SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

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



FOR THE FISCAL YEAR ENDED                                 COMMISSION FILE NUMBER
-------------------------                                 ----------------------
     MAY 31, 2002                                                0-12561


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



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


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

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

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

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

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

                                  YES  X  NO
                                     -----  -----
STATE THE ISSUER'S REVENUE FOR ITS MOST RECENT FISCAL YEAR.

$0

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

$ 2,965,215.95 (COMPUTED ON THE BASIS OF $.025 PER SHARE OF COMMON STOCK) AS OF
AUGUST 27, 2002.

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

 153,610,432 SHARES OF $.001 PAR VALUE COMMON STOCK AS OF MAY 31, 2002.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      NONE.


<PAGE>


                                     PART I

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

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

Our Products

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

MTCH-24(TM)

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

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

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

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

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

Viraplex(R)

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

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

                                       2

<PAGE>


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

Agricultural Products

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

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

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

Marketing Plan

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

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

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

                                       3

<PAGE>

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

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

Competition

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

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

Patents

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

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

                                   MTCH-24(TM)

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

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

                                  VIRAPLEX (R)

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

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

Government Regulation

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

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

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

Employees

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

                                       4

<PAGE>


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

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

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

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

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

None.

                                       5

<PAGE>


                                     PART II

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

The Company's common stock is traded on the over-the-counter (OTC) market. On
May 31, 2002, the closing bid price for the common stock of the Company was
$.033. 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, 2000                  .23                .45
           November 30, 2000                .095               .32
           February 28, 2001                .075               .29
           May 31, 2001                     .095               .25
           August 31, 2001                  .062               .07
           November 30, 2001                .033               .035
           February 28, 2002                .028               .03
           May 31, 2002                     .033               .033


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

As of August 30, 2002, there were approximately 3,000 holders of record of the
Company's outstanding shares of common stock.

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

The following sets forth recent sales by the Company of unregistered securities
during the fiscal year ended May 31, 2002.

1. During the year ended May 31, 2002, we granted 250,000 shares of our common
stock to a consultant for work performed in connection with the Forms SB-2. As
this work was a fundraising activity, no expense was recorded.

2. During the year ended May 31, 2002, we issued an aggregate of 2,500,000
shares of our common stock pursuant to an exercise of an option for an exercise
price of $75,000.

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

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

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

Overview

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

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

Since we became a public company, our operations have related primarily to
securing patents, initiating and continuing clinical tests, recruiting personnel
and raising capital. Through May 31, 2002, we have derived our revenues from the
sale of a license option to INR to develop and market new patented products.

                                       6

<PAGE>


Going Concern

The Company's independent certified public accountants have stated in their
report included in this Form 10KSB, that the consolidated financial statements
have been prepared on a going concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business.
As shown in the consolidated financial statements, the Company incurred a loss
of $972,073 during the year ended May 31, 2002, had a cash balance of
approximately $31,800, and had a deficit accumulated during the development
stage of approximately $16.5 million and a stockholders' deficit of
approximately $7.7 million at May 31, 2002. These factors, among others, raise
substantial doubt about our ability to continue as a going concern.

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

RESULTS OF OPERATIONS FOR THE YEARS ENDED MAY 31, 2002 AND 2001.

Sources of Revenues and Revenue Recognition

Our revenues were $0 in 2002 as compared to $100,000 in 2001. Revenues in 2001
consisted entirely of the fees paid to us by INR in anticipation of a license
agreement. Pursuant to the letter agreement dated in February 2000, we granted
INR an irrevocable option to license, develop and market several applications of
MTCH-24(TM) and Viraplex (R). In addition, pursuant to the letter agreement, INR
was obligated to pay to us the sum of $100,000 upon execution of a definitive
license agreement.

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

Operating Expenses

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

Research and Development Costs. Direct research and development costs for 2002
were $24,650, consisting of the costs of additional clinical trials on the
products. Research and development costs for 2001 were $6,500. The increase is
due to additional testing done on potential product offerings.

General and Administrative Expenses. Direct costs were $586,649 for 2002, as
compared with $601,937 for 2001. The decrease was primarily due to lower
miscellaneous expenses, accounting fees, and accrual of interest charged on
accounts payable, which was partially offset by an increase in consulting and
legal fees. In the future, we expect direct costs to increase in absolute dollar
terms but to decrease as a percentage of revenues due to OTC products reaching
the market and the sale of additional product licenses. In the future, we expect
selling, general and administrative expenses to increase in absolute dollars but
to decrease as a percentage of revenues due to improved economies of scale and
higher overall revenues.

Interest Expense. Interest expense was $369,775 for 2002 as compared to $338,100
for 2001. This increase was due to the additional interest on accrued debt. This
interest is accrued at a rate of 9% simple interest per annum on funds advanced
to the Company by Petro-Med Inc. Our Company's Chief Executive Officer, Gerald
N. Kern, also serves as Chairman of Petro-Med Inc.

Net Loss. Net loss was approximately $972,000 for 2002 as compared to net income
of $563,000 for 2001. The decrease from net income in fiscal year 2001 to a net
loss in fiscal year 2002 is due primarily to other income in fiscal 2001
resulting from the gain on write-down of accounts payable in the amount of
$1,405,232 which were no longer collectible against the Company due to the
statute of limitations.

                                       7

<PAGE>


LIQUIDITY AND CAPITAL RESOURCES FOR THE YEARS ENDED MAY 31, 2002 AND 2001

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 $31,777 at May 31, 2002 (down from $161,600
at May 31, 2001). This decrease was due to a lack of cash inflow from
contributed capital.

Net cash used in operations in 2002 was approximately $338,000, as compared to
cash used in operations of $130,000 in 2001. Cash was used in operations in
fiscal year 2002 for payment of accounting, consulting, legal and travel
expenses.

Net cash used in investing activities in 2002 and 2001 was approximately $400
and $3,200, respectively, which was due to purchases of office equipment.

Net cash provided by financing activities in 2002 was approximately $209,000, as
compared to $180,000 in 2001. This increase was due to payments made on advances
from stockholder in fiscal 2001.

On June 30, 2000, we entered into an investment agreement with Swartz Private
Equity, LLC which was amended and restated on February 15, 2001. The investment
agreement entitles us to issue and sell our common stock to Swartz for up to an
aggregate of $30 million from time to time during a three-year period beginning
on the date that the registration statement registering the resale of these
shares became effective, which was May 4, 2001. This is also referred to as a
put right. The trading volume limits the dollar amount of each sale and a
minimum period of time must occur between sales. In order to sell shares to
Swartz, there must be an effective registration statement on file with the SEC
covering the resale of the shares by Swartz and we must meet certain other
conditions. Through May 31, 2002, we have received $118,946 from Swartz under
this agreement.

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

Inflation

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

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

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

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

On July 16, 2001, the Company dismissed Singer Lewak Greenbaum & Goldstein, LLP
as its independent auditor. Singer Lewak Greenbaum & Goldstein, LLP's audit
reports on the Company's financial statements for the years ended May 31, 2000,
1999 and 1998 were included in the Company's Form 10-K, which was filed on
August 8, 2000. None of the audit reports contained an adverse opinion or
disclaimer of opinion; however, the audit reports for such periods did contain a
going concern qualification. The decision to dismiss Singer Lewak Greenbaum &
Goldstein, LLP was approved by the Company's Board of Directors.

