**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      DC 20549








**FORM
      10-KSB**








(Mark
      One)


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


For
      the
      fiscal year ended October 31, 2002





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


For
      the
      transition period from _______________ to
      _______________





Commission
      file number 0-27119


**MEDI-HUT
                CO., INC.**(Name
                of small business issuer in its
                charter)








**Nevada**
            **22-2436721**(State
                or other jurisdiction of
            (I.R.S.
                Employer Identification No.)incorporation
                or organization)








215
                Morris Avenue, Spring Lake, New Jersey
            07762(Address
                of principal executive offices)
            (Zip
                Code)







Issuer’s
      telephone number: (732)
      919-2799





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





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





Common
                Stock, par value $0.001(Title
                of class)





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


**Table
          of Contents**





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




Revenues
      for the fiscal year ended October 31, 2002: Revenues for the fiscal year ended
      October 31, 2002 are not determinable due to incomplete and unverifiable
      information for such year. See Note contained on page 1 of this
      report.




The
      aggregate market value of the shares of the Registrant’s common stock, par value
      $0.001 per share, held by non-affiliates of the Registrant, as of October 31,
      2005, was approximately $984,000. The Registrant has no other class of capital
      stock outstanding.




As
      of
      October 31, 2005, 21,276,090 shares of the Registrant’s common stock were
      outstanding .




DOCUMENTS
      INCORPORATED BY REFERENCE




None.




Transitional
      Small Business Disclosure Format (check one): Yes o No
x




SPECIAL
      NOTE REGARDING FORWARD-LOOKING STATEMENTS




Certain
      information included in this annual report on Form 10-KSB and other filings
      of
      the Registrant under the Securities Act of 1933, as amended (the “Securities
      Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
      as well as information communicated orally or in writing between the dates
      of
      such filings, contains or may contain “forward-looking statements” within the
      meaning of the Private Securities Litigation Reform Act of 1995, Section 27A
      of
      the Securities Act and Section 21E of the Exchange Act. Such statements are
      subject to certain risks, trends and uncertainties that could cause actual
      results to differ materially from expected results. Among these risks, trends
      and uncertainties are economic conditions generally and in the industries in
      which the Registrant may participate; competition within the Registrant’s chosen
      industry, including competition from much larger competitors; technological
      advances; available capital; and failure by the Registrant to successfully
      develop products and business relationships.




In
      some
      cases, forward-looking statements can be identified by terminology such as
      “may,”“will,”“should,”“could,”“expects,”“plans,”“anticipates,”“believes,”“estimates,”“predicts,”“potential”
      or “continue” or the negative of such terms or other comparable terminology.
      Although the Registrant believes that the expectations reflected in the
      forward-looking statements contained herein are reasonable, the Registrant
      cannot guarantee future results, levels of activity, performance or
      achievements. Moreover, neither the Registrant, nor any other person assumes
      responsibility for the accuracy and completeness of such statements. The
      Registrant is under no duty to update any of the forward-looking statements
      contained herein after the date of this annual report on Form 10-KSB .




**Table
          of Contents**




**MEDI-HUT
      CO., INC.**





**INDEX
      TO FORM 10-KSB**


**PART
                  I**Item
                  1.
              Description
                  of Business
              1Item
                  2.
              Description
                  of Property
              28Item
                  3.
              Legal
                  Proceedings
              29Item
                  4.
              Submission
                  of Matters to a Vote of Security
                  Holders
              35**PART
                  II**Item
                  5.
              Market
                  for Common Equity and Related Stockholder
                  Matters
              36Item
                  6.
              Management’s
                  Discussion and Analysis or Plan of
                  Operation
              39Item
                  7.
              Financial
                  Statements
              46Item
                  8.
              Changes
                  In and Disagreements With Accountants on Accounting
                  and Financial Disclosure
              46**PART
                  III**Item
                  9.
              Directors,
                  Executive Officers, Promoters and Control
                  Persons; Compliance with Section 16(a) of the Exchange
                  Act
              48Item
                  10.
              Executive
                  Compensation
              51Item
                  11.
              Security
                  Ownership of Certain Beneficial Owners and
                  Management and Related Stockholder Matters
              59Item
                  12.
              Certain
                  Relationships and Related
                  Transactions
              67Item
                  13.
              Exhibits
                  and Reports on Form 8-K
              68Item
                  14.
              Controls
                  and Procedures
              68SIGNATURES
              69


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          of Contents**





*NOTE* *:
      This annual report on Form 10-KSB for the fiscal year ended October 31, 2002
      is
      being prepared and filed by the Company’s management as of October 31, 2005. The
      information presented herein is for and as of the fiscal year ended October
      31,
      2002, unless otherwise indicated. On March 21, 2003, Medi-Hut terminated the
      employment of its four senior officers due to corporate mismanagement in the
      form of accounting irregularities and securities fraud during the fiscal years
      ended October 31, 2002 and 2001. At the time of their termination, all of these
      former officers were the subject of an investigation by the United States
      Department of Justice and three were the subject of an investigation by the
      Securities and Exchange Commission. On August 19, 2003, three of the former
      officers pled guilty in an action brought by the United States Department of
      Justice to conspiring to inflate the revenue and earnings of the Company and
      for
      lying to investigators and the fourth former officer pled guilty to obstruction
      of justice. Also on August 19, 2003, the Company, as well as three of the former
      officers who were under investigation by the Securities and Exchange Commission,
      agreed to a consent decree with the Securities and Exchange Commission. As
      a
      result of the actions of the former officers of Medi-Hut, certain portions
      of
      this report have been omitted where the information was incomplete or could
      not
      be adequately verified by the Company’s current management and/or the Company’s
      independent auditors. Medi-Hut’s current management and its Board of Directors
      are continuing to work aggressively to bring the Company into compliance with
      the requirements of the Securities and Exchange Commission and other regulatory
      bodies.*




**PART
      I**




**Item
              1.**
            **Description
                of Business**




**General**




Medi-Hut
      Co., Inc. (“Medi-Hut” or the “Company”) is a Nevada corporation that was
      headquartered in Wall Township, New Jersey until May 2004 when it relocated
      its
      headquarters to Spring Lake, New Jersey. Medi-Hut
      was incorporated in the State of New Jersey on November 29, 1982. On January
      28,
      1998, Medi-Hut entered into an Agreement and Plan of Reorganization with
      Indwest, Inc., a Utah corporation, whereby Medi-Hut changed its domicile to
      the
      State of Utah and became subject to the reporting requirements of the Securities
      Exchange Act of 1934, as amended (the “Exchange Act”). On February 2, 1998,
      Medi-Hut completed a second change of domicile transaction and became a Delaware
      corporation, and, on October 31, 2001, completed a third change of domicile
      transaction and became a Nevada corporation.




During
      the fiscal year ended October 31, 2002, Medi-Hut’s business included the
      distribution of over the counter medical devices and supplies, such as condoms
      and alcohol preparation pads, and generic and name brand pharmaceuticals. The
      Company’s business for the fiscal year ended October 31, 2002 also included the
      sale of hormone replacement therapy drugs (Syntest Double-Strength and
      Half-Strength), which were manufactured and supplied to the Company by a third
      party manufacturer. The Company’s products generally were sold by distributors
      or wholesalers to pharmacies or directly to customers through mail
      order.




During
      the fiscal year ended October 31, 2002, Medi-Hut continued to develop and
      commenced manufacturing the patented Elite Safety Syringe, a passive anti-stick
      safety syringe. For the fiscal year ended October 31, 2002, there were
      insignificant sales of the Elite Safety Syringe due to development,
      manufacturing and marketing issues which delayed the introduction of the Elite
      Safety Syringe to the United States market. See “Principal Products - Elite
      Safety Syringe.” In addition, on February 25, 2002, the Company acquired its
      other safety syringe product, the Solo-SafeTM Safety Syringe, which had never
      been sold and was in early development at the time of the acquisition. See
      “Principal Products - Solo-SafeTM Safety Syringe.”




-1-
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          of Contents**




In
      March
      2003, the Company exited from the business of selling branded and generic
      pharmaceuticals to wholesalers due to the low margins attributed to such sales.
      In addition, in March 2003, the Company was unable to continue the sale of
      Syntest, its hormone replacement therapy product line, due to a dispute with
      the
      manufacturer of and contract sales representative for such product line. This
      dispute resulted in the commencement of litigation by the Company against the
      manufacturer and contract sales representative as well as other related
      litigation involving the Company. See “Item 3. Legal Proceedings - Syntest
      Litigation.”




From
      March 2003 through September 2004, the only recurring revenue generated from
      the
      Company’s operations was from the continuing sale of condoms, alcohol preps and
      disposable clinical supplies to physicians and wholesalers. In October 2004,
      the
      Company stopped selling these products due to reduced profit margins and the
      decline of the customer base.




During
      May 2004, the Company’s current management team completed its evaluation of the
      Solo-SafeTM Safety Syringe. Due to the early development stage of the product,
      the fact that a manufacturing prototype had not been created and the cost
      associated with developing the product as compared to the overall market
      opportunity, the Company decided to stop any further development of this
      product.




In
      addition, during December 2004, the Company completed its evaluation of the
      Elite Safety Syringe product line. As a result of this evaluation, the Company’s
      current management decided not to pursue any further development or marketing
      of
      the Elite Safety Syringe due to the cost associated with correcting the product
      design, the cost associated with establishing sufficient manufacturing
      capabilities to support a market launch and the lack of a market for safety
      syringes sufficient to support the product launch. See “Principal Products -
      Elite Safety Syringe” and “Manufacturing; Principal Suppliers.”




Currently,
      the Company does not have any recurring revenue from the sale of products.
      The
      Company is in the process of identifying new products for acquisition and
      development. However, no assurances can be given that the Company will have
      the
      financial and other resources necessary for it to acquire and develop any new
      product. See “Strategy for Business Development.”




**Strategy
      for Business Development**




The
      Company’s strategy for business development focuses on the acquisition, through
      licensing or purchasing, of technologies or products that are sold in a
      specialty or niche market. Technologies or products of interest include, but
      are
      not limited to, medical devices, pharmaceuticals and other proprietary
      technologies or patented products. Specialty or niche-market technologies or
      products, as opposed to commodities, generally offer greater margins. These
      products are distributed through specialty distributor networks or manufacturer
      representatives to the original equipment manufacturer (“OEM”) market, supplier
      and provider markets and to the general marketplace.




-2-
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          of Contents**




In
      an
      effort to implement its acquisition strategy, the Company has begun to identify
      and review manufacturers of specialty technologies or products. The companies
      under review generally have sole product lines or orphan products with annual
      sales of less than $5 million. The Company believes that the technologies or
      products generally offered by these companies are not attractive to the larger
      companies because they do not represent opportunities that would be material
      to
      those companies. Many of the technologies and products suffer from lower sales
      because of inadequate distribution channels, lack of companion products or
      insufficient capital.




Following
      is a listing of criteria being utilized by the Company in identifying and
      reviewing potential technology or product acquisitions:




·
            Whether
                the technology or product is a specialty or niche-market product
                which is
                distributed through specialty
                distributors.




·
            Whether
                the technology or product is unique or
                patented.




·
            Whether
                the technology or product has an attractive gross margin, usually
                in
                excess of 35%.




·
            Whether
                the prospective seller is receptive to receiving equity as part of
                the
                purchase price.




·
            Whether
                the market for the technology or product is expanding, but not to
                such a
                degree as to attract larger manufacturers or result in the technology
                or
                product achieving commodity status.




·
            Whether
                the Company can access marketing channels to sell and distribute
                the
                technology or product.




The
      Company anticipates funding its acquisition strategy and the development of
      its
      business through equity and/or debt financing and favorable settlements or
      judgments in the pending Syntest litigation and the Company’s litigation against
      its former accounting firm, Rosenberg, Rich, Baker, Berman & Company. See
“Item 3. Legal Proceedings - Syntest Litigation; Litigation Against Former
      Accounting Firms.”




The
      Company has not entered into any definitive agreements to acquire any
      technologies or products and no assurances can be given that the Company will
      obtain favorable settlements or judgments in its pending litigations or
      otherwise have the financial and other resources necessary for it to acquire
      any
      technologies or products or otherwise implement any part of its business
      development strategy. In addition, no assurances can be given that if the
      Company effects any technology or product acquisition, or implements any other
      part of its business development strategy, such acquisition or business
      development will be profitable.







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          of Contents**





**Company
      Developments**




*SEC
      Investigation*




On
      February 21, 2002, the Securities and Exchange Commission (the “SEC”) commenced
      an investigation and review of Medi-Hut, which resulted in the commencement
      of
      an action by the SEC on August 19, 2003 against Medi-Hut and the Company’s
      former President and Chief Executive Officer, Joseph A. Sanpietro, former Chief
      Financial Officer, Laurence M. Simon, and former Vice President of Sales,
      Lawrence P. Marasco. Contemporaneous with the commencement of the SEC action,
      the Company, without admitting or denying the allegations of the complaint,
      consented to a final judgment against it and is permanently restrained from
      making any untrue or misleading disclosures, must make and keep accurate books,
      records and accounts and maintain a system of internal accounting control
      sufficient to ensure for fair and accurate financial disclosure. See “Item 3.
      Legal Proceedings - SEC Investigation.”




*Incomplete
      Periodic Reports*




As
      explained elsewhere in this report, Medi-Hut was subjected to corporate
      mismanagement by its former management team in the form of accounting
      irregularities and securities fraud during the fiscal years ended October 31,
      2002 and 2001, which ultimately resulted on August 19, 2003 in the guilty pleas
      by the four senior officers of prior management to an action brought by the
      United States Department of Justice. Three of these officers also entered into
      consent decrees with the SEC on the same date. The current management of the
      Company has concluded that the financial statements and other financial
      information disclosed in the Company’s quarterly reports on Forms 10-Q and
      10-QSB filed with the SEC in 2002 and 2001, respectively, and the Company’s
      annual report on Form 10-KSB for the fiscal year ended October 31, 2001 cannot
      be relied upon due to the Company’s inability to adequately verify the financial
      information disclosed in these reports due to incomplete or missing data and
      other information. In conjunction with this filing, the Company has amended
      these reports by removing all of the information contained therein, including
      all financial disclosures and discussion with respect thereto. In addition,
      as a
      result of the Company’s inability to verify the financial performance of the
      Company for fiscal 2002, this annual report on Form 10-KSB for the fiscal year
      ended October 31, 2002, contains limited financial disclosure and analysis.
      See
“Item 6. Management’s Discussion and Analysis or Plan of Operation” and “Item 7.
      Financial Statements.” Consequently, by filing incomplete reports with the SEC,
      the Company could be found in violation of the final judgment entered against
      it
      on August 19, 2003 as well as the general rules and regulations of the Exchange
      Act. See “Item 3. Legal Proceedings - SEC Investigation; Incomplete Periodic
      Reports.”