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

                                       8

<PAGE>


On July 17, 2001, the Company engaged Corbin & Wertz, which appointment was
approved by the Company's Board of Directors. During the Company's two most
recent fiscal years and any subsequent interim period prior to the engagement of
Corbin & Wertz, neither the Company nor anyone on the Company's behalf consulted
with Corbin & Wertz regarding either (i) the application of accounting
principles to a specified transaction, either contemplated or proposed, or the
type of audit opinion that might be rendered on the Company's financial
statements or (ii) any matter that was either the subject of a disagreement or a
reportable event.

The Company has authorized Singer Lewak Greenbaum & Goldstein, LLP to respond
fully to all inquiries of Corbin & Wertz.


                                    PART III

Item 10. Directors and Executive Officers

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

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

     Gerald N. Kern             64       Chairman of the Board           1982
                                         Chief Executive Officer,
                                         Director

     Cynthia S. Kern            52       Vice Chairman                   2001
                                         Secretary                       1983

     Steven I. Kern             35       President and Director          2001
                                         Chief Operating Officer         2000
                                         Chief Financial Officer

     Lester F. Goldstein        58       Director                        1983

     Harry Hall                 67       Director                        1990


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

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

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

Steven I. Kern
President, Chief Operating Officer, Chief Financial Officer and Director

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

Cynthia S. Kern
Vice Chairman, Director and Corporate Secretary

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

                                       9

<PAGE>


Lester F. Goldstein, Ph.D.
Director

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

Harry Hall
Director

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

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

Item 11. Executive Compensation

The following table sets forth all cash compensation for the fiscal years ended
May 31, 2002, 2001 and 2000 for (1) the Company's Chief Executive Officer and
(2) each of its most highly compensated executive officers whose aggregate cash
compensation exceeded $100,000.
<TABLE>
<CAPTION>

                                                      Summary Compensation Table
                                                        Annual Compensation                          Long-Term Compensation Award
                                   ------------------------------------------------------------    --------------------------------
                                                                                                                      Securities
           Name and                                                                                  Restricted       Underlying
      Principal Position           Fiscal Year         Salary          Bonus          Other         Stock Awards        Options
-------------------------------    -------------   --------------   ------------   ------------   ---------------   ---------------
<S>                                    <C>          <C>                <C>         <C>                  <C>          <C>
Gerald N. Kern                         2002         $ 150,000 (1)       $ 0         $12,000(1)           0            24,050,000
  Chairman of the Board and            2001         $  12,500 (1)       $ 0               0              0                     0
  Chief Executive Officer              2000         $  54,000 (1)       $ 0               0              0             4,500,000


Steven I. Kern                         2002         $ 120,000 (2)       $ 0         $12,000(2)           0            22,050,000
  Chief Operating Officer and          2001         $  10,000 (2)       $ 0               0              0                     0
  Chief Financial Officer              2000         $       0           $ 0               0              0             2,500,000

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

(1) Of the total annual compensation for the last three fiscal years, the
Company paid in cash only $23,000 of compensation for Gerald N. Kern. The
remaining compensation amount was accrued

(2) Of the total annual compensation for the last three fiscal years, the
Company paid in cash only $13,000 of compensation for Steven I. Kern. The
remaining compensation amount was accrued.

                                       10
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


OPTION GRANTS IN FISCAL 2002

The following table provides information concerning grants of options to
purchase the Company's common stock that we made to (1) the Company's Chief
Executive Officer and (2) each of its most highly compensated executive officers
whose cash compensation exceeded $100,000 during the fiscal year ended May 31,
2002. We did not grant stock appreciation rights to these individuals during
fiscal 2002.

                      Number of        Percentage of Total
                     Securities        Options Granted to
                     Underlying        Employees in Fiscal      Exercise Price       Expiration
Name               Options Granted             2002                Per Share           Date
--------------     ---------------     -------------------    ------------------    ------------
<S>                  <C>                         <C>                <C>                 <C> <C>
Gerald N. Kern       23,450,000                  49%                $0.056              8/7/11
                        250,000                 0.5%                $0.023            11/12/11
                        350,000                 0.7%                $0.028              5/3/12

Steven I. Kern       21,450,000                  45%                $0.056              8/7/11
                        250,000                 0.5%                $0.023            11/12/11
                        350,000                 0.7%                $0.028              5/3/12


OPTION EXERCISES AND FISCAL YEAR-END VALUES

The following table provides information on option exercises in the fiscal year
ended May 31, 2002, by the Named Executive Officers and the value of unexercised
options held by the Named Executive Officers as of May 31, 2002.


                                                        Number of securities underlying        Value of unexercised
                                                            unexercised options at            in-the-money options at
                                                                  May 31, 2002                     May 31, 2002
                                                        -----------------------------      ----------------------------
                           Shares
                          Acquired
                             on            Value
        Name              Exercise      Realized (1)    Exercisable      Unexercisable    Exercisable (1)   Unexercisable
---------------------    ----------     -----------     ------------     ------------      -----------       ----------

Gerald N. Kern                    0               0       25,050,000                0          128,788                0
                         ==========     ===========     ============     ============      ===========       ==========

Steven I. Kern                    0               0       24,050,000                0          128,788                0
                         ==========     ===========     ============     ============      ===========       ==========

(1) Based on the closing price of our common stock of $0.033 for the last
business day of the fiscal year ended May 31, 2002.

Employment Agreements

We entered into an employment agreement with Gerald N. Kern dated as of February
3, 2000 and approved by our directors on April 20, 2000, providing for his
employment as Chief Executive Officer effective February 3, 2000 and amended on
May 3, 2001. During the period between February 3, 2000 and May 3, 2001, Mr.
Kern acted in his capacities without accruing salary. The agreement was
contingent upon completion of the Swartz offering, which took place on May 3,
2001. The agreement provides for a three-year term 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, if we terminate him
without cause this would result in a lump sum severance payment based on two
years of base salary and bonus, as defined. Also, upon a change of control, Mr.
Kern may elect to terminate his employment and obtain a lump sum severance
payment based on two years of base salary and bonus, as defined. In addition, as
stated in the employment agreement, we granted in fiscal 2002 to Mr. Kern an
option to purchase 23,450,000 common shares that vested immediately.

                                       11
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


On February 3, 2000 we entered into an employment agreement with Steven I. Kern,
which was approved by our directors on February 3, 2000 and amended on May 3,
2001, providing for his employment as Chief Operating Officer and Chief
Financial Officer. During the period between February 3, 2000 and May 3, 2001,
Mr. Kern acted in his capacities without accruing salary. The agreement was
contingent upon completion of the Swartz offering, which closing took place on
May 3, 2001. The agreement provides for a three-year term 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. We may terminate Mr. Kern's employment
with or without cause. However, if we terminate him without cause this would
result in a lump sum severance payment based on two years of base salary and
bonus, as defined. If within 12 months of a change in control Mr. Kern's
employment is terminated other than for cause, or if Mr. Kern refuses to accept
or voluntarily resigns from a position other than a qualified position, then he
will receive a lump sum severance payment based on two years of base salary and
bonus, as defined. In addition, as stated in the employment agreement, we
granted in fiscal 2002 to Mr. Kern an option to purchase 21,450,000 common
shares that vested immediately.

The following table sets forth, as of May 31, 2002, the composition of the
Company's equity compensation plans:

                                                      EQUITY COMPENSATION PLANS

                                                      (a)                            (b)                             (c)
                                         ---------------------------    ----------------------     ---------------------------------
                                                                                                         Number of Securities
                                                                              Weighted-average       Remaining Available for Future
                                         Number of Securities to be         Exercise Price of            Issuance Under Equity
                                           Issued upon Exercise of       of Outstanding               Compensation Plans (excluding
                                            Outstanding Options,        Options, Warrants            Securities reflected in Column
                                             Warrants and Rights              and Rights                         (a))
           Plan Category                            (#)                           ($)                            (#)
-------------------------------------    ---------------------------    ----------------------     ---------------------------------

<S>                                              <C>                        <C>                                        <C>
Equity compensation plans
approved by security holders                               0                 $          0                               0

Equity compensation plans not
approved by security holders                      54,140,000                         0.06                               0
                                                ------------                 ------------                    ------------

Total                                             54,140,000                 $       0.06                               0
                                                ============                 ============                    ============

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

The following table sets forth, as of August __, 2002, the stock ownership of
each officer and director of our Company, of all our officers and directors as a
group, and of each person known by us to be a beneficial owner of five percent
or more of our common stock. Except as otherwise noted, each person listed below
is the sole beneficial owner of the shares and has sole investment and voting
power over such shares. Unless otherwise indicated, the address of each named
beneficial owner is the same as that of our principal executive offices located
at 10105 E. Via Linda, No. 103, Scottsdale, Arizona 85258.

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

Gerald N. Kern                        57,816,794  (2)                 28.3%

Petro-Med, Inc.                       26,256,794                      12.8%

Steven I. Kern                        24,405,000  (3)                 11.9%

Cynthia S. Kern                        3,455,000  (4)                  1.7%

Lester Goldstein                       1,490,000  (5)                   *

Harry Hall                             1,100,000  (6)                   *

Immune Network, Limited                9,145,000                       4.5%
3650 Wesbrook Mall
Vancouver, Canada, BC V6S ZLZ

All directors & officers              88,266,794                      43.1%
as a group (5 persons)

                                       12
</TABLE>

<PAGE>


* Less than 1%.

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

(2) Mr. Kern is the Chairman of the Board and Chief Executive Officer of
Petro-Med, Inc. and may be deemed the beneficial owner of the 26,256,794 shares
owned by Petro-Med, Inc. Includes 25,050,000 shares issuable upon exercise of
outstanding stock options. Does not include an aggregate of 25,210,000 shares of
our common stock beneficially owned by Mr. Kern's spouse and adult children. Mr.
Kern disclaims beneficial ownership of the shares held by such persons.

(3) Includes 24,050,000 shares issuable upon exercise of outstanding stock
options.

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

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

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

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

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

The following table sets forth, as of May 31, 2002, the shares of common stock
of Petro-Med owned of record and beneficially by certain officers and directors
of the Company and by all such officers and directors of the Company as a group.

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

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

     Lester F. Goldstein                      8,000                  0.4%

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

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

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

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

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

At May 31, 2002, the Company maintained short-term advances from affiliates of
$4,311,648 which are due on demand. Accrued interest is attributed to the
outstanding balance as incurred. The advances bear interest at 9% per annum on
any outstanding balance. Interest expense on the advances was $369,775, and
$338,100 for the years ended May 31, 2002 and 2001, respectively.

                                       13

<PAGE>


                                     Part IV

Item 13. Exhibits and Reports on Form 8-K


Index to Financial Statements

 INDEPENDENT AUDITORS' REPORT................................................F-1

CONSOLIDATED FINANCIAL STATEMENTS

    Consolidated Balance Sheet as of May 31, 2002............................F-2

    Consolidated Statements of Operations for the years ended
      May 31, 2002 and 2001 and for the period from May 4, 1982
     (date of inception) through May 31, 2002................................F-3

    Consolidated Statements of Stockholders' Deficit for the years
      ended May 31, 2002 and 2001 and for the period from May 4, 1982
      (date of inception) through May 31, 2002........................F-4 - F-13

    Consolidated Statements of Cash Flows for the years ended
      May 31, 2002 and 2001 and for the period from May 4, 1982
      (date of inception) through May 31, 2002..............................F-14

    Notes to Consolidated Financial Statements for the years ended
      May 31, 2002 and 2001..........................................F-15 - F-24

Index to Exhibits

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

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

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

                                       14



<PAGE>


                          INDEPENDENT AUDITORS' REPORT


Board of Directors and Stockholders
Meditech Pharmaceuticals, Inc.

We have audited the accompanying consolidated balance sheet of Meditech
Pharmaceuticals, Inc. and subsidiary (development stage companies) (the
"Company") as of May 31, 2002, and the related consolidated statements of
operations, stockholders' deficit and cash flows for each of the years in the
two-year period then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
May 31, 2002, and the results of their operations and their cash flows for each
of the years in the two-year period then ended, in conformity with accounting
principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. During the year ended May 31,
2002, the Company incurred a net loss of $972,073. In addition, at May 31, 2002,
the Company had an accumulated deficit during development stage of $16,460,978
and a negative working capital of $7,565,761. 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 2 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 2. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.




                                            /s/  CORBIN & WERTZ
                                            -----------------------------------
                                                 CORBIN & WERTZ

Irvine, California
July 26, 2002

                                      F-1

<PAGE>
<TABLE>
<CAPTION>


                                        MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                        (Development Stage Companies)

                                                           CONSOLIDATED BALANCE SHEET

=====================================================================================

ASSETS                                                                  May 31, 2002
                                                                        ------------

Current assets:
     <S>                                                                <C>
     Cash and cash equivalents                                          $     31,777
                                                                        ------------
         Total current assets                                                 31,777

Property and equipment, net of accumulated depreciation of $2,180              1,413
Other assets                                                                   8,230
                                                                        ------------

                                                                        $     41,420
                                                                        ============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
     Accounts payable and accrued expenses                              $    260,537
     Accrued compensation                                                  3,025,353
     Advances from affiliates                                              4,311,648
                                                                        ------------
         Total current liabilities                                         7,597,538
                                                                        ------------

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

Commitments and contingencies

Stockholders' deficit:
     Preferred stock, $0.001 par value; 25,000,000 shares authorized;
       no shares issued and outstanding                                         --
     Common stock, $0.001 par value; 400,000,000 shares authorized;
       152,725,487 shares issued and outstanding                             152,712
     Subscriptions receivable                                               (165,000)
     Additional paid-in capital                                            8,725,848
     Deficit accumulated during the development stage                    (16,460,978)
                                                                        ------------
         Total stockholders' deficit                                      (7,747,418)
                                                                        ------------

                                                                        $     41,420
                                                                        ============

-------------------------------------------------------------------------------------
                                                See independent auditors' reports and
                              accompanying notes to consolidated financial statements
                                                                                  F-2
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                                          MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                                          (Development Stage Companies)