*Class
      Action Lawsuits*




Beginning
      in February 2002, the Company and certain of its former officers and directors
      were named in an aggregate of eleven class action lawsuits filed in the United
      States District Court for the District of New Jersey. The lawsuits alleged
      that,
      among other contentions, the Company and certain of its former officers and
      directors failed to disclose related party transactions between the Company
      and
      Lawrence P. Marasco, the Company’s former Vice President of Sales, in its
      periodic reports filed with the SEC. The lawsuits against the Company and
      certain of its officers and directors were consolidated on January 13,
      2003.




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On
      August
      18, 2003, the Company reached an agreement to settle the consolidated class
      action lawsuits, which was subject to the approval of the United States District
      Court for the District of New Jersey. As part of the settlement, the Company
      agreed to pay $400,000 in cash to the plaintiffs and issue to them 861,990
      shares of Medi-Hut common stock (fair value of approximately $129,300 as of
      August 18, 2003), which equaled 6% of Medi-Hut’s issued and outstanding shares
      of common stock on the date the settlement agreement was reached. The United
      States District Court for the District of New Jersey issued a Preliminary
      Approval Order on January 12, 2004 and issued its final approval of the
      settlement on May 3, 2004. See “Item 3. Legal Proceedings - Class Action
      Lawsuits.”




*New
      Management*




On
      February 21, 2003 the Company entered into a Consulting Services Agreement
      with
      Century Capital Associates LLC (“Century Capital”) whereby Century Capital would
      provide general corporate and strategic business advisory services to the
      Company. The Consulting Services Agreement was amended and restated as of
      February 1, 2005. See “Item 10. Executive Compensation - Consulting Services
      Agreement.” On March 21, 2003, David R. LaVance of Century Capital replaced
      Joseph A. Sanpietro as the President and Chief Executive Officer of Medi-Hut
      and
      Thomas S. Gifford of Century Capital replaced Laurence M. Simon as the Chief
      Financial Officer of Medi-Hut. Mr. LaVance and Mr. Gifford also were elected
      to
      the Company’s Board of Directors. In addition, at such time, Vincent J.
      Sanpietro, the Chief Operating Officer of Medi-Hut and Joseph Sanpietro, Jr.,
      an
      employee of Medi-Hut, were terminated by the Company. Shortly thereafter, Joseph
      A. Sanpietro and Vincent J. Sanpietro resigned from the Company’s Board of
      Directors. See “Guilty Pleas of Former Offices and Directors” and “Item 3. Legal
      Proceedings - Litigation Against Certain Former Officers and Directors and
      Others.”




*Repayment
      of Line of Credit*




On
      February 26, 2002 the Company entered into a loan agreement (the “Loan
      Agreement”) with PNC Bank. Pursuant to the Loan Agreement, the Company secured a
      $750,000 note (the “Note”) under which the Company was permitted to draw-down
      money until February 1, 2003. Interest on the outstanding balance of the Note
      was charged at prime. In addition, the Company secured a $2,000,000 line of
      credit (“Line of Credit”) at a rate of prime plus .75% for a term of one year
      ending February 1, 2003. Pursuant to the terms of the Security Agreement entered
      into between the Company and PNC, both the Note and the Line of Credit were
      secured by all of the personal property of the Company including cash, accounts
      receivable, inventory, equipment and general intangibles. The Company’s only
      draw down on the Line of Credit occurred on November 13, 2002. On December
      13,
      2002, the Company was notified by PNC that it was in default on the Note and
      the
      Line of Credit, and in February 2003, it was notified that PNC would not extend
      the expiration date of the Note or the Line of Credit, at which time the
      outstanding balance on the Line of Credit was $1,500,000. As a result, in
      February and March 2003 the Company was required to pay to PNC $1,500,000
      related to the Line of Credit and $159,404 related to a letter of credit and
      certain fees. The Company currently does not have a lending relationship with
      a
      commercial bank.







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*NASDAQ
      Delisting*




On
      March
      21, 2003, trading of Medi-Hut’s shares of common stock on the NASDAQ SmallCap
      Market was halted. The Company’s common stock was later delisted from the NASDAQ
      SmallCap Market on March 28, 2003 for, among other things, failure by the
      Company to file with the SEC its annual report on Form 10-KSB for the fiscal
      year ended October 31, 2002. See “Item 3. Legal Proceedings - NASDAQ
      Delisting.”




Since
      March 21, 2003, no established public trading market has existed for Medi-Hut’s
      common stock and shares of Medi-Hut’s common stock are neither listed on any
      national securities exchange, nor presently traded on any public stock exchange
      or in any other public market. Although quotations for shares of Medi-Hut’s
      common stock may be obtained through the over-the counter (“OTC”) “Pink Sheets”
      maintained by Pink Sheets LLC (a centralized quotation service that collects
      and
      publishes market maker quotes for OTC securities), because secondary market
      activity for shares of Medi-Hut’s common stock has been limited and sporadic,
      such quotations may not accurately reflect the price or prices at which
      purchasers or sellers would be currently willing to purchase or sell shares
      of
      Medi-Hut common stock. See “Item 5. Market for Common Equity and Related
      Stockholder Matters.”




*New
      Independent Auditors; Deficient Periodic Report*




On
      March
      28, 2003, the Company dismissed Rosenberg, Rich, Baker, Berman & Company
      (“Rosenberg”) as its independent auditors. The Company reported the dismissal of
      the Rosenberg firm as its independent auditors in a current report on Form
      8-K,
      dated March 28, 2003. In that current report on Form 8-K, the Company stated
      that in connection with its audits for the fiscal years ended October 31, 2002
      and 2001, respectively, and during any subsequent periods preceding the date
      of
      dismissal, there were no disagreements with Rosenberg in any matter regarding
      accounting principles or practices, financial statement disclosure, or auditing
      scope or procedure. Pursuant to the procedure outlined in SEC Regulation S-K,
      Item 304, the Company amended its current report on Form 8-K, dated March 28,
      2003, to include a letter from Rosenberg in which the accounting firm disagreed
      with the Company’s statements. On April 8, 2003, the SEC provided comments to
      the Company with respect to the disclosures in the Company’s current report on
      Form 8-K, dated March 28, 2003 and amended on April 4, 2003. Current management
      could not adequately respond to the SEC’s comments due to the incomplete and
      unverifiable information left behind by prior management. Consequently, the
      Company’s current report on Form 8-K, dated March 28, 2003 and amended on April
      4, 2003, has been deemed deficient by the SEC. Although the SEC has not
      commenced an enforcement action against the Company for such deficient current
      report on Form 8-K, no assurance can be given that the SEC will not do so in
      the
      future. Any such action by the SEC could have significant adverse consequences
      to the Company. See “Item 8. Changes In and Disagreements With Accountants on
      Accounting and Financial Disclosure.” On January 9, 2004, the Company filed an
      action against Rosenberg for alleged negligence and accounting malpractice.
      See
“Item 3. Legal Proceedings - Actions Against Former Accounting
      Firms.”




On
      May
      15, 2003, the Company engaged the accounting firm Eisner, LLP (“Eisner”), as its
      independent auditors to perform an audit of the Company’s financial statements
      as of the fiscal years ended October 31, 2002 and October 31, 2001. Since that
      time, the Company has made exhaustive efforts to complete its audits of the
      2002
      and 2001 financial statements. As a result of these efforts, management
      determined that due to incomplete records, among other issues, they could not
      file complete audited financial statements for these periods. However,
      management determined that it would be able to file an audited balance sheet
      as
      of October 31, 2002. Further, management intends to file the required interim
      period and annual audited financial statements up to and including the fiscal
      year ended October 31, 2005 as soon as practical.




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On
      March
      3, 2005, the Company replaced Eisner as its independent auditors with the
      accounting firm, Weiser LLP (“Weiser”). Management believed that it was in the
      best interest of the Company to change auditors in order to facilitate the
      completion of the audit of the Company’s balance sheet as of October 31, 2002.
      The change in auditing firms was reviewed and recommended by the Company’s Audit
      Committee and approved by the Company’s Board of Directors. The Company reported
      the dismissal of the Eisner firm as its independent auditors in a current report
      on Form 8-K, dated March 3, 2005. In that current report on Form 8-K, the
      Company stated that in connection with its audits as of and for the fiscal
      years
      ended October 31, 2002 and 2001, respectively, and during any subsequent interim
      periods preceding the date of dismissal, there were no disagreements with Eisner
      on any matter regarding accounting principles or practices, financial statement
      disclosure, or auditing scope or procedure. In addition, during its engagement
      by the Company, Eisner did not issue any report on the financial statements
      or
      review any financial statements of the Company.




Pursuant
      to the procedure outlined in SEC Regulation S-B, Item 304, the Company included
      in the current report on Form 8-K a letter from Eisner in which the accounting
      firm agreed with the Company’s statements that there were no disagreements
      between the Company and Eisner on any matter regarding accounting principles
      or
      practices, financial statement disclosure, or auditing scope or
      procedure.




*New
      Board Members*




In
      May
      2003, Salvatore J. Badalamenti, John A. Moore and Richard E. Otto joined James
      G. Aaron, Thomas S. Gifford and David R. LaVance on the Board of Directors
      of
      Medi-Hut. At such time, James G. Aaron, a member of the Board since April 3,
      2001, agreed to remain on the Board of Directors for the primary purpose of
      assisting the transition of management. After assisting the transition of
      management, effective February 5, 2004, Mr. Aaron resigned from the Board.
      On
      January 1, 2005, due to various business and personal commitments, Salvatore
      J.
      Badalamenti resigned from the Board. See “Item 9. Directors, Executive Officers,
      Promoters and Control Persons; Compliance with Section 16(a) of the Exchange
      Act
      - Current Officers and Directors.”




*Syntest
      Litigation*




On
      May
      12, 2003, Medi-Hut commenced an action in the United States District Court
      for
      the Eastern District of New York against Syntho Pharmaceuticals Inc. (“Syntho”)
      and its president, Muhammed Malik (collectively, the “Syntho Group”),
      Breckenridge Pharmaceutical Inc. (“Breckenridge”) and its principal owner, Larry
      Runsdorf (collectively, the “Breckenridge Group”), Scott Schrader (“Schrader”)
      and his affiliates, namely Schrader & Associates, LLC (“Schrader
      Associates”), Bluegrass Drug LLC (“Bluegrass”) and Medpharm Corporation
      (“Medpharm”) (collectively, the “Schrader Group”) relating to the Company’s
      exclusive right to distribute the hormone replacement therapy drug, Syntest,
      under an agreement with Syntho which expires no earlier than November 2006
      (the
“Syntest Agreement”). In its complaint, the Company alleged, among other things,
      that Syntho permitted Breckenridge, Medpharm and Bluegrass to distribute Syntest
      in violation of the Syntest Agreement and that Schrader and Schrader Associates,
      which had been appointed by the Company as a broker with respect to sales of
      Syntest to drug wholesalers, chain drug stores and managed care companies
      offered discounts, incentives and rebates to customers of the Company without
      the Company’s authorization.




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In
      related litigations, on April 18, 2003, the members of the Schrader Group
      commenced three separate actions in the State Court of Kentucky against the
      Company alleging, among other things, that the Company breached the brokerage
      agreement entered into by the Company and members of the Schrader Group, and,
      on
      May 12, 2003, Breckenridge commenced an action against the Company in the United
      States District Court for the Southern District of Florida, alleging that the
      Company was interfering with plaintiff’s alleged exclusive rights to distribute
      Syntest. Breckenridge’s action was later moved to the United States District
      Court for the Eastern District of New York.




In
      June
      2003, the Syntho Group filed an answer to the Company’s complaint which
      contained counterclaims against the Company for alleged: (1) breach of contract,
      (2) failure to pay for product, (3) tortious interference with Syntho’s
      agreement with Breckenridge, and (4) conversion of property.




On
      April
      21, 2004, the Company entered into a settlement agreement and limited release
      with the Schrader Group. Pursuant to this agreement, the Company and the
      Schrader Group agreed to dismiss with prejudice the actions which were pending
      in the United States District Court for the District of Kentucky and the actions
      against each other which were pending in the United States District Court for
      the Eastern District of New York. As part of the settlement reached by the
      Company and the Schrader Group, the Schrader Group paid to the Company a cash
      payment of $375,000. In addition, the parties released each other from certain
      claims arising out of the distribution and sale of Syntest.




On
      October 17, 2005, the Company and Breckenridge entered into a purchase and
      settlement agreement pursuant to which the Company sold its distribution and
      other rights and business with respect to the hormone replacement drug, Syntest,
      to Breckenridge. In consideration for the sale of such rights and the other
      benefits provided under the purchase and settlement agreement,  Breckenridge
      agreed to pay the Company an aggregate of $1,000,000 as follows: (1) $250,000
      was paid shortly after the execution of the purchase and settlement agreement,
      and (2) $50,000 will be paid on the first day of each month for a 15 month
      period commencing on November 1, 2005 and ending on January 1, 2007. Further,
      pursuant to the settlement agreement, the Company and Breckenridge dismissed
      their actions against each other and released each other from any further claims
      arising out of the distribution and sale of Syntest, except as provided under
      the purchase and settlement agreement. Pursuant to the purchase and settlement
      agreement, the Company has reserved all of its rights to its claims for damages
      against the Syntho Group that were incurred by the Company as a result of the
      alleged breach by the Syntho Group of the Syntho Agreement and other wrongful
      actions by the Syntho Group.




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The
      Company is continuing its action against the Syntho Group in the Syntest
      litigation pending in the United States District Court for the Eastern District
      of New York. See “Item 3. Legal Proceedings - Syntest Litigation.”




*Guilty
      Pleas of Former Officers and Directors*




On
      August
      19, 2003, Joseph A. Sanpietro, Laurence M. Simon and Lawrence P. Marasco pled
      guilty to conspiracy to inflate the revenue and earnings of the Company and
      lying to investigators. In addition, Vincent J. Sanpietro, the Company’s former
      Chief Operating Officer and Secretary and a former director, pled guilty to
      obstruction of justice. See “Item 3. Legal Proceedings - Litigation Against
      Certain Former Offices and Directors and Others.”




*Litigation
      Against Certain Former Officers and Directors and Others*




On
      December 4, 2003, Medi-Hut commenced litigation in the Superior Court of New
      Jersey against certain of its former officers and directors, Healthgen
      Distributors, Inc. (formerly known as Larval Corp.), Kinray, Inc. and Santi
      Greco, an officer of Kinray, Inc. In its complaint, Medi-Hut alleged that Joseph
      A. Sanpietro, a former director and the former President and Chief Executive
      Officer of the Company, Vincent J. Sanpietro, a former director and the former
      Chief Operating Officer and Secretary of the Company, Laurence M. Simon, the
      former Chief Financial Officer of the Company, and Lawrence P. Marasco, the
      former Vice President of Sales of the Company, caused the Company to suffer
      significant damage and incur substantial costs by, among other things, engaging
      in a scheme to overstate Medi-Hut’s revenues and earnings through fraudulent
      accounting practices. In addition to the foregoing, the Company alleged in
      its
      complaint that these former officers and directors, with the assistance of
      Larval Corp., an entity controlled by Mr. Marasco, Kinray, Inc., a New York
      based pharmaceutical distributor, and Santi Greco, an officer of Kinray, Inc.,
      committed violations of state and federal laws prohibiting forgery and
      fraudulent practices and otherwise participated in “racketeering activity” as
      that term is defined in 18 U.S.C .
      §1961(1) and N.J.S.A .
      2C:41-1. Further, the Company sought payment of a promissory note in the
      principal amount of $575,000 issued to it by former officer and director, Robert
      S. Russo, plus all accrued interest thereon.