                                                                  CONSOLIDATED STATEMENTS OF OPERATIONS

=======================================================================================================

                                                                                         For The Period
                                                                                           May 4, 1982
                                                        For The Year      For The Year      (Date of
                                                           Ended             Ended        Inception) to
                                                        May 31, 2002      May 31, 2001     May 31, 2002
                                                        -------------    -------------    -------------
<S>                                                     <C>              <C>              <C>
Revenue                                                 $        --      $     100,000    $     125,000
                                                        -------------    -------------    -------------

Operating expenses:
     Research and development                                  24,650            6,500        1,869,450
     General and administrative                               586,649          601,937       13,271,586
     Aborted stock offering costs                                --               --            325,400
                                                        -------------    -------------    -------------
         Total operating expenses                             611,299          608,437       15,466,436
                                                        -------------    -------------    -------------

Loss before other income (expense)                           (611,299)        (508,437)     (15,341,436)
                                                        -------------    -------------    -------------

Other income (expense):
     Interest expense                                        (369,775)        (338,100)      (3,241,675)
     Interest income                                            2,989            4,000          305,489
     Other income, net                                          6,012             --             81,612
     Gain on write-down of accounts payable                      --          1,405,232        1,405,232
                                                        -------------    -------------    -------------
         Total other income (expense)                        (360,774)       1,071,132       (1,449,342)
                                                        -------------    -------------    -------------

Loss before minority interest in losses of subsidiary        (972,073)         562,695      (16,790,778)

Minority interest in losses of subsidiary                        --               --            329,800
                                                        -------------    -------------    -------------
Net (loss) income                                       $    (972,073)   $     562,695    $ (16,460,978)
                                                        =============    =============    =============

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

Net (loss) income per common share - basic and
  diluted                                               $       (0.01)   $        --
                                                        =============    =============

Weighted average shares outstanding:
     Basic                                                151,225,693      140,897,179
                                                        =============    =============
     Diluted                                              151,225,693      142,535,110
                                                        =============    =============


-------------------------------------------------------------------------------------------------------
                                                                  See independent auditors' reports and
                                                accompanying notes to consolidated financial statements
                                                                                                    F-3
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                     MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                     (Development Stage Companies)

                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

               For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

==================================================================================




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

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

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

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

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

Offering costs                      --            --            --            --

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

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

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

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

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

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


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

                                                                               F-4
</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                        MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                        (Development Stage Companies)

                                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

                  For The Period May 4, 1982 (Date of Inception) Through May 31, 2002
                                                                           (Continued)
=====================================================================================


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

Net loss                            --            --       (1,022,600)    (1,022,600)
                             -----------   -----------    -----------    -----------

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

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

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

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

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

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

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

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

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

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


-------------------------------------------------------------------------------------
                                                See independent auditors' reports and
                              accompanying notes to consolidated financial statements
                                                                          F-4 (Con't)
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                      MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                       (Development Stage Companies)

                        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - CONTINUED

                 For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

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



                                          Common Stock            Treasury Stock
                                   -----------------------   -----------------------
                                     Shares       Amount       Shares       Amount
                                   ----------   ----------   ----------   ----------
<S>                                 <C>              <C>           <C>          <C>
Issuance of stock for
  subscriptions to officer          8,000,000        8,000         --           --

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

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

Balance, May 31, 1986              74,015,000       74,000         --           --

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

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

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

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


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

                                                                                 F-5

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                          MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                          (Development Stage Companies)

                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - CONTINUED

                    For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

=======================================================================================



                                                                 Deficit
                                                               Accumulated
                                                 Additional    During the
                                 Subscriptions    Paid-in      Development
                                   Receivable     Capital        Stage         Total
                                   ----------    ----------    ----------    ----------
<S>                                <C>            <C>           <C>           <C>
Issuance of stock for
  subscriptions to officer         (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              (1,440,000)    5,753,615    (5,688,900)   (1,301,285)

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

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

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

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


---------------------------------------------------------------------------------------
                                                  See independent auditors' reports and
                                accompanying notes to consolidated financial statements
                                                                            F-5 (Con't)
</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                       MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                       (Development Stage Companies)

                        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - CONTINUED

                 For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

====================================================================================



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

<S>                                <C>          <C>          <C>          <C>
Issuance of Viral Research
  Technologies, Inc. options
  for services                           --           --           --           --

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

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

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

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

Stock options exercised               366,000          400         --           --

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

Issuance of common stock of
  subsidiary                             --           --           --           --

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

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


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

                                                                                 F-6

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                        MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                        (Development Stage Companies)

                         CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - CONTINUED

                  For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

=====================================================================================



                                                              Deficit
                                                            Accumulated
                                                Additional  During the
                                  Subscriptions   Paid-in   Development
                                   Receivable     Capital      Stage         Total
                                   ----------   ----------   ----------    ----------
<S>                               <C>           <C>          <C>           <C>
Issuance of Viral Research
  Technologies, Inc. options
  for services                           --        190,400         --         190,400

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

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

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

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

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

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

Issuance of common stock of
  subsidiary                             --        290,000         --         290,000

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

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


-------------------------------------------------------------------------------------
                                                See independent auditors' reports and
                              accompanying notes to consolidated financial statements
                                                                           F-6(Con't)
</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                                                                      MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                                                                      (Development Stage Companies)

                                                                       CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - CONTINUED

                                                                For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

===================================================================================================================================



                                                                                                             Deficit
                                                                                                           Accumulated
                                  Common Stock             Treasury Stock                     Additional   During the
                             -----------------------   ----------------------- Subscriptions    Paid-in    Development
                               Shares       Amount       Shares       Amount     Receivable     Capital       Stage         Total
                             ----------   ----------   ----------   ----------   ----------   ----------   ----------    ----------
<S>                          <C>          <C>          <C>          <C>          <C>          <C>          <C>           <C>
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


-----------------------------------------------------------------------------------------------------------------------------------
                                                                                              See independent auditors' reports and
                                                                            accompanying notes to consolidated financial statements
                                                                                                                                F-7
</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                       MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                       (Development Stage Companies)

                        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - CONTINUED

                 For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

====================================================================================



                                     Common Stock               Treasury Stock
                               -------------------------   -------------------------
                                 Shares        Amount        Shares        Amount
                               -----------   -----------   -----------   -----------
<S>                            <C>           <C>           <C>           <C>
Net loss                              --            --            --            --
                               -----------   -----------   -----------   -----------

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

Sale of common stock             2,000,000         2,000          --            --

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

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

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

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

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

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

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

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

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


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

                                                                                 F-8
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                       MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                        (Development Stage Companies)

                         CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - CONTINUED

                  For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

=====================================================================================



                                                               Deficit
                                                             Accumulated
                                              Additional     During the
                               Subscriptions    Paid-in      Development
                                Receivable      Capital        Stage          Total
                               -----------   -----------   -----------    -----------
<S>                            <C>            <C>          <C>            <C>
Net loss                              --            --        (479,100)      (479,100)
                               -----------   -----------   -----------    -----------

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

Sale of common stock                  --          29,400          --           31,400

Net loss                              --            --        (483,100)      (483,100)
                               -----------   -----------   -----------    -----------

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

Net loss                              --            --        (449,400)      (449,400)
                               -----------   -----------   -----------    -----------

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

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

Net loss                              --            --        (753,900)      (753,900)
                               -----------   -----------   -----------    -----------

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

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

Net loss                              --            --        (515,600)      (515,600)
                               -----------   -----------   -----------    -----------


-------------------------------------------------------------------------------------
                                                See independent auditors' reports and
                              accompanying notes to consolidated financial statements
                                                                           F-8(Con't)
</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                     MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                      (Development Stage Companies)

                       CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - CONTINUED

                For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

===================================================================================



                                    Common Stock               Treasury Stock
                              -------------------------   -------------------------
                                Shares        Amount        Shares        Amount
                              -----------   -----------   -----------   -----------
<S>                          <C>            <C>           <C>           <C>
Balance, May 31, 1995         109,223,132       109,300     8,000,000          --

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

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

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

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

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

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

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

Balance, May 31, 1998         124,563,432       124,600     8,000,000          --

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

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


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

                                                                             F-9
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                      MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                       (Development Stage Companies)

                        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - CONTINUED

                 For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

====================================================================================



                                                              Deficit
                                                            Accumulated
                                               Additional   During the
                              Subscriptions     Paid-in     Development
                                Receivable      Capital        Stage          Total
                              -----------   -----------   -----------    -----------
<S>                           <C>           <C>           <C>            <C>
Balance, May 31, 1995                --       6,429,215   (12,119,900)    (5,581,385)

Net loss                             --            --        (501,600)      (501,600)
                              -----------   -----------   -----------    -----------

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

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

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

Net loss                             --            --        (957,400)      (957,400)
                              -----------   -----------   -----------    -----------

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

Net loss                             --            --        (555,200)      (555,200)
                              -----------   -----------   -----------    -----------

Balance, May 31, 1998                --       6,841,215   (14,134,100)    (7,168,285)

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

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


------------------------------------------------------------------------------------
                                               See independent auditors' reports and
                             accompanying notes to consolidated financial statements
                                                                          F-9(Con't)
</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                          MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                           (Development Stage Companies)

                            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - CONTINUED

                     For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

========================================================================================



                                          Common Stock              Treasury Stock
                                   -------------------------   -------------------------
                                     Shares        Amount        Shares        Amount
                                   -----------   -----------   -----------   -----------
<S>                                <C>           <C>           <C>           <C>
Net loss                                  --            --            --            --
                                   -----------   -----------   -----------   -----------

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

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

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

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

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

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

Stock option issued to employees          --            --            --            --

Contributed services                      --            --            --            --


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

                                                                                    F-10
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                             MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                             (Development Stage Companies)

                              CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - CONTINUED

                       For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

==========================================================================================



                                                                  Deficit
                                                                Accumulated
                                                   Additional   During the
                                  Subscriptions     Paid-in     Development
                                    Receivable      Capital        Stage          Total
                                   -----------    -----------   -----------    -----------
<S>                                <C>            <C>           <C>            <C>
Net loss                                  --             --        (767,400)      (767,400)
                                   -----------    -----------   -----------    -----------

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

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

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

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

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

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

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

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


------------------------------------------------------------------------------------------
                                                     See independent auditors' reports and
                                   accompanying notes to consolidated financial statements
                                                                               F-10(Con't)
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                         MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                         (Development Stage Companies)

                          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - CONTINUED

                   For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

======================================================================================



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

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

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

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

Contributed services                    --            --            --            --

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

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

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

Costs incurred to register
  common stock                          --            --            --            --


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

                                                                                  F-11
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                           MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                            (Development Stage Companies)

                             CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - CONTINUED

                      For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

=========================================================================================



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

Net loss                                --             --       (1,150,100)    (1,150,100)
                                 -----------    -----------    -----------    -----------

Balance, May 31, 2000                (10,000)     7,743,200    (16,051,600)    (8,181,700)

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

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

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

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

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

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


-----------------------------------------------------------------------------------------
                                                    See independent auditors' reports and
                                  accompanying notes to consolidated financial statements
                                                                              F-11(Con't)
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                       MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                        (Development Stage Companies)

                         CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - CONTINUED

                  For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

=====================================================================================



                                      Common Stock               Treasury Stock
                                -------------------------   -------------------------
                                  Shares        Amount        Shares        Amount
                                -----------   -----------   -----------   -----------
<S>                             <C>           <C>           <C>           <C>
Stock options issued to
 consultants                           --            --            --            --

Net income                             --            --            --            --
                                -----------   -----------   -----------   -----------

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

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

Exercise of put option to
  Swartz LLC                      1,157,000         1,157          --            --

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

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

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


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

                                                                                 F-12
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                          MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                           (Development Stage Companies)

                            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - CONTINUED

                     For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

========================================================================================



                                                                Deficit
                                                               Accumulated
                                                Additional     During the
                               Subscriptions     Paid-in       Development
                                Receivable       Capital         Stage          Total
                                -----------    -----------    -----------    -----------
<S>                             <C>            <C>            <C>            <C>
Stock options issued to
 consultants                           --           19,500           --           19,500

Net income                             --             --          562,695        562,695
                                -----------    -----------    -----------    -----------

Balance, May 31, 2001              (213,404)     8,513,176    (15,488,905)    (7,040,328)

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

Exercise of put option to
  Swartz LLC                           --           69,385           --           70,542

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

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

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


----------------------------------------------------------------------------------------
                                                   See independent auditors' reports and
                                 accompanying notes to consolidated financial statements
                                                                             F-12(Con't)
</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                          MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                           (Development Stage Companies)

                            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - CONTINUED

                     For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

========================================================================================



                                      Common Stock                 Treasury Stock
                               --------------------------    ---------------------------
                                  Shares         Amount         Shares         Amount
                               ------------   ------------   ------------   ------------
<S>                            <C>            <C>            <C>            <C>
Stock options issued to
  consultants                          --             --             --             --

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

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

Balance, May 31, 2002           152,725,487   $    152,712     12,737,945   $       --
                               ============   ============   ============   ============


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

                                                                                    F-13
</TABLE>
<PAGE>
<TABLE>
<CAPTION>



                                            MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                             (Development Stage Companies)

                              CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - CONTINUED

                       For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

==========================================================================================



                                                                 Deficit
                                                               Accumulated
                                                Additional     During the
                               Subscriptions     Paid-in       Development
                                Receivable       Capital          Stage          Total
                               ------------    ------------   ------------    ------------
<S>                            <C>             <C>            <C>             <C>
Stock options issued to
  consultants                          --            56,400           --            56,400

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

Net loss                               --              --         (972,073)       (972,073)
                               ------------    ------------   ------------    ------------

Balance, May 31, 2002          $   (165,000)   $  8,725,848   $(16,460,978)   $ (7,747,418)
                               ============    ============   ============    ============


------------------------------------------------------------------------------------------
                                                     See independent auditors' reports and
                                   accompanying notes to consolidated financial statements
                                                                               F-13(Con't)
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                                             MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                                             (Development Stage Companies)

                                                                     CONSOLIDATED STATEMENTS OF CASH FLOWS

==========================================================================================================