On
      February 4, 2004, the Company entered into a settlement and release agreement
      with Vincent J. Sanpietro. In exchange for a one time payment of $20,000, the
      return of 554,800 shares of the Company’s common stock and certain other
      non-monetary considerations, the Company agreed to discharge its claims against
      Mr. Sanpietro.




On
      April
      14, 2004, the Company entered into a settlement and release agreement with
      Joseph A. Sanpietro. In exchange for a one-time payment of $60,000 and the
      return of 3,179,200 shares of the Company’s common stock and certain other
      non-monetary consideration, the Company agreed to discharge its claims against
      Mr. Sanpietro.




On
      May
      14, 2004, the Company entered into a settlement and release agreement with
      Robert S. Russo. In exchange for a one-time payment of $300,000, the return
      of
      125,000 shares of the Company’s common stock and other non-monetary
      consideration, the Company agreed to discharge its claims against Mr.
      Russo.




On
      July
      6, 2004, the Company amended the complaint against certain of its former
      officers and directors and others and commenced litigation against Muhammed
      Malik, Intermax Pharmaceuticals, Inc. and Syntho. In its complaint, Medi-Hut
      alleges that Muhammed Malik, in his capacity as a consultant to the Company
      and
      as president of Intermax Pharmaceuticals, Inc. and Syntho, provided substantial
      assistance to the former officers and certain former directors of the Company
      in
      carrying out the scheme to overstate Medi-Hut’s revenues and earnings through
      fraudulent accounting practices and committed violations of state and federal
      laws prohibiting forgery and fraudulent practices and otherwise participated
      in
“racketeering activity” as that term is defined in 18 U.S.C .
      §1961(1) and N.J.S.A .
      2C:41-1. The defendants in this action have counterclaimed against the Company
      for alleged: (1) breach of contract, (2) breach of implied covenant of good
      faith and fair dealing, (3) fraud, (4) misrepresentation, (5) fraudulent
      concealment, (6) violation of the New Jersey Consumer Fraud Act, (7) conversion,
      and (8) failure to pay for delivered product.




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On
      September 16, 2004, the Company entered into a settlement agreement and release
      with Lawrence P. Marasco. As part of the settlement, Mr. Marasco paid to the
      Company the sum of $60,000, returned 405,000 shares of the Company’s common
      stock and agreed to provide certain other non-monetary
      consideration.




On
      November 29, 2004, the Company entered into a settlement agreement and release
      with Laurence M. Simon. In exchange for the return of 30,000 shares of the
      Company’s common stock and certain other non-monetary consideration, the Company
      agreed to dismiss its claims against Mr. Simon.




On
      January 19, 2005, the Company entered into a settlement agreement and release
      in
      connection with its action against Kinray, Inc. and its officer, Santi
      Greco.  Kinray,
      Inc. agreed to pay to the Company the sum of $300,000. This settlement was
      entered into without any admission of liability or any inferences of wrongdoing
      by any settling party. “Item 3. Legal Proceedings - Litigation Against Certain
      Former Officers and Directors and Others.”




*Litigation
      Against Former Accounting Firms*




On
      January 9, 2004, the Company commenced litigation in the Superior Court of
      New
      Jersey against two of its former accounting firms, Rosenberg, which served
      as
      Medi-Hut’s independent auditor and principal accounting firm from February 1998
      to March 2003, excluding a three week period in early 2002, and Koenig, Russo
      & Associates (“Koenig”), an accounting consultant engaged by Medi-Hut to
      review various tax documents, financial statements and filings by the Company
      with the SEC. Robert S. Russo, a former officer and director of Medi-Hut and
      a
      defendant in a litigation commenced by the Company against certain of its former
      officers and directors on December 4, 2003, is a principal of Koenig. In its
      complaint, Medi-Hut alleged, among other things, that Rosenberg and Koenig,
      through their negligence and accounting malpractice, caused the Company to
      suffer significant damage and incur substantial costs.




The
      Company is seeking compensatory damages, consequential damages and punitive
      damages, and the costs of the litigation, including approximately $800,000
      incurred by the Company for legal costs and expenses associated with actions
      by
      the SEC and others against the Company and certain of its former officers and
      directors.




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On
      May
      14, 2004, in connection with the settlement of the Company’s separate action
      against Robert S. Russo in the Superior Court of New Jersey (See “Litigation
      Against Certain Former Officers and Directors and Others”), the Company entered
      into a settlement and release agreement with Koenig. In exchange for certain
      non-monetary consideration, the Company agreed to discharge its claims against
      Koenig. See “Item 3. Legal Proceedings - Litigation Against Former Accounting
      Firms.”




*Lexington
      Insurance Lawsuit*




On
      April
      14, 2004, a complaint was served on Medi-Hut by National Union Fire Insurance
      Co. (“National Union”) in the United States District Court for the District of
      New Jersey. In this action, National Union alleged that the Company owed
      National Union $235,000, representing unpaid insurance premiums. On January
      19,
      2005, the complaint was amended by National Union in order to properly state
      the
      name of the plaintiff as Lexington Insurance Company (“Lexington”).




On
      March
      10, 2005, the Company filed a third party complaint against Universal Business
      Insurance, Inc. (“Universal”) and Brett D. Mayer (“Mayer”) in the United States
      District Court for the District of New Jersey. Universal was the retail broker
      that advised the Company during the Company’s business dealings with Lexington
      and Mayer was the individual employed by Universal that dealt directly with
      the
      Company. In its complaint, the Company alleged that Universal and Mayer were
      negligent and breached their fiduciary duty to the Company in providing services
      related to the Company’s procurement of directors and officers insurance.




On
      September 28, 2005, the Company and Lexington entered into an agreement in
      which
      Lexington agreed to dismiss its complaint against the Company and both Lexington
      and the Company agreed to release each other from any and all claims which
      could
      have been asserted as a result of the Lexington lawsuit. On October 13, 2005,
      the Company, Universal and Mayer entered into an agreement in which the Company
      agreed to dismiss its third party complaint against Universal and Mayer in
      exchange for a one time payment from Universal and Mayer of $8,500. See “Item 3.
      Legal Proceedings - Lexington Insurance Lawsuit.”




*Relocation
      of Corporate Offices and Settlement with Former Landlord*




In
      May
      2004, the Company relocated its principal offices to 215 Morris Avenue, Spring
      Lake, New Jersey 07762 in order to reduce its monthly operating expenses and
      to
      more appropriately accommodate its current operations. In connection with the
      relocation of its principal offices, the Company and Monmouth/Atlantic Realty
      Associates, L.L.C., the landlord of the Company’s former office space in Wall
      Township, New Jersey, reached an agreement to terminate the remaining term
      of
      the existing lease (44 months resulting in a lease obligation of approximately
      $454,000 plus an additional $154,000 for common area charges) for a one-time
      payment by the Company of $100,000 plus the forfeiture of a $33,338 security
      deposit.




*Loures
      Lawsuit*




On
      December 28, 2004, an action was commenced in the Superior Court of New Jersey
      by James J. Loures, Jr. and his wife, Christine Loures, against the Company
      and
      certain of its former officers and directors. The plaintiffs allege that the
      Company, its former officers and certain of its former directors engaged in
      a
      scheme to inflate the Company’s revenues and earnings through a series of
      accounting irregularities and fraudulent financial disclosures during the period
      June 2001 through March 2003 which resulted in the plaintiffs’ loss of
      approximately $120,000. The Company intends to vigorously defend this action.
      See “Item 3. Legal Proceedings - Loures Lawsuit.”




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*Private
      Placement of Convertible Debentures*




On
      May
      26, 2005, the Company closed on a private placement of convertible debentures
      (the “Debentures”). The gross proceeds received in connection with this private
      placement were $300,000. The Debentures have a 5 year term maturing on April
      30,
      2007 and bear interest at a rate of 8% per annum. Up to 50% of the aggregate
      principal amount of the Debentures are immediately convertible into the
      Company’s common stock at the option of the holders at a conversion price of
      $0.10 per share. The remaining 50% of the aggregate principal amount of the
      Debentures are convertible into common stock at the option of the holders at
      any
      time after May 1, 2006 at a conversion price of $0.20 per share. The market
      price of the common stock on the date of closing the transaction was $.06 per
      share.




*Private
      Placement of Common Stock*




On
      August
      25, 2005, the Company closed on a private placement of 4,000,000 shares of
      common stock. The gross proceeds received in connection with this private
      placement were $200,000 ($.05 per share). 3,000,000 shares of common stock
      were
      purchased by Richard Rimer, a private investor, for $150,000. 1,000,000 shares
      of Common Stock were purchased by John A. Moore, a director of the Company,
      for
      $50,000. The market price of the Common Stock on the date of closing the
      transaction was $.04 per share.




**Product
      Acquisitions**




On
      February 25, 2002, the Company purchased certain intellectual property from
      Spectrum Biotech, Inc., a Nevada corporation (“Spectrum”), relating to the
      Solo-Safe TM
      Safety
      Syringe .
      In
      consideration for Spectrum’s safety syringe patents and patents pending and
      related U.S. Food and Drug Administration (the “FDA”) 510(k) approval, the
      Company issued to the shareholders of Spectrum 700,000 restricted shares of
      its
      common stock, which at the time were valued at approximately $3,500,000. In
      addition, the Company granted certain registration rights to Spectrum and its
      shareholders. See “Principal Products - Solo-Safe TM
      Safety
      Syringe.”




On
      May
      29, 2002, the Company entered into a letter of intent with Owens-Illinois
      Closure Inc. (“Owens-Illinois”) in which the parties agreed to negotiate in good
      faith an agreement that would allow Owens-Illinois to become the contract
      manufacturer of the Solo-SafeTM Safety Syringe. The Company and Owens-Illinois
      ceased discussions regarding the manufacture of the Solo-SafeTM Safety Syringe in
      May 2003.




On
      July
      1, 2002, the Company entered into a license agreement with Cuppy Medical
      Products, Inc. (“Cuppy”), which had a five year term. Pursuant to this license
      agreement, Cuppy granted Medi-Hut the exclusive, non-transferable license to
      manufacture, use, sell and distribute a patented safety engineered intravenous
      catheter system (the “Cuppy Catheter”) within the United States, United States
      Possessions, Canada and Mexico. The Company agreed to pay Cuppy an annual
      royalty of 6% of net sales of the Cuppy Catheter for a period of five years
      commencing July 1, 2002. In addition, upon execution of the license agreement,
      the Company paid $125,000 as an advance against future royalty payments, of
      which $85,000 was non-refundable and $40,000 was refundable in the event the
      Cuppy Catheter did not receive 510(k) approval by the FDA. See “Government
      Regulation.” Further, the Company agreed to make annual non-refundable payments
      as advances against future royalties as follows: $25,000 on July 1, 2003,
      $40,000 on July 1, 2004, $65,000 on July 1, 2005 and $85,000 on July 1,
      2006.




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The
      license agreement also provided that, upon the notification of receipt of 510(k)
      approval by the FDA, the Company would grant and issue to Cuppy restricted
      shares of the Company’s common stock with a total fair market value of $125,000
      and afford the holder of the restricted shares with certain registration rights.




The
      Company did not make the $25,000 payment due July 1, 2003, and, as a result,
      on
      November 7, 2003, Cuppy terminated the license agreement with the Company.
      The
      Company does not believe it has any further payment or other obligations under
      the terminated license agreement nor does it believe it will receive any refunds
      thereunder.




On
      July
      26, 2002, the Company entered into a letter of intent with Owens-Illinois in
      which the parties agreed to negotiate in good faith an agreement that would
      allow Owens-Illinois to become the exclusive contract manufacturer of the Cuppy
      Catheter. This letter of intent was extended on February 4, 2003 and, on March
      14, 2003, the Company countersigned a proposal from Owens-Illinois for the
      manufacture of 100 prototypes of the Cuppy Catheter. However, due to the
      Company’s decision not to pursue the development and sale of the Cuppy Catheter,
      the Company and Owens-Illinois ceased discussions in June 2003 regarding this
      product.




**Principal
      Products**




*Name
      Brand and Generic Drugs*




For
      the
      fiscal year ended October 31, 2002, the Company was a wholesaler of name brand
      and generic drugs, which are drugs that are protected by patent or licensure.
      In
      March 2003, the Company exited this line of business due to the low margins
      attributed to such sales.




*Condoms*




For
      the
      fiscal year ended October 31, 2002 and through September 2004, the Company
      was a
      wholesaler of condoms under the brand name “Elite” and on a private label basis.
      The condoms were manufactured by third parties. The Company stopped selling
      condoms in October 2004 due to reduced profit margins and the decline in the
      customer base.




*Elite
      Safety Syringe*




During
      the fiscal year ended October 31, 2002 and through December 2004, the Company
      was developing the Elite Safety Syringe and attempted to secure appropriate
      manufacturing and distribution for the product. As discussed below, due to
      development, manufacturing and marketing issues, sales of the Elite Safety
      Syringe have not been material and, as a result, the Company has determined
      that
      it will not pursue any further development or marketing of the Elite Safety
      Syringe.




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The
      Elite
      Safety Syringe is an anti-stick safety syringe that incorporates features
      designed to safely cover the sharp needle with minimal effort and to minimize
      danger to the user by preventing accidental needle sticks. There are two types
      of anti-stick syringes, active devices (this type of product demands that the
      user in some way make a physical movement to activate the device after the
      injection and prior to disposal) and passive devices (this type of product
      activates automatically after injection and should be designed not to interfere
      with the normal injection procedure). The Elite Safety Syringe is a passive
      device that incorporates a transparent sleeve into which the needle
      automatically retracts after use and is designed to decrease accidental needle
      sticks of medical service providers. The Elite Safety Syringe is also designed
      to be activated using a one hand technique.