                                                                                            For The Period
                                                                For The         For The       May 4, 1982
                                                              Year Ended      Year Ended       (Date of
                                                                May 31,         May 31,      Inception) to
                                                                 2002            2001        May 31, 2002
                                                             ------------    ------------    ------------

Cash flows from operating activities:
     <S>                                                     <C>             <C>             <C>
     Net (loss) income                                       $   (972,073)   $    562,695    $(16,460,978)
     Adjustments to reconcile net (loss) income to
       net cash used in operating activities:
         Depreciation and amortization                              1,390           1,100         138,690
         Warrants and options issued to employees,
           vendors and consultants                                 56,400          19,500         851,000
         Minority interest in losses of subsidiary                   --              --          (329,800)
         Stock issued to employees, vendors and
           consultants                                               --              --         1,667,300
         Contributed services                                        --           336,150         463,050
         Accrued interest on advances from affiliates             369,748         338,100       3,241,648
         Gain on write-down of accounts payable                      --        (1,405,232)     (1,405,232)
         Changes in operating assets and liabilities:
              Other assets                                           (697)         (5,143)         (9,140)
              Accounts payable and accrued expenses                (3,784)         96,053       1,594,769
              Accrued compensation                                211,003          27,250       3,025,353
              Deferred revenue                                       --          (100,000)           --
                                                             ------------    ------------    ------------

     Net cash used in operating activities                       (338,013)       (129,527)     (7,223,340)
                                                             ------------    ------------    ------------

Cash flows used in investing activities:
     Purchases of furniture and equipment                            (393)         (3,200)       (139,193)
                                                             ------------    ------------    ------------

Cash flows from financing activities:
     Proceeds from advances from affiliates, net                     --              --         2,250,800
     Proceeds from loan payable                                      --              --            71,000
     Proceeds from sale of stock and exercise options, net        193,946         300,000       5,178,346
     Costs incurred to register securities                         14,637         (76,973)        (62,336)
     Principal payments on advances from stockholder                 --           (43,500)        (43,500)
                                                             ------------    ------------    ------------

     Net cash provided by financing activities                    208,583         179,527       7,394,310
                                                             ------------    ------------    ------------

Net change in cash and cash equivalents                          (129,823)         46,800          31,777

Cash and cash equivalents, beginning of period                    161,600         114,800            --
                                                             ------------    ------------    ------------

Cash and cash equivalents, end of period                     $     31,777    $    161,600    $     31,777
                                                             ============    ============    ============


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


See accompanying notes to consolidated financial statements for a detail of
non-cash investing and financing activities.


---------------------------------------------------------------------------------------------------------
                                                                    See independent auditors' reports and
                                                  accompanying notes to consolidated financial statements
                                                                                                     F-14
</TABLE>

<PAGE>


                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (Development Stage Companies)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

             For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

================================================================================


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. Since then, it has been engaged in research and
development activities associated with bringing its products to market.

NOTE 2 - 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" -
see Note 3) (collectively, the "Company"). All significant intercompany
transactions and balances have been eliminated in consolidation.

Development Stage Enterprise
----------------------------

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

Basis of Presentation
---------------------

The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America, which contemplate continuation of the Company as a going concern. The
Company incurred a net loss of $972,073 during the year ended May 31, 2002 and
had a cash balance of approximately $32,000 at May 31, 2002. In addition, at May
31, 2002, the Company's deficit accumulated during the development stage was
$16,460,978 and the Company had negative working capital of $7,565,761.
Management recognizes that the Company must generate additional resources for
the eventual achievement of sustained profitable operations. Management's plans
include obtaining additional capital through equity financing and the extension
of existing debt. However, no assurance can be given that additional capital, if
needed, will be available when required or upon terms acceptable to the Company
or that the Company will be successful in its efforts to negotiate the extension
of its existing debt.

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

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

                                                                            F-15

<PAGE>


                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (Development Stage Companies)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

             For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

================================================================================


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------

Estimates
---------

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

Cash and Cash Equivalents
-------------------------

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

Revenue
-------

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

Property and Equipment
----------------------

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

Impairment of Long-Lived Assets
-------------------------------

The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of the assets to future net cash flows
expected to be generated by the assets. If the assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount exceeds the fair value of the assets. Based on its analysis, the
Company believes that no impairment of the carrying value on its long-lived
assets exists at May 31, 2002. There can be no assurance, however, that market
conditions will not change which could result in impairment on long-lived assets
in the future.

Stock-Based Compensation
------------------------

The Company accounts for non-employee stock-based compensation under Statement
of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for
Stock-Based Compensation." SFAS 123 defines a fair value based method of
accounting for stock-based compensation. However, SFAS 123 allows an entity to
continue to measure compensation cost related to stock and stock options issued
to employees using the intrinsic method of accounting prescribed by Accounting
Principles Board Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to
Employees." Under APB 25, compensation cost, if any, is recognized over the
respective vesting period based on the difference, on the date of grant, between
the fair value of the Company's common stock and the grant price. Entities
electing to remain with the accounting method of APB 25 must make pro forma
disclosures of net income (loss) and earnings per share, as if the fair value
method of accounting defined in SFAS 123 had been applied. The Company has
elected to account for its stock-based compensation to employees under APB 25
(see Note 5).

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

                                                                            F-16

<PAGE>


                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (Development Stage Companies)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

             For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

================================================================================


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------

Income Taxes
------------

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

Fair Value of Financial Instruments
-----------------------------------

The carrying values of certain of the Company's financial instruments as of May
31, 2002, including cash, accounts payable and accrued expenses, and accrued
compensation, approximate their respective fair values due to their short-term
nature. The fair value of advances from affiliates are not determinable as the
transactions are with related parties.

Concentration of Credit Risk
----------------------------

The financial instrument which potentially subjects the Company to concentration
of credit risk is cash and cash equivalents. The Company maintains cash and cash
equivalents balances at certain high quality financial institutions, and at
times such balances may exceed the Federal Deposit Insurance Corporation
$100,000 insurance limit. As of May 31, 2002, there were no uninsured portions
of cash.

Loss Per Share
--------------

Basic loss per share is computed by dividing loss available to common
stockholders by the weighted-average number of common shares outstanding.
Diluted loss per share is computed similar to basic loss per share except that
the denominator is increased to include the number of additional common shares
that would have been outstanding if the potential common shares had been issued
and if the additional common shares were dilutive (966,667 and 1,637,931 shares
were considered additional common stock equivalents at May 31, 2002 and 2001,
respectively). For the year ended May 31, 2002, the Company incurred a net loss;
therefore, basic and diluted loss per share are the same.

Comprehensive Income
--------------------

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

Segments of an Enterprise and Related Information
-------------------------------------------------

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

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

                                                                            F-17

<PAGE>


                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (Development Stage Companies)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

             For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

================================================================================


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------

New Accounting Standard
-----------------------

On April 30, 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections" ("SFAS 145"). SFAS 145 rescinds SFAS No. 4, which required all
gains and losses from extinguishments of debt to be aggregated and, if material,
classified as an extraordinary item, net of related income tax effect. As a
result of SFAS 145, the criteria in APB Opinion No. 30, "Reporting the Results
of Operations, Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions" will
now be used to classify those gains and losses. Early application of the
provisions of SFAS 145 may be as of the beginning of the fiscal year or as of
the beginning of the interim period in which SFAS 145 is issued. The Company has
elected to adopt SFAS 145 as of the beginning of the current fiscal year.

As a result of the adoption of SFAS 145, the Company reclassified a gain on
write-down of accounts payable recognized during the fiscal year 2001 (see Note
9) as other income in the accompanying statements of operations as it did not
meet the criteria for treatment as an extraordinary item as provided for in APB
Opinion No. 30.

Reclassifications
-----------------

Certain reclassifications have been made to prior year amounts in the
consolidated financial statements in order to conform to the current year
presentation.

NOTE 3 - MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY
-----------------------------------------------------

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

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

At May 31, 2002, the assets and liabilities of Viral were as follows:

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

         Liabilities
               Accounts payable                          $    5,000
               Due to Meditech                              129,000
                                                         ----------
                     Total liabilities                      134,000

         Equity                                             266,000
                                                         ----------
                     Total liabilities and equity        $  400,000
                                                         ==========


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

                                                                            F-18

<PAGE>


                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (Development Stage Companies)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

             For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

================================================================================


NOTE 3 - MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY, continued
----------------------------------------------------------------

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

NOTE 4 - COMMITMENTS AND CONTINGENCIES
--------------------------------------

Leases
------

Currently, the Company uses its operating facilities, which are provided by its
Chief Executive Officer, without a lease agreement. During the years ended May
31, 2002 and 2001, the Company incurred approximately $12,000 and $15,000,
respectively, of rent expense related to this lease. There is no guarantee the
officer will be willing to provide these facilities in the future (see Note 8).

Employment Agreements
---------------------

The Company entered into employment agreements dated February 3, 2000 (amended
on May 3, 2001) with two of its officers. The agreements are for a three-year
term terminating on March 15, 2003 and provide for a combined base salary of
$270,000 per annum for the first year with an increase at least equal to the
consumer price index over each succeeding year. The agreements also provide for
annual bonus based on certain performance goals and a severance payment based on
two years of base salary and bonus, as defined, upon termination without cause
or change of control of the Company. Additionally, on August 9, 2001, the
Company granted to its officers options to purchase a total of 44,900,000 shares
of common stock exercisable at $0.056 per share and vesting immediately on the
date of grant. No compensation expense was recognized for the granting of these
options as the exercise price was equal to the market price on the date of
grant.

Litigation
----------

The Company may become 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. 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.

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

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

                                                                            F-19

<PAGE>


                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (Development Stage Companies)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

             For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

================================================================================


NOTE 5 - STOCKHOLDERS' DEFICIT
------------------------------

Preferred Stock
---------------

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

Common Stock
------------

In October 2000 and February 2001, holders of an aggregate 10,000,000 options
exercised their option to purchase common stock for cash of $300,000.

In May 2001, holders of 1,500,000 options exercised their option to purchase
common stock for a subscription receivable of $155,000.

In May 2001, the Company exercised a put option pursuant to an investment
agreement (see Note 6). Pursuant to the terms of the agreement the Company put
605,055 shares of its common stock to the investor for total proceeds of
$48,404, which was received in June 2001. The Company had originally put (and
transferred) 1,500,000 shares of its common stock to the investor, but due to
certain volume restrictions the investor was obligated to purchase only 605,055
shares. The Company is to receive back 894,945 shares which have not been sold,
and has presented these shares as treasury shares with no cost.

During the year ended May 31, 2001, the Company incurred $76,973 of expenses
related to registering securities underlying the investment agreement (see Note
6). These expenses have been offset against capital.

In June 2001, the Company exercised a put option pursuant to the investment
agreement for 1,157,000 shares of common stock for a subscription receivable of
$70,542, which was later collected (see Note 6). The Company had originally put
(and transferred) 5,000,000 shares of its common stock to the investor. The
Company is to receive back 3,843,000 shares which were not sold due to certain
volume restrictions of the investment. The Company has presented these shares as
treasury shares with no cost.

In October 2001, the Company issued 250,000 shares of common stock to a
consultant for work performed in connection with stock fundraising activities.
As a result, no expense was recorded in the accompanying consolidated statements
of operations.

In December 2001, the holder of 2,500,000 options exercised his options to
purchase common stock for cash of $75,000.

During the year ended May 31, 2002, the Company received a reimbursement of
$14,637 from INR, representing certain expenses related to registering
securities in fiscal 2001. This reimbursement has been recorded to additional
paid-in capital in the accompanying consolidated statements of stockholders'
deficit.

Stock Options
-------------

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

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

                                                                            F-20

<PAGE>
<TABLE>
<CAPTION>


                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (Development Stage Companies)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

             For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

================================================================================


NOTE 5 - STOCKHOLDERS' DEFICIT, continued
-----------------------------------------

The following summarizes all transactions for the years ended May 31, 2002 and
2001 involving the Company's stock options:

During the year ended May 31, 2001, the Company granted consultants options to
purchase 150,000 shares of common stock at an exercise price of $0.13 per share
valued at $19,500 (based on the Black-Scholes option pricing model pursuant to
SFAS 123). All of these options vested immediately. In accordance with SFAS 123,
the Company recorded compensation expense of approximately $19,500 under general
and administrative expenses in the accompanying consolidated statement of
operations.

During the year ended May 31, 2002, the Company issued options to purchase
3,240,000 shares of its common stock to vendors and consultants of the Company.
The options are exercisable at $0.023 per share for 2,700,000 options, $0.028
per share for 500,000 options, and $0.056 per share for 40,000 options and
expire at various dates through May 2012. 500,000 of the options vest based on
certain achievement of agreement and marketing criteria, as defined (valued at
$15,000 based on the Black-Scholes option pricing model pursuant to SFAS 123,
which will be recognized when earned in future periods), and all other options
vest immediately. The Company recognized $56,400 as consulting expense under
general and administrative expenses in the accompanying consolidated statement
of operations related to these options (based on the Black-Scholes option
pricing model pursuant to SFAS 123).

During the year ended May 31, 2002, the Company issued options to purchase
47,800,000 shares of common stock to employees and stockholders of the Company,
vesting immediately. The options are exercisable at $0.023 per share for
1,200,000 options, $0.028 per share for 1,700,000 options, and $0.056 per share
for 44,900,000 options and expire at various dates through May 2012. No
compensation expense was recognized as the exercise price at the dates of grant
approximated the fair market value of the stock on those dates.