The
      Elite
      Safety Syringe was originally manufactured at two facilities located
      in the Republic of Korea. One facility is operated by Medi-Hut International,
      a
      Korean corporation in which Medi-Hut has a 44% ownership interest, and the
      other
      facility is operated by Sam Woo, a Korean corporation (collectively, the “Korean
      Facilities”) independent of the Company. Medi-Hut International was formed
      pursuant to a joint venture between the Company and COA International
      Industries, Inc. (“COA”), a Korean corporation which manufactures and exports
      medical disposable products, including disposable syringes. See “Manufacturing;
      Principal Suppliers.” In May 2003, the Company determined that the product
      quality of the Elite Safety Syringes being manufactured at the Korean Facilities
      was not sufficient for the sale of such product in the United States. After
      evaluating the corrective action taken by both Korean Facilities to rectify
      the
      manufacturing problems identified by the Company, the Company initially
      determined that it would not pursue manufacturing of the Elite Safety Syringe
      at
      the manufacturing facility being operated by Sam Woo. Instead, the Company
      would
      utilize the manufacturing facility operated by Medi-Hut International, which
      instituted a corrective plan in June 2003 to address its manufacturing
      deficiencies. The Company believes that as a result of this corrective plan,
      the
      manufacturing facility operated by Medi-Hut International is now capable of
      manufacturing the Elite Safety Syringe with a product quality sufficient for
      the
      United States market. However, the Company has determined that the cost
      associated with adequately equipping Medi-Hut International to support a market
      launch of the product combined with the cost associated with correcting certain
      design issues exceed the overall market opportunity that exists for the product.
      Accordingly, the Company has decided that it will no longer develop or market
      the Elite Safety Syringe. The Company is currently seeking a third party
      interested in acquiring the product.




Medi-Hut
      and Medi-Hut International entered into a loan agreement, effective June 7,
      2002, to memorialize certain financial assistance that Medi-Hut had been
      providing to Medi-Hut International. Medi-Hut International acknowledged that
      it
      had received loan installments from Medi-Hut during the period from June 7,
      2002
      through February 28, 2003 in the total amount of $450,000. The loan amount
      is to
      be repaid over time with interest as follows plus any and all accrued interest:
      $75,000 on or before December 31, 2004; $125,000 on or before December 31,
      2005;
      $125,000 on or before December 31, 2006; and $125,000 on or before December
      31,
      2007. As of October 31, 2005, the Company had not received the $75,000 payment
      due on or before December 31, 2004 and is currently evaluating whether to
      institute action to recover same.




*Disposable
      Medical Products*




During
      the fiscal year ended October 31, 2002, disposable medical products sold by
      the
      Company, other than the Elite Safety Syringe, were manufactured for the Company
      by third parties. These products included syringes, hot and cold packs, gauze
      bandages, adhesive bandages, paper products, alcohol preparation pads and
      condoms, as discussed above. The Company sold alcohol preparation pads on a
      private-label basis as well as under the Company’s Elite brand name. The Company
      stopped selling these products in October 2004 due to reduced profit margins
      and
      the decline in the customer base.




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*Solo-SafeTM
      Safety Syringe*




On
      February 25, 2002, the Company acquired certain intellectual property owned
      by
      Spectrum relating to the Solo-SafeTM Safety Syringe. The Company acquired patents
      in the United States relating to the Solo-SafeTM Safety Syringe and has acquired
      the rights to patents in New Zealand, Australia, Brazil and Japan and patents
      pending in five other foreign countries. Medi-Hut also holds a 510(k) approval
      from the FDA to market the Solo-SafeTM Safety Syringe in the United States. See
“Government Regulation.”




The
      Solo-SafeTM Safety Syringe is an active type safety syringe designed for
      intra-muscular injections. When the needle is retracted after injection the
      design forces the needle back into the syringe barrel and off to one side.
      The
      plunger handle then snaps off at an engineered point, resulting in the syringe
      barrel enclosing the used needle. The purpose of the design is to prevent
      accidental needle sticks of healthcare personnel administering injections to
      patients.




The
      Solo-SafeTM Safety Syringe is in early development and a manufacturing prototype
      has not been created. The Company does not intend to further develop this
      product or maintain its patents due to the significant amount of development
      costs that would have to be incurred in order to bring the product to market,
      the limited market opportunity that exists for the product and the Company’s
      limited financial resources.




*Tru-Choice
      Product Line*




During
      the fiscal year ended October 31, 2002, Medi-Hut distributed its Tru-Choice
      product line, which primarily consisted of generic medications which are sold
      over-the-counter in pharmacies. The distribution of the Tru-Choice product
      line
      was ceased in March 2003 due to the low margins attributed to such sales.




*Hormone
      Replacement Therapy Drugs - Syntest*




In
      November 2001, the Company entered into an agreement with Syntho for the
      exclusive distribution rights of esterified estrogen/methyl testosterone based
      prescription hormone replacement therapy drugs: Syntest Double-Strength (DS)
      and
      Half-Strength (HS). For the fiscal year ended October 31, 2002, the revenue
      from
      the sale of Syntest products was significant. However, in March 2003, the
      Company was unable to continue the sale of Syntest products due to a dispute
      with the manufacturer and contract sales representative for such products.
      This
      dispute resulted in the commencement of litigation against the manufacturer
      and
      contract sale representative as well as other related litigation involving
      the
      Company. During July and August 2003, the Company sold all of its remaining
      Syntest inventory. See “Item 3. Legal Proceedings - Syntest
      Litigation.”




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**Patents
      and Trademarks**




The
      Company holds two United States patents (5,562,626 and 6,692,470) on the Elite
      Safety Syringe. The patent and the patent application for the Elite Safety
      Syringe were assigned to the Company by Joseph A. Sanpietro, the Company’s
      former Chairman and Chief Executive Officer, on April 30, 2003. The Company
      holds no foreign patents or patent applications for the Elite Safety
      Syringe.




The
      Company holds two United Sates patents (6,129,710 and 5,382,235) on the
      Solo-Safe TM Safety
      Syringe. The Company also holds one foreign patent Japan (3,422,025) with
      respect to the Solo-Safe TM
      Safety
      Syringe.




The
      Company’s decision to maintain existing patents and continue the prosecution of
      patent applications depends upon management’s continual analysis of the patent
      and development costs associated with the product versus the market opportunity
      that each product provides and the financial resources available to the Company.
      Currently, the Company is maintaining the patents related to the Elite Safety
      Syringe but is not maintaining the patents related to the Solo-Safe Safety
      Syringe.




Solo-SafeTM
      Safety Syringe is currently the Company’s only trademark.




**Manufacturing;
      Principal Suppliers**




The
      Company does not have any internal manufacturing capabilities and therefore
      outsourced all of its manufacturing requirements with respect to products
      previously sold by the Company. The Company purchased some of the products
      previously sold by it at wholesale and others directly from the manufacturer.




Many
      of
      the disposable medical products previously sold by the Company were purchased
      directly from wholesalers. Moreover, the brand and generic pharmaceuticals
      sold
      by the Company in the fiscal year ended October 31, 2002 also were purchased
      directly from wholesalers. Accordingly, the Company traditionally did not have
      any contracts with the manufacturers of the disposable medical products or
      brand
      and generic pharmaceuticals sold by the Company nor does it have any such
      contracts currently in effect.




The
      condoms and alcohol preparation pads previously sold by the Company were
      purchased directly from third party manufacturers and, during the fiscal year
      ended October 31, 2002, the Company’s Tru-Choice products also were purchased
      directly from third party manufacturers. Traditionally, the Company had not
      entered into formal manufacturing agreements with these third party
      manufacturers but rather placed purchase orders with them when product was
      required. During the fiscal year ended October 31, 2002 and through September
      2004, the Company purchased condoms from a third-party manufacturer located
      in
      the Republic of Korea and contracted with a third-party company in the United
      States to package the condoms. Also during this period, the Company purchased
      the alcohol preparation pads as a finished product from third party
      manufacturers located in the United States.




The Company
      purchased Syntest as a finished product directly from the manufacturer, Syntho,
      which is located in the United States, pursuant to a distribution agreement
      dated November 20, 2001, as amended on February 7, 2002 and April 3, 2002.
      The
      Company paid Syntho $2.5 million and agreed to purchase the Syntest product
      at a
      price per unit as agreed upon by the parties in exchange for the exclusive
      rights to distribute the product over a five year period commencing on the
      first
      commercial sale of the Syntest product which occurred on October 14, 2002.
      Regular sales of the Syntest product ceased in March 2003 due to Syntho’s
      refusal, beginning in January 2003, to sell any additional product to the
      Company. As a result, the Company commenced litigation against Syntho and other
      parties on May 12, 2003. See “Item 3. Legal Proceedings - Syntest
      Litigation.”




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On
      November 16, 2000, the Company entered into a joint venture
      agreement  with
      COA
      pursuant to which the Company and COA formed Medi-Hut International for the
      purpose of manufacturing disposable syringes. In order to fund Medi-Hut
      International, the Company made a capital contribution of $1,000,000 to Medi-Hut
      International and COA made a capital contribution of $400,000. In exchange
      for
      their respective capital contributions, the Company received a 44% ownership
      interest in Medi-Hut International and COA received a 46% ownership interest.
      The remaining 10% ownership interest in Medi-Hut International was granted
      to
      Inben Brothers Company as compensation for its actions as coordinator-negotiator
      and agent for both the Company and COA. The agreement between the parties
      continues indefinitely until terminated as provided for therein.




During
      fiscal year ended October 31, 2002, the Elite Safety Syringe was manufactured
      in
      the Republic of Korea by Medi-Hut International and Sam Woo. In May 2003, the
      Company determined that the product quality of the Elite Safety Syringe being
      manufactured by Medi-Hut International and Sam Woo was not sufficient for the
      United States market. Sam Woo was not able to correct its manufacturing
      deficiencies. Medi-Hut International instituted a corrective action plan in
      June
      2003 which was monitored by the Company. As a result, the Company believes
      that
      Medi-Hut International has corrected a majority of the manufacturing issues
      uncovered in May 2003 and that Medi-Hut International is now capable of
      manufacturing the Elite Safety Syringe at a quality sufficient for the United
      States market. However, the Company has determined that the cost associated
      with
      adequately equipping Medi-Hut International to support a market launch of the
      product combined with the cost associated with correcting certain design issues
      exceed the overall market opportunity that exists for the product. Accordingly,
      the Company has decided that it will no longer develop or market the Elite
      Safety Syringe. The Company is currently seeking a third party interested in
      acquiring the product.




On
      September 18, 2003, the Company, COA and Medi-Hut International entered into
      an
      agreement under which the Company granted a non-exclusive license to Medi-Hut
      International to make, manufacture and export the Elite Safety Syringe. The
      territorial boundary of this license is limited to within the Republic of Korea.
      In accordance with the license, Medi-Hut International must obtain the Company’s
      permission prior to any sales to a third party. Medi-Hut International is to
      pay
      to the Company a royalty based upon the total net sales under the license.
      The
      royalty amount is to be negotiated in good faith at the time of such sales.
      For
      the purpose of calculating royalty payments, Medi-Hut International is to
      provide Medi-Hut with a report setting forth the total net sales during the
      previous quarter. The agreement remains in full force and effect until the
      expiration of the last to expire of Medi-Hut’s United States patent with respect
      to the Elite Safety Syringe or upon the voluntary termination of either party
      for any reason with six months notice. As of October 31, 2005, the Company
      has
      not collected any royalties from Medi-Hut International and the Company is
      not
      aware of any sales of the Elite Safety Syringe by Medi-Hut
      International.




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**Distribution,
      Sales and Marketing**




Prior
      to
      the termination of the name brand and generic drug product line and the
      Tru-Choice product line in March 2003, the Company distributed the products
      through drug wholesalers and distributors in the United States who then sold
      the
      product to other drug wholesalers, distributors, pharmacies and/or drug store
      chains. Upon receipt of an order from a customer, the Company would place an
      order with the supplier of the product. The product generally would be shipped
      directly from the supplier to the Company’s customer or another third party as
      directed by the Company’s customer. The Company typically inventoried very
      little product at its warehouse located at its corporate headquarters. On
      occasion, product was shipped directly to the Company’s warehouse and the
      Company arranged delivery to the appropriate customer.




Prior
      to
      Syntho’s decision to stop selling the Syntest products to the Company in January
      2003, the Company primarily sold the Syntest products through a third party
      contract sales representative, Schrader Associates, which brokered the sale
      of
      the Syntest product directly to national distributors and drug store chains.
      The
      Company and Schrader Associates entered into a three year brokerage agreement
      dated April 1, 2002 in which Schrader Associates agreed to market and sell
      the
      Syntest products to certain drug wholesalers, drug store chains and managed
      care
      companies on an exclusive basis, in exchange for a commission that ranged from
      $3.50 to $4.00 per bottle sold by Schrader Associates. This agreement was
      terminated by Schrader Associates by letter dated March 12, 2003. As a result
      of
      this termination, the Company and Schrader Associates each filed lawsuits
      against one another on April 18, 2003 and May 14, 2003, respectively. These
      lawsuits were settled by the parties on April 21, 2004. See “Item 3. Legal
      Proceedings - Syntest Litigation.” The Company also utilized the services of a
      third party warehousing and logistics company, Making Distribution Intelligent,
      LLC (“MDI”), which was responsible for warehousing Syntest, shipping the product
      pursuant to the Company’s instructions, billing the Company’s customers and
      providing customer service. The Company and MDI entered into a three year
      logistics services agreement commencing March 25, 2002, as amended on June
      17,
      2002, pursuant to which Medi-Hut agreed to pay MDI a one-time fee of $15,000,
      a
      base monthly fee of $14,750 and a series of variable fees based on a per
      unit/case/pallet basis for receiving product, storing product, shipping product,
      invoicing customers and accepting returns. The Company and MDI entered into
      a
      termination and mutual release agreement on August 29, 2003 in which the parties
      agreed to terminate the remaining term of the March 25, 2002 logistics services
      agreement (21 months resulting in an obligation of $257,250) for a one-time
      payment of $50,000 from Medi-Hut to MDI. The parties also agreed to a mutual
      release of all potential claims against each other. In July 2003, the Company
      sold the majority of its remaining Syntest inventory to Breckenridge for
      $1,032,000. The remaining Syntest inventory was sold to Breckenridge in August
      2003 for $14,000. The Company and Breckenridge each filed lawsuits against
      one
      another in May 2003 regarding the distribution rights to the Syntest products.
      See “Item 3. Legal Proceedings - Syntest Litigation.”




During
      the fiscal year ended October 31, 2002 and through September 2004, the Company
      sold its condoms and alcohol preparation pads directly to distributors on a
      private label basis and also to wholesalers under the Company’s Elite brand
      name. The other disposable clinical supplies distributed by the Company were
      sold directly to physicians and wholesalers.