Stock option activity for the years ended May 31, 2002 and 2001, is as follows:

                                                      2002                                   2001
                                          ------------------------------          -----------------------------
                                                               Weighted                               Weighted
                                                               Average                                Average
                                            Options        Exercise Price           Options       Exercise Price
                                          -----------        -----------          -----------       -----------
<S>                                         <C>              <C>                   <C>              <C>
Outstanding, beginning of year              5,600,000        $      0.14           16,950,000       $      0.08
     Granted                               51,040,000               0.05              150,000              0.13
     Exercised                             (2,500,000)              0.03          (11,500,000)             0.04
                                          -----------        -----------          -----------       -----------

Outstanding, end of year                   54,140,000        $      0.06            5,600,000       $      0.14
                                          ===========        ===========          ===========       ===========

Exercisable, end of year                   53,640,000        $      0.06            5,600,000       $      0.14
                                          ===========        ===========          ===========       ===========

Weighted average fair value of
  options granted                                            $      0.05                            $      0.13
                                                             ===========                            ===========

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

                                                                                                           F-21
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (Development Stage Companies)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

             For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

================================================================================


NOTE 5 - STOCKHOLDERS' DEFICIT, continued
-----------------------------------------

The following summarizes information about stock options outstanding at May 31,
2002:

                                           Options Outstanding                              Options Exercisable
                        -----------------------------------------------------------    -------------------------------
                                                  Weighted
                                                  Average             Weighted                             Weighted
     Range of              Number of             Remaining             Average          Number of          Average
 Exercise                    Shares             Contractual           Exercise            Shares           Exercise
      Prices              Outstanding           Life (Years)            Price          Exercisable          Price
-------------------     -----------------     -----------------    ----------------    -------------     -------------

<S>                      <C>                        <C>             <C>                 <C>               <C>
 $0.010 - $0.028            3,900,000               9.2              $      0.025          3,400,000       $    0.024
 $0.050 - $0.056           46,990,000               8.9                     0.056         46,990,000            0.056
 $0.130 - $0.210            3,250,000               2.7                     0.206          3,250,000            0.206
                        -------------                                ------------      -------------       ----------

                           54,140,000                                $      0.063         53,640,000       $    0.063
                        =============                                ============      =============       ==========

Pro Forma Stock Option Information
----------------------------------

Pro forma information regarding net (loss) income is required by SFAS 123 and is
determined as if the Company had accounted for its employee stock options under
the fair value method pursuant to SFAS 123, rather than the method pursuant to
APB 25, as discussed in Note 2. The fair value of these options is estimated at
the date of grant based on the Black-Scholes options pricing model (the "Model")
with the following assumptions for the years ended May 31, 2002 and 2001,
respectively: risk free interest rate of 4.4% and 4.8%; expected dividend yield
of 0%; expected life of the options of 5 years; and volatility factor of the
expected market price of the Company's common stock of 150% and 190%.

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

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

                                                         2002            2001
                                                      -----------    -----------

Net (loss) income, as reported                        $  (972,073)   $   562,695

Additional compensation expense under SFAS 123         (1,482,000)          --
                                                      -----------    -----------

Pro forma net (loss) income                           $(2,454,073)   $   562,695
                                                      ===========    ===========

Pro forma net (loss) income per share                 $     (0.02)   $      --
                                                      ===========    ===========

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

                                                                            F-22
</TABLE>

<PAGE>


                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (Development Stage Companies)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

             For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

================================================================================


NOTE 6 - INVESTMENT AGREEMENT
-----------------------------

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

Under the agreement, in order to invoke a put right, the Company must provide
Swartz with at least 10 but not more than 20 business days advance notice of the
date on which the Company intends to exercise a put right and must indicate the
number of shares of common stock the Company intends to sell to Swartz. The
Company may also designate a maximum dollar amount of common stock (not to
exceed $2,000,000), which the Company will sell to Swartz during the put and/or
a minimum purchase price per common share at which Swartz may purchase shares
during the put. The number of shares of common stock sold to Swartz in a put may
not exceed the lesser of (i) 1,500,000 shares; (ii) 15% of the aggregate daily
reported trading volume of the Company's common shares, excluding certain block
trades, during the 20 business days after the date of a put notice, with certain
restrictions; (iii) 15% of the aggregate daily reported trading volume of common
shares during the 20 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.

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

During the years ended May 31, 2002 and 2001, the Company exercised put options
for 1,157,000 and 605,055 shares for $70,542 and $48,404 in cash, respectively
(see Note 5).

NOTE 7 - INCOME TAXES

Significant components of the Company's deferred tax assets and liabilities
consisted of the following at May 31, 2002:

         Deferred tax assets:
              Reserve for finance charges                     $      46,000
              Accrued compensation                                1,210,000
              Interest on related party advances                  1,296,000
              Net operating losses                                  861,000
              Valuation allowance                                (3,413,000)
                                                              -------------

                  Net deferred tax asset                      $        --
                                                              =============

The valuation allowance decreased by $265,000 during the year ended May 31,
2002. No current provision for income taxes for the year ended May 31, 2002 and
2001 is required, since the Company incurred net operating losses through May
31, 2002.

As of May 31, 2002, the Company had net operating loss carryforwards of
approximately $2,700,000 for federal income tax reporting purposes available to
offset future taxable income, which expire through 2017.

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

                                                                            F-23

<PAGE>
<TABLE>
<CAPTION>


                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (Development Stage Companies)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

             For The Period May 4, 1982 (Date of Inception) Through May 31, 2002

================================================================================


NOTE 8 - 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, 2002, the
Company maintained short-term advances from affiliates of $4,311,648 which are
due on demand. Accrued interest is attributed to and included in the outstanding
balance as incurred. The advances bear interest at 9% per annum on any
outstanding balance. Interest expense on the advances was $369,775, and $338,100
for the years ended May 31, 2002 and 2001, respectively.

The Company maintains its primary place of business in facilities owned by the
Chief Executive Officer, for which it is charged rent expense (see Note 4).

NOTE 9 - GAIN ON WRITE-DOWN OF ACCOUNTS PAYABLE
-----------------------------------------------

During fiscal year 2001, the Company recognized a gain on write-down of accounts
payable of $1,405,232, since the respective liabilities were no longer
enforceable against the Company.

NOTE 10 - EARNINGS PER SHARE
----------------------------

The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations for the years ended May 31,
2002 and 2001.

                                                                             2002                 2001
                                                                        -------------        -------------

     Numerator for basic and diluted earning per share:

     <S>                                                               <C>                  <C>
     Net (loss) income contributed to common stockholders               $    (972,073)       $     562,695
                                                                        =============        =============

     Denominator for basic and diluted earnings per share:
         Weighted average shares (basic)                                $ 151,225,693        $ 140,897,179
         Common stock equivalents                                                --              1,637,931
                                                                        -------------        -------------

         Weighted average shares (dilutive)                             $ 151,225,693        $ 142,535,110
                                                                        =============        =============

     Basic and diluted earnings per share -
         Loss per common share                                          $       (0.01)       $        --
                                                                        =============        =============


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

                                                                                                      F-24
</TABLE>


<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: August 28, 2002

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:   August 28, 2002
-----------------------------
     Gerald N. Kern, Chairman and
     Chief Executive Officer

/s/  Steven I. Kern                          Dated:   August 28, 2002
-----------------------------
     Steven I. Kern, Director, President,
     Chief Operating Officer and
     Chief Financial Officer

/s/  Cynthia S. Kern                         Dated:   August 28, 2002
-----------------------------
     Cynthia S. Kern, Vice Chairman,
     Director and Secretary

/s/  Harry Hall                              Dated:   August 28, 2002
-----------------------------
     Harry Hall, Director

/s/  Lester F. Goldstein                     Dated:   August 28, 2002
-----------------------------
     Lester F. Goldstein, Director

                                       15