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Prior
      to
      its decision to no longer develop or market the Elite Safety Syringe, the
      Company did not anticipate directly marketing or distributing the Elite Safety
      Syringe due to the high cost of establishing a sales force, the financial
      resources available to the Company and the difficulty in penetrating the
      relevant market. The Company intended to sell the Elite Safety Syringe through
      a
      distributor capable of executing a successful market launch in the United
      States, Europe and/or other international markets. The Company entered into
      an
      agreement with Bond-Brown Sales Design, LLC (“Bond-Brown”) on December 14, 2001
      to assist the Company in the identification and establishment of relationships
      with distributors for the Elite Safety Syringe. The agreement required the
      Company to pay Bond-Brown a minimum fee of $10,600 per month for a minimum
      of
      six months. The Company terminated the agreement with Bond-Brown in August
      2003.
      In addition, the Company hired an Executive Vice President of Sales and
      Marketing in January 2003 to spear-head the then contemplated market launch
      of
      the Elite Safety Syringe. The Company terminated this employee in August 2003
      due to the Company’s inability to determine when the Elite Safety Syringe would
      be available for launch in the United States market and its decision to seek
      a
      partner to distribute the product.




The
      Company currently does not maintain a dedicated sales force and currently does
      not sell any products. During fiscal year ended October 31, 2002 through
      September 2004 when the Company was selling products, the Company’s personnel
      involved in the sales process also maintained other duties within the Company.
      The Company dedicated the equivalent of approximately two full time employees
      to
      sales during this period. These individuals worked out of the Company’s
      corporate headquarters and contacted wholesalers, distributors and physicians
      by
      phone or periodic visits. During the fiscal year ended October 31, 2002, the
      Company’s sales terms varied from customer to customer. Beginning in fiscal year
      ended October 31, 2003, all sales by the Company were made on thirty day credit
      terms. In addition, the Company generally required an upfront payment from
      customers on their purchases of private label products.




With
      the
      exception of the Syntest products, the Company historically kept a very low
      amount of inventory since the majority of its sales were shipped directly by
      the
      supplier of the product to either the Company’s customer or to another third
      party as directed by the Company’s customer. Prior to Syntho’s decision to stop
      selling the product to the Company, the Company would generally warehouse one
      month of inventory of the Syntest product at MDI, a third party warehousing
      company.







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**Competition**




The
      competition for the Company’s name brand and generic drug products and
      Tru-Choice products was generally with numerous large and small companies that
      wholesale drugs and medical products. Management believes that the Company
      had
      an insignificant percentage of the markets for these products prior to the
      Company’s decision to exit from these business lines in March 2003.




The
      Company’s competition in the disposable medical supply business, which included
      alcohol preparation pads, was with numerous large and small manufacturers and
      wholesalers. Management believes that the Company had an insignificant
      percentage of these markets prior to the Company’s decision to exit from this
      business line in October 2004.




The
      condom market is dominated by three major companies; Church & Dwight Co.,
      Inc. (Trojan brand), Ansell Healthcare Products Inc. (Lifestyles brand) and
      SSL
      International plc (Durex brand). Management believes that the Company had an
      insignificant percentage of the market prior to the Company’s decision to exit
      from the business line in October 2004..




In
      general, the Syntest products compete against the many other hormone-replacement
      therapy drugs available in the United States. However, the Syntest products
      specifically compete against Estratest, a hormone-replacement therapy
      manufactured by Solvay Pharmaceuticals, Inc. (“Solvay”). The two products are
      very similar in that they both are a combination of esterified estrogens and
      methyltestosterone. The Company believes that Solvay controls a majority of
      this
      specific market.




The
      safety syringe market is dominated by four major companies; Becton, Dickinson
      and Company (“Becton Dickinson”), Tyco International Ltd., Terumo Medical
      Corporation and Retractable Technologies, Inc. These four companies control
      a
      majority of the worldwide market for safety syringes. In addition, when
      assessing the competition for the safety syringe market, the Company believes
      that it is necessary to consider the suppliers of standard syringes. The Company
      believes that safety syringes currently account for approximately 25% of the
      total worldwide market for injection needles and standard syringes account
      for
      the remaining 75%. The Company believes that Becton Dickinson is the worldwide
      leader in the sale of standard syringes .




**Government
      Regulation**




*Medical
      Devices*




As
      a
      former developer and distributor of medical devices, the Company was subject
      to
      regulation by, among other governmental entities, the FDA, and the corresponding
      agencies of the states and foreign countries in which the Company sold its
      products. These regulations govern the introduction of new medical devices,
      the
      observance of certain standards with respect to the manufacture, testing and
      labeling of such devices, the maintenance of certain records, the tracking
      of
      devices, and other matters, and could have a material impact on the Company’s
      future operations in the event the Company acquires existing medical devices
      and
      related products. See “Strategy for Business Development.”




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All
      medical device manufacturing establishments are required to be registered with
      the FDA. Similarly, all categories of medical devices marketed by a company
      in
      the United States are required to be listed. This listing information must
      be
      updated pursuant to FDA regulations. The FDA can take regulatory action against
      a company that does not provide or update its registration and listing
      information. Pursuant to the Food, Drug and Cosmetic Act (the “FDC Act”),
      medical devices intended for human use are classified into three categories,
      Classes I, II and III, on the basis of the controls deemed necessary by the
      FDA
      to reasonably assure their safety and effectiveness. Class I devices are subject
      to general controls (for example, labeling, premarket notification and adherence
      to good manufacturing practice regulations) and Class II devices are subject
      to
      general and special controls (for example, performance standards, postmarket
      surveillance, patient registries, and FDA guidelines). Generally, Class III
      devices are those which must receive premarket approval (“PMA”) from the FDA to
      ensure their safety and effectiveness (for example, life-sustaining,
      life-supporting and implantable devices, or new devices which have not been
      found substantially equivalent to legally marketed devices).




Some
      Class I devices and most Class II devices require premarket notification
      (510(k)) clearance pursuant to Section 510(k) of the FDC Act. Most Class III
      devices are required to have an approved PMA application. Obtaining PMA approval
      can take up to several years or more and involve preclinical studies and
      clinical testing. In contrast, the process of obtaining a 510(k) clearance
      typically requires the submission of substantially less data and generally
      involves a shorter review period, although obtaining a 510(k) clearance may
      involve the submission of a substantial volume of data, including clinical
      data,
      and may require a substantial review period. A 510(k) premarket notification
      clearance indicates that the FDA agrees with an applicant’s determination that
      the product for which clearance has been sought is substantially equivalent
      in
      terms of safety and effectiveness to another medical device that has been
      previously marketed, but does not indicate that the product is safe and
      effective. The Elite Safety Syringe and Solo-SafeTM Safety Syringe have been
      granted 510(k) approval. Both of these 510(k) approvals are owned by the
      Company.




In
      addition to requiring clearance or approval for new products, the FDA may
      require clearance or approval prior to marketing products that are modifications
      of existing products. FDA regulations provide that new 510(k) clearances are
      required when, among other things, there is a major change or modification
      in
      the intended use of the device or a change or modification to a legally marketed
      device that could significantly affect its safety or effectiveness. The
      developer and/or manufacturer is expected to make the initial determination
      as
      to whether a proposed change to a cleared device or to its intended use is
      of a
      kind that would necessitate the filing of a new 510(k) notification. The Company
      believes that no such changes have occurred with the Elite Safety Syringe or
      the
      Solo-SafeTM Safety Syringe since the original 510(k) clearances were
      granted.




In
      order
      to conduct clinical trials of an uncleared or unapproved device, companies
      generally are required to comply with the FDA’s Investigational Device
      Exemptions regulations (“IDE regulations”). For significant risk devices, the
      IDE regulations require FDA approval of an investigational device before a
      clinical study may begin. In its approval letter for significant risk
      investigational device studies, the agency may limit the number of patients
      that
      may be treated with the device and/or the number of institutions at which the
      device may be used. Device studies subject to the IDE regulations, including
      both significant risk and non-significant risk device studies, are subject
      to
      various restrictions imposed by the FDA. Patients must give informed consent
      to
      be treated with an investigational device. The institutional review board of
      each institution where a study is being conducted must also approve the clinical
      study. The device generally may not be advertised or otherwise promoted.
      Unexpected adverse experiences must be reported to the FDA. The company
      sponsoring the investigation must ensure that the investigation is being
      conducted in accordance with the IDE regulations.




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Some
      of
      the Company’s products, namely the Elite Safety Syringe, the Solo-SafeTM Safety
      Syringe and the condoms have received FDA marketing clearances through the
      510(k) process (each of these products are no longer sold nor being developed
      by
      the Company). Certain future product applications, however, could require
      approval through the PMA process. There can be no assurance that all necessary
      501(k) clearances or PMA approvals will be granted on a timely basis or at
      all.
      In addition, future products may have to comply with the IDE regulations. The
      FDA review process may delay the Company’s product introductions in the future.
      It is possible that delays in receipt of or failure to receive any necessary
      clearance or approval could have a material adverse effect on the Company’s
      future operations.




Pursuant
      to the FDA’s Good Manufacturing Practices under the Quality System Regulations
      (“GMP/QSR”), the medical device manufacturer must manufacture products and
      maintain records in a prescribed manner with respect to manufacturing, testing
      and control activities. Further, the manufacturer, distributor and/or owner
      of a
      product is required to comply with FDA requirements for labeling and promotion
      of its products. For example, the FDA prohibits cleared or approved devices
      from
      being marketed or promoted for uncleared or unapproved uses. The medical device
      reporting regulations requires that a company provide information to the FDA
      whenever there is evidence to reasonably suggest that one of the company’s
      devices may have caused or contributed to a death or serious injury, or that
      there has occurred a malfunction that would be likely to cause or contribute
      to
      a death or serious injury if the malfunction were to recur. Additionally, the
      FDA imposes other requirements on medical device manufacturers, including
      reporting and record keeping requirements for device corrections and removals
      (recalls).




Medical
      device manufacturers and distributors are generally subject to periodic
      inspections by the FDA. If the FDA determines that a company is not in
      compliance with applicable laws and regulations, it can, among other things,
      issue a warning letter apprising the company of violative conduct, detain or
      seize products, issue a recall, enjoin future violations and assess civil and
      criminal penalties against the company, its officers or its employees. In
      addition, it is possible that clearances or approvals could be withdrawn in
      certain circumstances. Failure to comply with regulatory requirements or any
      adverse regulatory action could have a material adverse effect on the Company’s
      future business, financial condition and results of operations.




Medical
      device laws and regulations are also in effect in many of the countries in
      which
      the Company may conduct business outside the United States. These range from
      comprehensive device approval requirements for certain medical device products
      to simple requests for product data or certifications. The number and scope
      of
      these requirements are increasing. Medical device laws and regulations are
      also
      in effect in many of the states in which the Company may conduct business in
      the
      future. State and foreign medical device laws and regulations may have a
      material impact on the Company. In addition, international sales of certain
      medical devices manufactured in the United States but not cleared or approved
      by
      the FDA for distribution in the United States are subject to FDA export
      requirements and policies, including a policy whereby the Company provides
      a
      statement to FDA certifying that the product to be exported meets certain
      criteria and FDA issues a certificate to facilitate device export.




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There
      is
      a different set of regulatory requirements in place for the European Union
      (“EU”). In the EU, the company putting a medical device onto the market must
      comply with the requirements of the Medical Devices Directive (“MDD”) and affix
      the CE mark to the product to attest to such compliance. To achieve this, the
      medical devices in question must meet the “essential requirements” defined under
      the MDD relating to safety and performance, and the relevant company must
      successfully undergo a verification of its regulatory compliance by a third
      party standards certification provider, known as “Notified Body.” The nature of
      the assessment will depend on the regulatory class of products concerned, which
      in turn determines the precise form of testing to be undertaken by the Notified
      Body. The requirements of the MDD must be complied with by the “manufacturer of
      the device,” which is defined as the party responsible for the design,
      manufacture, packaging and labeling of the device before it is placed on the
      EU
      market, regardless of whether these operations are carried out by this entity
      or
      on its behalf. Accordingly, if the Company decided to market a medical device
      in
      the European Union, compliance with MDD would be required.




Federal,
      state and foreign laws and regulations regarding the manufacture, sale and
      distribution of medical devices are subject to future changes. For example,
      the
      Congress enacted the Medical Device User Fee and Modernization Act of 2002,
      which included several significant amendments to the prior law governing medical
      devices. Additionally, the FDA made significant changes to its GMP/QSR
      regulations in 1996 and may make changes to other regulations as well. The
      Company cannot predict what impact, if any, such changes might have on its
      future business; however, such changes could have a material impact on the
      Company and its business, financial condition and operating
      results.




*Pharmaceutical
      Products*




In
      addition to manufacturing, developing and distributing medical devices, the
      Company distributed name brand and generic drugs during the fiscal year ended
      October 31, 2002, including the hormone
      replacement therapy drugs, Syntest Double-Strength and Half-Strength. See “Item
      1. Description of Business - General.” The
      FDA
      and comparable regulatory agencies in state and local jurisdictions and in
      foreign countries impose substantial requirements upon the clinical development,
      manufacture and marketing of pharmaceutical products. These agencies and other
      federal, state and local entities regulate research and development activities
      and the testing, manufacture, quality control, safety, effectiveness, labeling,
      storage, record keeping, approval, advertising and promotion of such products.
      Under the FDC Act, all drugs require FDA approval before marketing, with certain
      limited exceptions. This approval requires that the drug company establish
      that
      the drug is safe and effective for its labeled use. These regulations could
      have
      a material impact on the Company’s future ability to distribute pharmaceutical
      products.




The
      FDA
      requires the submission of a New Drug Application ("NDA"), a Supplemental New
      Drug Application ("SNDA") or an Abbreviated New Drug Application (“ANDA”), as
      applicable, and subsequent approval by the FDA. The
      goals
      of the NDA are to provide enough information to permit the FDA reviewer to
      reach
      the conclusions as to whether (1) the drug is safe and effective in its proposed
      use(s); (2) the benefits of the drug outweigh the risks; (3) the drug's proposed
      labeling (package insert) is appropriate and has the necessary contents; and
      (4)
      the methods used in manufacturing the drug and the controls used to maintain
      the
      drug's quality are adequate to preserve the drug's identity, strength, quality
      and purity. The
      steps
      required for approval of an NDA or SNDA may include (a) extensive pre-clinical
      toxicology and pharmacology studies, (b) submission to the FDA of an
      investigational new drug application ("IND"), which must become effective before
      human clinical trials can be commenced, (c) a series of preliminary clinical
      studies to demonstrate safety (Phase I) and optimal dosing and
      pharmacologic effects (Phase II), (d) adequate and well-controlled human
      clinical trials (Phase III) to establish the safety and effectiveness
      of
      the product, (e) submission of an NDA or an SNDA to the FDA, (f) presentation
      of
      NDA data to an FDA advisory panel for its recommendation and (g) FDA approval
      of
      the NDA or SNDA prior to any commercial sale or shipment of the
      product.




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In
      some
      cases, the FDA can request Phase IV clinical studies to be conducted as a
      condition of approval of the NDA, to be performed after the NDA approval and
      within a specified timeframe. These studies can be designed to obtain additional
      safety and efficacy data, detect new uses for or abuses of a drug, or determine
      effectiveness for labeled indications under conditions of widespread usage.
      These studies can involve significant additional expenses, and failure to
      perform these Phase IV studies within the FDA-stated timeframe can result in
      the
      FDA withdrawing the NDA approval.  The FDA may also require user fees
      for
      prescription drug NDAs or SNDAs. Further, even after regulatory approval is
      obtained, later discovery of previously unknown problems with a product may
      result in restrictions on the sale and marketing of the product or even complete
      withdrawal of the product from the market. Any product distributed by the
      Company pursuant to FDA clearance or approvals are subject to pervasive and
      continuing regulation by the FDA, including record-keeping requirements and
      reporting of adverse experiences with the drug.




An
      ANDA
      contains data which when submitted to FDA's Center for Drug Evaluation and
      Research, Office of Generic Drugs, provides for the review and ultimate approval
      of a generic drug product. Once approved, an applicant may manufacture and
      market the generic drug product to provide a safe, effective, low cost
      alternative to the public. A generic drug product is one that is comparable
      to
      an innovator drug product in dosage form, strength, route of administration,
      quality, performance characteristics and intended use. Generic drug applications
      are termed "abbreviated" because they are generally not required to include
      preclinical (animal) and clinical (human) data to establish safety and
      effectiveness.  Instead, generic applicants must scientifically demonstrate
      that their product is bioequivalent (i.e., performs in the same manner as the
      innovator drug).




One
      way
      scientists demonstrate bioequivalence is to measure the time it takes the
      generic drug to reach the bloodstream in 24 to 36 healthy volunteers. 
      This
      gives them the rate of absorption, or bioavailability, of the generic drug,
      which they can then compare to that of the innovator drug.  The generic
      version must deliver the same amount of active ingredients into a patient's
      bloodstream in the same amount of time as the innovator drug. Using
      bioequivalence as the basis for approving generic copies of drug products was
      established by the Drug
      Price  Competition
      and Patent Term Restoration Act of 1984 ,
      also
      known as the Waxman-Hatch Act.  The Waxman-Hatch Act expedites the
      availability of less costly generic drugs by permitting FDA to approve
      applications to market generic versions of brand-name drugs without conducting
      costly and duplicative clinical trials.  At the same time, the brand-name
      companies can apply for up to five additional years of patent protection for
      the
      new medicines they developed to make up for time lost while their products
      were
      going through FDA's approval process. Brand-name drugs are subject to the same
      bioequivalence tests as generics upon reformulation.




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Syntest
      is an alternate form of Estratest, a product that has been marketed by Solvay
      since approximately 1964. Estratest has never received FDA approval for
      distribution. Prior to 1962, the FDC Act required drug companies to obtain
      pre-approval by the FDA before marketing a new drug in order to establish that
      the drug to be marketed was safe. In 1962, the FDC Act was amended to require
      that drug companies establish that drugs were not only safe, but also effective
      for their intended purpose. At the time the FDA established a program called
      the
“Drug Efficacy Study Implementation” (“DESI”) program in order to establish
      efficacy of drugs which had already been approved by the FDA as safe. As
      Estratest was not approved as safe prior to 1962, the DESI program does not
      apply to Estratest or Syntest and since Estratest has never received FDA
      approval, Syntest is unable to avail itself of the piggyback provision allowing
      a drug which is identical, similar or related to use an ANDA. As a result,
      Syntest is also a drug that has never been approved for marketing by the FDA.




In
      April
      2003, the FDA published a proposal in the Federal Register in which the FDA
      announced the commencement of a formal administrative process to examine the
      effectiveness of estrogen/androgen combination products for the treatment of
      hot
      flashes associated with menopause. Both Estratest and Syntest are
      estrogen/androgen combination products. Pursuant to the FDA’s announcement, any
      company producing such products could request a formal hearing with the FDA.
      In
      June 2003, both Solvay and Syntho submitted documents requesting such a hearing.
      Typically, when the FDA has decided that a class of marketed drug products
      must
      be the subject of approved applications, the FDA will require the company to
      obtain a premarket approval application at a set date in the future, thereby
      giving the affected company a reasonable length of time to obtain approvals
      and
      stay on the market. Syntho has not informed Medi-Hut as to the status of Syntest
      in the approval process. If Syntho fails to obtain a premarket approval within
      the FDA’s prescribed timeline, Syntest could be removed from the market.




When
      the
      Company engages third-party manufacturers, such third-party manufacturers must
      adhere to FDA regulations relating to current good manufacturing practice
      regulations, which include requirements relating to organization of personnel,
      buildings and facilities, equipment, control of components and drug product
      containers and closures, production and process controls, packaging and labeling
      controls, holding and distribution, laboratory controls, records and reports,
      and returned and salvaged products. Ongoing compliance with these procedures,
      labeling and other regulatory requirements are monitored through periodic
      inspections and market surveillance by state and federal agencies, including
      the
      FDA. It is also the Company’s obligation to periodically monitor the FDA
      compliance of any of its third-party manufacturers. Failure by any third-party
      manufacturer engaged by the Company to comply with these rules could result
      in
      sanctions being imposed, including fines, injunctions, civil penalties,
      suspension or withdrawal of FDA approvals, seizures or recalls of products,
      operating restrictions and criminal prosecutions.




Additionally,
      products that contain controlled substances are subject to the requirements
      of
      the Drug Enforcement Administration (“DEA”) relating to the manufacturing,
      marketing and selling of such products. Syntest contains methyltestosterone
      (an
      anabolic steroid), which is a Schedule III controlled substance. Under the
      DEA’s
      scheme, there are two ways in which a product can be legally manufactured,
      marketed and sold: registration or exemption. Under the registration scheme,
      a
      company that wishes to produce or market any product containing a controlled
      substance can register to manufacture, market and sell such product and this
      registration is done by schedule and not by product. Further, if a company
      is
      registered to produce products containing substances at a certain schedule
      level, the registration also includes the right to produce products containing
      ingredients on a “higher” numbered schedule. Under the exemption scheme, a
      product can be exempted from DEA requirements and can be legally manufactured,
      marketed and distributed. Exemptions are given on a product by product
      basis.




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Initially,
      Syntest was subject to an interim rule from the DEA, dated January 15, 2003,
      in
      which the DEA designated Syntest as an exempt product. The comment period for
      this interim ruling expired on March 17, 2003. The exemption applied to all
      parties that “handle” the exempt product and permits the Company to market and
      distribute Syntest without any concerns from the DEA. The exemption did not
      apply retroactively. The Company cannot confirm whether there will be any
      negative ramifications from the DEA as a result on any sales of Syntest prior
      to
      the date of the exemption. As of December 31, 2003, Syntest is listed as an
      exempt anabolic steroid by the DEA.




When
      offering for sale medical devices and pharmaceutical products, the Company
      may
      also have to comply with federal and state anti-kickback and other healthcare
      fraud and abuse laws. Moreover, approval must be obtained for a pharmaceutical
      product by comparable governmental regulatory authorities in foreign countries
      prior to the commencement of clinical trials and subsequent marketing of such
      product in those countries. The approval procedure varies from country to
      country, and the time required may be longer or shorter than that required
      for
      FDA approval.




The
      regulatory policies of the FDA and other regulatory bodies may change and
      additional governmental regulations may be enacted which could prevent or delay
      regulatory approval of the products the Company distributes. The Company cannot
      predict the likelihood, nature or extent of adverse governmental regulation
      that
      might arise from future legislative or administrative action, within the United
      States or abroad.







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**Insurance**




The
      Company maintains insurance in such amounts and against such risks as it deems
      prudent, although no assurance can be given that such insurance will be
      sufficient under all circumstances to protect the Company against significant
      claims for damages. The occurrence of a significant event not fully insured
      could materially and adversely affect the Company’s business, financial
      condition and results of operations. Moreover, no assurance can be given that
      the Company will be able to maintain adequate insurance in the future at
      commercially reasonable rates or on acceptable terms.




**Employees**




As
      of
      October 31, 2005, David R. LaVance (President and Chief Executive Officer)
      and
      Thomas S. Gifford (Executive Vice President, Chief Financial Officer (Treasurer)
      and Secretary) are the only executive officers of the Company. Mr. LaVance
      and
      Mr. Gifford are engaged by Medi-Hut pursuant to the amended and restated
      Consulting Services Agreement, dated as of February 1, 2005, between Medi-Hut
      and Century Capital. See “Item 10. Executive Compensation - Consulting Services
      Agreement.” Excluding Messrs. LaVance and Gifford, who are consultants to the
      Company, the Company currently has one full-time employee. The
      Company’s ****** employee
      is not currently covered by any collective bargaining agreement. Medi-Hut has
      not experienced any work stoppages to date and management believes that the
      Company’s relationship with its employee is good.







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




In
      May
      2004, the Company relocated its principal offices to 215 Morris Avenue, Spring
      Lake, New Jersey 07762 in order to reduce its monthly operating expenses and
      to
      more appropriately accommodate its current operations. The Company and Century
      Capital entered into a Shared Services Agreement whereby the Company rented
      three fully furnished, business equipped offices approximating 340 square feet
      inside Century Capital’s existing offices. This agreement commenced on May 1,
      2004 and has a month to month term that requires sixty day written notice to
      terminate. The monthly rental is $2,500. Century Capital is owned by David
      R.
      LaVance and Thomas S. Gifford, Medi-Hut’s executive management team. See “Item
      12. Certain Relationships and Related Transactions.”




From
      November 2002 through April 2004, the Company’s corporate offices and warehouse
      facilities consisted of 11,718 square feet in Wall Township, which is located
      in
      central New Jersey. The Company leased this property from Monmouth/Atlantic
      Realty Associates, L.L.C. The lease for this property commenced on November
      25,
      2002, had a five year term, and an option to renew for an additional five year
      term. The annual rent for years 1 and 2 of the lease was $114,485. In years
      three, four and five of the lease, the annual rent would have increased to
      $125,969. Additional monthly charges include the Company’s portion of common
      area charges relating to taxes, operating costs, repairs and maintenance and
      other expenses. Medi-Hut provided the landlord with a $33,388 security deposit.
      In connection with the relocation of its principal offices, the Company and
      Monmouth/Atlantic Realty Associates, L.L.C. reached an agreement to terminate
      the remaining term of the existing lease (44 months resulting in a lease
      obligation of approximately $454,000 plus an additional $154,000 for common
      area
      charges) for a one-time payment by the Company of $100,000 plus the forfeiture
      of the security deposit.




Prior
      to
      taking possession of the Wall Township premises, the Company leased 3,500 square
      feet of office and warehouse space in Lakewood, New Jersey. The lease for this
      property included a five year term, annual rent of $24,000 and additional
      monthly rent payments contingent upon increases in taxes, insurance and common
      area maintenance expense **.**







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**Item
              3.**
            **Legal
                Proceedings**




**SEC
      Investigation** **




On
      February 21, 2002, the SEC issued a formal order directing a private
      investigation of Medi-Hut. According to this formal order, the SEC investigated,
      among other things, the accuracy of the Company’s filings with the SEC and its
      financial disclosures in general, as well a the sufficiency of the Company’s
      system of internal accounting controls. The SEC’s investigation of Medi-Hut
      resulted in the commencement of an action against Medi-Hut and the Company’s
      former President and Chief Executive Officer, Joseph A. Sanpietro, former Chief
      Financial Officer, Laurence M. Simon, and former Vice President of Sales,
      Lawrence P. Marasco. In its complaint, filed by the SEC in the United States
      District Court for the District of New Jersey on August 19, 2003, the SEC
      alleged that these three former corporate officers inflated Medi-Hut’s revenues
      through fictitious period-end invoices and other accounting irregularities
      and
      concealed that Mr. Marasco owned and controlled one of Medi-Hut’s largest
      customers. On August 19, 2003, without admitting or denying the allegations
      of
      the complaint, the Company consented to a final judgment against it. Pursuant
      to
      the final judgment, the Company is permanently restrained from making any untrue
      or misleading disclosures, whether such disclosures are in a report filed with
      the SEC or are contained in a press release or other general public disclosure.
      The Company also must make and keep accurate books, records and accounts and
      maintain a system of internal accounting control sufficient to ensure for fair
      and accurate financial disclosure.




**Incomplete
      Periodic Reports**




As
      explained elsewhere in this report, the actions of the former officers caused
      Medi-Hut to be subjected to corporate mismanagement in the form of accounting
      irregularities and securities fraud during the fiscal years ended October 31,
      2002 and 2001, which ultimately resulted in the August 19, 2003 guilty pleas
      by
      the four senior officers of prior management to an action brought by the United
      States Department of Justice. Three of the former officers also entered into
      consent decrees with the SEC on the same date. The Company’s current management
      commenced an extensive review of the financial statements and other financial
      information disclosed in the Company’s quarterly reports on Forms 10-Q and
      10-QSB filed with the SEC in 2002 and 2001, respectively. As a result, the
      current management of the Company concluded that financial statements and other
      financial information disclosed in the Company’s quarterly reports on Forms 10-Q
      and 10-QSB filed with the SEC in 2002 and 2001, respectively, and the Company’s
      annual report on Form 10-KSB for the fiscal year ended October 31, 2001 cannot
      be relied upon due to the Company’s inability to adequately verify the financial
      information disclosed in these reports due to incomplete or missing data and
      other information. In conjunction with this filing, the Company has amended
      these reports by removing all of the information contained therein, including
      all financial disclosures and discussion with respect thereto. In addition,
      as a
      result of the Company’s inability to verify the financial performance of the
      Company for fiscal 2002, this annual report on Form 10-KSB for the fiscal year
      ended October 31, 2002, contains limited financial disclosure and analysis.
      See
“Item 6. Management’s Discussion and Analysis or Plan of Operation” and “Item 7.
      Financial Statements.” Consequently, by filing incomplete reports with the SEC,
      the Company could be found in violation of the final judgment entered against
      it
      in August 19, 2003 as well as the general rules and regulations of the Exchange
      Act.




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Inasmuch
      as this annual report on Form 10-KSB and the annual report on Form 10-KSB for
      the fiscal year ended October 31, 2001 and the quarterly reports referred to
      above, each as amended by removing all the information contained therein, are,
      and will remain, incomplete, no assurance can be given by the Company that
      the
      SEC will not take an enforcement or other action against it. Any such action
      by
      the SEC could have significant adverse consequences to the Company.




**Class
      Action Lawsuits**




Beginning
      in February 2002, the Company and certain of its former officers and directors
      were named in an aggregate of eleven class action lawsuits filed in the United
      States District Court for the District of New Jersey. In these lawsuits the
      plaintiffs alleged that, among other contentions, the Company and certain of
      its
      former officers and directors failed to disclose a related party transaction
      between the Company and Lawrence P. Marasco, the Company’s former Vice President
      of Sales, in the Company’s periodic reports filed with the SEC. The lawsuits
      against the Company and certain of its officers and directors were consolidated
      on January 13, 2003.




On
      August
      18, 2003, the Company reached an agreement to settle the consolidated class
      action lawsuits, which was subject to the approval of the United States District
      Court for the District of New Jersey. As part of the settlement, the Company
      agreed to pay $400,000 in cash to the plaintiffs and issue 861,990 shares of
      Medi-Hut common stock (fair value of approximately $129,300 as of August 18,
      2003), which equaled 6% of the Company’s issued and outstanding shares of common
      stock on the date the settlement agreement was reached.




On
      September 12, 2003, the complaint and the pending consolidated class action
      lawsuit against the Company and the other defendants was amended. The amended
      class action complaint included additional information, including information
      regarding the alleged improper conduct of certain former officers and directors
      of the Company. On September 16, 2003, the plaintiffs in the consolidated class
      action against the Company commenced a related action against the Company’s
      former independent auditors, Rosenberg, under Section 10(b) of the Exchange
      Act.




On
      January 12, 2004, the United States District Court for the District of New
      Jersey issued a Preliminary Approval Order preliminarily approving the
      settlement of the consolidated class action lawsuits and issued its final
      approval of the settlement on May 3, 2004. For purposes of the settlement only,
      the United States District Court for the District of New Jersey certified a
      class on behalf of all persons or entities who purchased or otherwise acquired
      shares of the Company’s common stock during the period from October 7, 1999
      through August 19, 2003, inclusive, and who were damaged thereby. Excluded
      from
      the class, among others, were the defendants and the members of their immediate
      families, any entity in which any defendant has a controlling interest and
      the
      current and former directors and officers of the Company.




**FBI
      Investigation**




On
      November 22, 2002, the Federal Bureau of Investigation (“FBI”) executed a search
      warrant and removed certain documents and computers from the Company’s premises.
      The Company was not advised of the reasons for the FBI’s actions. To date, no
      indictments or charges have been issued against the Company.




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**NASDAQ
      Delisting**




On
      March
      21, 2003, trading of Medi-Hut’s shares of common stock on the NASDAQ SmallCap
      Market was halted. The Company’s common stock was later delisted from the NASDAQ
      SmallCap Market on March 28, 2003 for, among other things, failure by the
      Company to file with the SEC its annual report on Form 10-KSB for the fiscal
      year ended October 31, 2002.




**Syntest
      Litigation**




On
      May
      12, 2003, Medi-Hut commenced an action in the United States District Court
      for
      the Eastern District of New York against the Syntho Group, the Breckenridge
      Group and the Schrader Group relating to the Company’s exclusive right to
      distribute the hormone replacement therapy drug, Syntest, under the Syntest
      Agreement. In its complaint, the Company alleged that Syntho permitted
      Breckenridge, Medpharm and Bluegrass to distribute Syntest in violation of
      the
      Syntest Agreement and that Schrader Associates, which had been appointed by
      the
      Company as the exclusive broker with respect to sales of Syntest to drug
      wholesalers, chain drug stores and managed care companies, and Schrader offered
      discounts, incentives and rebates to customers of the Company without the
      Company’s authorization. In its complaint, the Company also asserted a breach of
      contract by Syntho, tortious interference with contract by the Breckenridge
      Group, Schrader, Medpharm and Bluegrass, violations of the Lanham Act by
      Breckenridge, fraud and violations of the Robinson Patman Act by the Schrader
      Group, breach of a nondisclosure agreement by Schrader Associates and breach
      of
      agreements to pay for goods sold by the Company to Bluegrass and Medpharm.
      The
      Company initially sought injunctive relief and monetary damages of an
      unspecified amount. However, the court, in September 2003, denied the Company’s
      request for a preliminary injunction against Syntho, holding that the Company
      had the ability to recover adequate monetary damages for the alleged
      breach.




On
      April
      18, 2003, three separate actions were filed against the Company in Kentucky
      state court by different members of the Schrader Group; one by Schrader
      Associates alleging breach of the brokerage agreement with the Company and
      seeking monetary damages; one by Medpharm seeking a declaratory judgment that
      it
      is entitled to credits or goods from the Company under an oral agreement to
      purchase product from the Company; and one by Bluegrass alleging breach of
      an
      agreement to pay compensation and provide free goods and failure to accept
      returns. These actions were later moved from the state court in Frankfort,
      Kentucky to the United States District Court for the Eastern District of
      Kentucky.




The
      Company was served on May 12, 2003 with a summons and complaint by Breckenridge,
      filed in the United States District Court for the Southern District of Florida,
      in which Breckenridge alleges that the Company was interfering with its alleged
      exclusive rights to distribute Syntest. In this action, Breckenridge was seeking
      monetary damages of an unspecified amount. This action was later moved to the
      United States District Court for the Eastern District of New York.




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In
      June
      2003, the Syntho Group filed an answer to the Company’s complaint which
      contained counterclaims against the Company for alleged: (1) breach of contract,
      (2) failure to pay for product, (3) tortious interference with Syntho’s
      agreement with Breckenridge, and (4) conversion of property.




On
      April
      21, 2004, the Company entered into a settlement agreement and limited release
      with the Schrader Group. Pursuant to this agreement, the Company and the
      Schrader Group agreed to dismiss with prejudice the actions which were pending
      in the United States District Court for the District of Kentucky, and the
      actions against each other which were pending in the United States District
      Court for the Eastern District of New York. As part of the settlement reached
      by
      the Company and the Schrader Group, the Schrader Group paid to the Company
      a
      cash payment of $375,000. In addition, the parties released each other from
      certain claims arising out of the distribution and sale of Syntest.




On
      October 17, 2005, the Company and Breckenridge entered into a purchase and
      settlement agreement pursuant to which the Company sold its distribution and
      other rights and business with respect to the hormone replacement drug, Syntest,
      to Breckenridge. In consideration for the sale of such rights and the other
      benefits provided under the purchase and settlement agreement,  Breckenridge
      agreed to pay the Company an aggregate of $1,000,000 as follows: (1) $250,000
      was paid shortly after the execution of the purchase and settlement agreement,
      and (2) $50,000 will be paid on the first day of each month for a 15 month
      period commencing on November 1, 2005 and ending on January 1, 2007. Further,
      pursuant to the settlement agreement, the Company and Breckenridge dismissed
      their actions against each other and released each other from any further claims
      arising out of the distribution and sale of Syntest, except as provided under
      the purchase and settlement agreement. Pursuant to the purchase and settlement
      agreement, the Company has reserved all of its rights to its claims for damages
      against the Syntho Group that were incurred by the Company as a result of the
      alleged breach by the Syntho Group of the Syntho Agreement and other wrongful
      actions by the Syntho Group.




The
      Company is continuing its action against the Syntho Group in the Syntest
      litigation pending in the United States District Court for the Eastern District
      of New York. The Company plans to vigorously pursue this matter through trial.




**Litigation
      Against Certain Former Officers and Directors and Others**




On
      December 4, 2003, Medi-Hut commenced litigation in the Superior Court of New
      Jersey against certain of its former officers and directors, Healthgen
      Distributors, Inc. (formerly known as Larval Corp.), Kinray, Inc. and Santi
      Greco, an officer of Kinray, Inc. In its complaint, Medi-Hut alleged that Joseph
      A. Sanpietro, a former director and the former President and Chief Executive
      Officer of the Company, Vincent J. Sanpietro, a former director and the former
      Chief Operating Officer and Secretary of the Company, Laurence M. Simon, the
      former Chief Financial Officer of the Company, and Lawrence P. Marasco, the
      former Vice President of Sales of the Company, caused the Company to suffer
      significant damage and incur substantial costs by engaging in a scheme to
      overstate Medi-Hut’s revenues and earnings through fraudulent accounting
      practices. The Company also alleged in its complaint that these former officers
      and directors, in furtherance of their scheme to defraud, filed materially
      false
      and misleading documents with the SEC and disseminated materially false and
      misleading information to the general public, investors and financial advisors
      and brokers. In addition to the foregoing, the Company alleged in its complaint
      that these former officers and directors, with the assistance of Larval Corp.,
      an entity controlled by Mr. Marasco, Kinray, Inc., a New York based
      pharmaceutical distributor, and Santi Greco, an officer of Kinray, Inc.,
      committed violations of state and federal laws prohibiting forgery and
      fraudulent practices and otherwise participated in “racketeering activity” as
      that term is defined in 18 U.S.C .
      §1961(1) and N.J.S.A .
      2C:41-1.




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In
      addition, as set forth in the complaint, the Company sought payment of a
      promissory note in the principal amount of $575,000 issued to it by former
      officer and director, Robert S. Russo, plus all accrued interest thereon. The
      promissory note, due and payable on October 24, 2003, was issued by Mr. Russo
      as
      payment for 100,000 shares of Medi-Hut common stock which he purchased in a
      private placement by the Company during the fall of 2001. The Company also
      sought to recover damages from Mr. Russo for his alleged breach of fiduciary
      duties to the Company during the time he was serving as an officer of the
      Company .




On
      January 20, 2004, Mr. Russo filed his answer to the Company’s complaint along
      with a counterclaim for compensatory and punitive damages, attorneys’ fees and
      costs and a declaration that the promissory note described above be declared
      null and void. Mr. Russo also filed a crossclaim for indemnification from the
      other defendants in the litigation should he be adjudged to be liable on any
      of
      the counts in the Company’s complaint.




On
      February 4, 2004, the Company entered into a settlement and release agreement
      with Vincent J. Sanpietro. In exchange for a one time payment of $20,000, the
      return of 554,800 shares of the Company’s common stock and certain other
      non-monetary considerations, the Company agreed to discharge its claims against
      Mr. Sanpietro.




On
      April
      14, 2004, the Company entered into a settlement and release agreement with
      Joseph A. Sanpietro. In exchange for a one-time payment of $60,000 and the
      return of 3,179,200 shares of the Company’s common stock and certain other
      non-monetary consideration, the Company agreed to discharge its claims against
      Mr. Sanpietro.




On
      May
      14, 2004, the Company entered into a settlement and release agreement with
      Robert S. Russo. In exchange for a one-time payment of $300,000, the return
      of
      125,000 shares of the Company’s common stock and other non-monetary
      consideration, the Company agreed to discharge its claims against Mr.
      Russo.




On
      July
      6, 2004, the Company amended the complaint against certain of its former
      officers and directors and others and commenced litigation against Muhammed
      Malik, Intermax Pharmaceuticals, Inc. and Syntho. In its complaint, Medi-Hut
      alleges that Muhammed Malik, in his capacity as a consultant to the Company
      and
      as president of Intermax Pharmaceuticals, Inc. and Syntho, provided substantial
      assistance to the former officers and certain former directors of the Company
      in
      carrying out the scheme to overstate Medi-hut’s revenues and earnings through
      fraudulent accounting practices and committed violations of state and federal
      laws prohibiting forgery and fraudulent practices and otherwise participated
      in
“racketeering activity” as that term is defined in 18 U.S.C .
      §1961(1) and N.J.S.A .
      2C:41-1. The defendants in this action have counterclaimed against the Company
      for alleged: (1) breach of contract, (2) breach of implied covenant of good
      faith and fair dealing, (3) fraud, (4) misrepresentation, (5) fraudulent
      concealment, (6) violation of the New Jersey Consumer Fraud Act, (7) conversion,
      and (8) failure to pay for delivered product.




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On
      September 16, 2004, the Company entered into a settlement agreement and release
      with Lawrence P. Marasco. As part of the settlement, Mr. Marasco paid to the
      Company the sum of $60,000, returned 405,000 shares of the Company’s common
      stock and agreed to provide certain other non-monetary
      consideration.




On
      November 29, 2004, the Company entered into a settlement agreement and release
      with Laurence M. Simon. In exchange for the return of 30,000 shares of the
      Company’s common stock and certain other non-monetary consideration, the Company
      agreed to dismiss its claims against Mr. Simon.




On
      January 19, 2005, the Company entered into a settlement agreement and release
      in
      connection with its action against Kinray, Inc. and its officer, Santi
      Greco.  Kinray,
      Inc. agreed to pay to the Company the sum of $300,000. This settlement was
      entered into without any admission of liability or any inferences of wrongdoing
      by any settling party.




**Litigation
      Against Former Accounting Firms** **




On
      January 9, 2004, the Company commenced litigation in the Superior Court of
      New
      Jersey against two of its former accounting firms, Rosenberg, Rich, Baker,
      Berman & Company, which served as Medi-Hut’s independent auditor and
      principal accounting firm from February 1998 to March 2003, excluding a three
      week period in early 2002, and Koenig, Russo & Associates, an accounting
      consultant engaged by Medi-Hut to review various tax documents, financial
      statements and filings by the Company with the SEC. Robert S. Russo, a former
      officer and director of Medi-Hut and a defendant in a litigation commenced
      by
      the Company against certain of its former officers and directors on December
      4,
      2003, is a principal of Koenig. In its complaint, Medi-Hut alleges that
      Rosenberg and Koenig, through their negligence and accounting malpractice,
      caused the Company to suffer significant damage and incur substantial costs.
      The
      Company alleges in its complaint that as a result of such negligence and
      accounting malpractice, Rosenberg and Koenig failed to detect or simply ignored
      a scheme by certain of the Company’s former officers and directors to overstate
      Medi-Hut’s revenues and earnings through fraudulent accounting practice, which
      had a devastating impact on the Company. The Company also alleges in its
      complaint that, as a result of their negligence and accounting malpractice,
      Rosenberg and Koenig failed to uncover and/or disclose the materially false
      and
      misleading financial information contained in the periodic reports filed by
      the
      Company with the SEC and otherwise disseminated to the general public, investors
      and financial advisors and brokers.




The
      Company is seeking compensatory damages, consequential damages and punitive
      damages, and the costs of the litigation, including approximately $800,000
      incurred by the Company for legal costs and expenses associated with actions
      by
      the SEC and others against the Company and certain of its former officers and
      directors.




In
      connection with the settlement of the Company’s separate action against Robert
      S. Russo in the Superior Court of New Jersey (See “Litigation Against Certain
      Officer, Directors and Others”), on May 14, 2004, the Company entered into a
      settlement and release agreement with Koenig. In exchange for certain
      non-monetary consideration, the Company agreed to discharge its claims against
      Koenig.




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**Lexington
      Insurance Lawsuit** **




On
      April
      14, 2004, a complaint was served on Medi-Hut by National Union in the United
      States District Court for the District of New Jersey. On January 19, 2005,
      the
      complaint was amended by National Union in order to properly state the name
      of
      the plaintiff as Lexington Insurance Company. In this action, the plaintiff
      alleged that the Company owed the plaintiff $235,000, representing unpaid
      insurance premiums related to directors and officers insurance for the period
      January 2003 through December 2003. While the Company did receive a proposal
      from Lexington, the Company secured directors and officers insurance from
      another carrier under better terms and at a lower cost. No written binder,
      policy forms, endorsements nor any other indicia of a Lexington policy were
      ever
      delivered to the Company.




On
      March
      10, 2005, the Company filed a third party complaint against Universal and Brett
      D. Mayer in the United States District Court for the District of New Jersey.
      Universal was the retail broker that advised the Company during the Company’s
      business dealings with Lexington and Mayer was the individual employed by
      Universal that dealt directly with the Company. In its complaint, the Company
      alleged that Universal and Mayer were negligent and breached their fiduciary
      duty to the Company in providing services related to the Company’s procurement
      of directors and officers insurance.




On
      September 28, 2005, the Company and Lexington entered into an agreement in
      which
      Lexington agreed to dismiss its complaint against the Company and both Lexington
      and the Company agreed to release each other from any and all claims which
      could
      have been asserted as a result of the Lexington lawsuit. On October 13, 2005,
      the Company, Universal and Mayer entered into an agreement in which the Company
      agreed to dismiss its third party complaint against Universal and Mayer in
      exchange for a one time payment from Universal and Mayer of $8,500.




**Loures
      Lawsuit** **




On
      December 28, 2004, an action was commenced in the Superior Court of New Jersey
      by James J. Loures, Jr. and his wife, Christine Loures, against the Company
      and
      certain of its former officers and directors. The plaintiffs allege that the
      Company, its former officers and certain of its former directors engaged in
      a
      scheme to inflate the Company’s revenues and earnings through a series of
      accounting irregularities and fraudulent financial disclosures during the period
      June 2001 through March 2003 which resulted in the plaintiffs’ loss of
      approximately $120,000. The plaintiffs allegations are the same as those alleged
      in the class action lawsuits discussed above. The plaintiffs were one of eight
      parties that opted out of the settlement related to the class action lawsuit.
      The Company intends to vigorously defend this action. No accrual has been
      provided for this lawsuit




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




No
      matters were submitted to a vote of the Company’s shareholders during the fourth
      quarter of fiscal 2002.




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**PART
      II**




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




On
      March
      21, 2003, trading of the Company’s shares of common stock on the NASDAQ SmallCap
      Market was halted. The Company’s common stock was later delisted from the NASDAQ
      SmallCap Market on March 28, 2003 for, among other things, failure by the
      Company to file with the SEC its annual report on Form 10-KSB for the fiscal
      year ended October 31, 2002. Since that time, no established public trading
      market has existed for the Company’s common stock and shares of the Company’s
      common stock are neither listed on any national securities exchange, or
      presently traded on any public stock exchange or in any other public market.
      Although quotations for shares of the Company’s common stock may be obtained
      through the Pink Sheets maintained by Pink Sheets LLC, because secondary market
      activity for shares of the Company’s common stock has been limited and sporadic,
      such quotations may not actually reflect the price or prices at which purchasers
      and sellers would currently be willing to purchase or sell such shares.




The
      following table shows the range of high and low closing bid prices for the
      Company’s common stock for the periods indicated, as reported by NASDAQ and the
      NASDAQ Trading and Market Services under the symbol “MHUT” for the period
      commencing November 1, 2000 to March 20, 2003, and in the Pink Sheets under
      the
      symbol “MHUT” for the period commencing March 21, 2003 through October 31, 2005.
      These quotations represent prices between dealers and may not include retail
      markups, markdowns, or commissions that may not necessarily represent actual
      transactions.




**Year
                Ended October 31, 2005**
            
            **High**
            
            **Low**First
                Quarter
            
            $
            .15
            
            $
            .02Second
                Quarter
            
            
            .14
            
            
            .03Third
                Quarter
            
            
            .11
            
            
            .05Fourth
                Quarter****
            
            
            .10
            
            
            .04**Year
                Ended October 31, 2004**
            
            
            **High**
            
            
            **Low**First
                Quarter
            
            $
            .24
            
            $
            .06Second
                Quarter
            
            
            .22
            
            
            .06Third
                Quarter
            
            
            .13
            
            
            .02Fourth
                Quarter
            
            
            .05
            
            
            .02**Year
                Ended October 31, 2003**
            
            
            **High**
            
            
            **Low**First
                Quarter
            
            $
            3.53
            
            $
            1.21Second
                Quarter
            
            
            1.65
            
            
            .45Third
                Quarter
            
            
            .80
            
            
            .14Fourth
                Quarter
            
            
            .25
            
            
            .13





-36-
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          of Contents**




**Year
                Ended October 31, 2002**
            
            **High**
            
            **Low**First
                Quarter
            
            $
            13.85
            
            $
            6.94Second
                Quarter
            
            
            6.70
            
            
            2.27Third
                Quarter
            
            
            5.40
            
            
            1.70Fourth
                Quarter
            
            
            4.32
            
            
            2.19**Year
                Ended October 31, 2001**
            
            
            **High**
            
            
            **Low**First
                Quarter
            
            $
            8.00
            
            $
            5.00Second
                Quarter
            
            
            6.97
            
            
            4.50Third
                Quarter
            
            
            8.55
            
            
            6.25Fourth
                Quarter
            
            
            9.50
            
            
            5.65





Pink
      Sheets LLC is an electronic quotation and information service that collects
      and
      publishes market maker quotes for OTC securities and thereby enables National
      Association of Securities Dealers (NASD) broker-dealer firms to more efficiently
      deal in OTC securities. The Company’s common stock is currently classified as an
      OTC security. An investment in an OTC security is speculative and involves
      a
      degree of risk. Many OTC securities are relatively illiquid, or “thinly traded,”
      which can enhance volatility in the share price and make it difficult for
      investors to buy or sell without dramatically affecting the quoted price or
      may
      be unable to sell a position at a later date.




**Shareholders**




As
      of
      October 31, 2005, there were approximately 416 shareholders of record of the
      Company’s common stock and 21,276,090 shares of common stock
      outstanding **.**




**Dividends**




The
      Company has not paid cash or stock dividends on its common stock and does not
      intend to pay cash or stock dividends in the foreseeable future. ******




**Sales
      of Unregistered Securities for the Fiscal Year Ended October 31,
      2002**




On
      February 25, 2002, the Company acquired certain intellectual property from
      Spectrum relating to the Solo-SafeTM Safety Syringe. In consideration for
      Spectrum’s safety syringe patents and patents pending and the related FDA 510(k)
      approval, the Company issued to the shareholders of Spectrum 700,000 shares
      of
      restricted common stock based on a price per share of $5.00 for a total purchase
      price of $3,500,000. The Company also granted certain registration rights to
      Spectrum and its shareholders. The Company relied on an exemption from
      registration for a private transaction not involving a public distribution
      provided by Section 4(2) of the Securities Act.







-37-
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          of Contents**





On
      August
      1, 2002, the Company engaged Muhammed Malik, a consultant, to provide assistance
      in adding products to the Company’s distribution pipeline pursuant to a
      consulting agreement. The term of the consulting agreement was for thirty-six
      months commencing on August 1, 2002 and ending on July 31, 2005, unless
      terminated sooner by either of the parties. As compensation for these future
      services, on August 1, 2002, the Company issued to Mr. Malik a warrant to
      purchase 90,000 shares of common stock of the Company, exercisable at $4.50
      per
      share, and a warrant to purchase 90,000 shares of common stock of the Company,
      exercisable at $2.45 per share. Each warrant was fully vested on the date of
      issuance and each is exercisable until October 31, 2006. The warrants had a
      fair
      value of approximately $215,122 at the date of issuance. The Company recorded
      deferred compensation for the fair value of the warrants upon issuance and
      initially intended to amortize the expense over the life of the agreement.
      Each
      warrant contains customary anti-dilution provisions. The Company has the right
      to require the holder to exercise the warrant, in whole or in part, in the
      event
      that the closing bid price of the Company’s common stock is greater than $10.00
      at any time after the six month anniversary of the date of issuance of the
      warrant. The Company relied on an exemption from registration for a private
      transaction not involving a public distribution provided by Section 4(2) of
      the
      Securities Act. Although the consulting agreement was set to expire on July
      31,
      2005, the Company determined that the consultant did not provide any services
      beyond the fiscal year ended October 31, 2002. Accordingly, the Company expensed
      the extra amount of deferred compensation related to this consulting agreement
      as of October 31, 2002.




No
      other
      sale of unregistered securities took place during the fiscal year ended October
      31, 2002, which were not previously disclosed in a quarterly report on Form
      10-QSB.







-38-
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          of Contents**





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




The
      following discussion of the financial condition and results of operations of
      the
      Company should be read in conjunction with the Company’s audited balance sheet
      at October 31, 2002 and the related notes thereto appearing elsewhere in this
      annual report on Form 10-KSB.




**Background**




Medi-Hut
      Co. is a Nevada corporation headquartered in Spring Lake, New Jersey. Medi-Hut
      was incorporated in the State of New Jersey on November 29, 1982. On January
      28,
      1998, Medi-Hut entered into an Agreement and Plan of Reorganization with
      Indwest, Inc., a Utah corporation, whereby Medi-Hut changed its domicile to
      the
      State of Utah and became subject to the reporting requirements of the Exchange
      Act. On February 2, 1998, Medi-Hut completed a second change of domicile
      transaction and became a Delaware corporation, and, on October 31, 2001,
      completed a third and final change of domicile transaction and became a Nevada
      corporation.




During
      the fiscal year ended October 31, 2002, Medi-Hut’s business included the
      distribution of over the counter medical devices and disposable clinical
      supplies, such as condoms and alcohol preparation pads, and generic and name
      brand pharmaceuticals. The Company’s business for the fiscal year ended October
      31, 2002 also included the sale of hormone replacement therapy drugs (Syntest
      Double-Strength and Half-Strength) which were manufactured and supplied to
      the
      Company by Syntho pursuant to the Company’s exclusive distribution agreement
      with Syntho. The Company’s products generally were sold directly to distributors
      or wholesalers who sold the products to pharmacies, drug store chains or other
      wholesalers. Occasionally the Company sold directly to physicians and other
      healthcare providers.




During
      the fiscal year ended October 31, 2002, Medi-Hut continued to develop the
      patented Elite Safety Syringe, a passive anti-stick safety syringe, and
      commenced the initial manufacturing of the product. For the fiscal year ended
      October 31, 2002, there were minimal sales of the Elite Safety Syringe due
      to
      development, manufacturing and marketing issues. After evaluating the various
      development, manufacturing and marketing issues surrounding the Elite Safety
      Syringe, the Company determined that the cost associated with creating
      sufficient manufacturing capabilities to support a market launch of the product
      combined with the cost associated with correcting certain design issues exceeded
      the overall market opportunity that exists for the product. Accordingly, the
      Company has decided that it will no longer develop or market the Elite Safety
      Syringe. In addition, on February 25, 2002, the Company acquired its other
      safety syringe product, the Solo-SafeTM Safety Syringe, which has never been sold
      and remains in early development. The
      Company does not intend to further develop this product or maintain its patents
      due to the significant amount of development costs that would have to be
      incurred to bring the product to market, the limited market opportunity that
      exists for the product and the Company’s limited financial
      resources.







-39-
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In
      March
      2003, the Company exited from the business of selling branded and generic
      pharmaceuticals to wholesalers due to the low margins attributed to such sales.
      In addition, in March 2003, the Company was unable to continue the sale of
      Syntest, its hormone replacement therapy product line, due to a dispute with
      the
      manufacturer of and contract sales representative for such product line, which
      resulted in the commencement of litigation by the Company against such parties
      as well as other related litigation involving the Company.




Commencing
      March 2003 through September 2004, the Company’s operations focused on the sale
      of condoms to wholesalers and distributors and the sale of disposable clinical
      supplies (e.g. alcohol preparation pads) directly to distributors, physicians
      and other medical providers. The
      Company stopped selling these products in October 2004 due to reduced profit
      margins and the decline in the customer base.




Currently,
      the Company does not have any recurring revenue from the sale of products.
      The
      Company is in the process of identifying new products for acquisition and
      development. However, no assurances can be given that the Company will have
      the
      financial and other resources necessary for it to acquire and develop any new
      product. See “Item 1. Description of Business - Strategy for Business
      Development.”




**Critical
      Accounting Policies**




The
      discussion and analysis of the Company’s financial condition is based upon the
      balance sheet contained elsewhere herein, which has been prepared in accordance
      with accounting principles generally accepted in the United States. The
      preparation of the balance sheet required the Company to make estimates and
      judgments that affect the reported amounts of assets, liabilities and related
      disclosure of contingent assets and liabilities. On an on-going basis, the
      Company evaluates its estimates, including those related to product returns,
      bad
      debts, inventories, investments, intangible assets, income taxes, contingencies
      and litigation. The Company based its estimates on historical experience and
      on
      various other assumptions that are believed to be reasonable under the
      circumstances, the results of which form the basis for making judgments about
      the carrying value of assets and liabilities that are not readily apparent
      from
      other sources. Actual results may differ from these estimates under different
      assumptions or conditions.




The
      Company believes the following critical accounting policies affect the more
      significant judgments and estimates used in preparation of the balance sheet
      contained elsewhere herein.




**Inventory**




As
      included in the Company’s balance sheet as of October 31, 2002, inventory
      consists of finished goods and is stated at the lower of cost (first-in,
      first-out basis) or market. As a distributor of medical products during the
      fiscal year ended October 31, 2002, the Company was exposed to a number of
      economic and industry factors that resulted in portions of the inventory
      becoming either obsolete or in excess of anticipated usage. These factors
      included, but are not limited to, technological changes in the market, the
      Company’s ability to meet changing customer requirements, competitive pressures
      in products and prices, reliability and replacement of product from the
      Company’s suppliers. During the fiscal year ended October 31, 2002, the
      Company’s policy was to establish inventory reserves when conditions existed
      that suggested the inventory may be in excess of anticipated demand or was
      obsolete based upon assumptions about future demand for the Company’s products
      or market conditions. The Company evaluated its ability to realize the value
      of
      its inventory based on a combination of factors including the following:
      historical usage rates, forecasted sales or usage, product end of life dates,
      estimated current and future market values and new product introductions.
      Assumptions used in determining the Company’s estimates of future product demand
      may sometimes prove to be inaccurate, in which case the provision required
      for
      excess and obsolete inventory would have to be adjusted in the future. Although
      every effort is made to ensure the accuracy of the Company’s forecasts of future
      product demand, any significant unanticipated changes in demand could have
      a
      significant negative impact on the value of the Company’s inventory.
      Additionally, purchasing requirements and alternative usage avenues are explored
      within these processes to mitigate inventory exposure. When recorded, the
      Company’s reserves are intended to reduce the carrying value of its inventory to
      its net realizable value. As of October 31, 2002, the Company recorded a reserve
      of $10,000 for potentially obsolete inventory.




-40-
 **Table
          of Contents**




**Accounts
      Receivable Reserves**




During
      the fiscal year ended October 31, 2002, the Company recorded a provision for
      estimated sales returns and allowances on product sales made prior to November
      1, 2002. These estimates were based on the specific facts and circumstances
      of
      particular orders, analysis of credit memo data and other known factors. If
      the
      data the Company uses to calculate these estimates did not properly reflect
      reserve requirements, then a change in the allowances would be made in the
      period in which such a determination was made and revenues in that period could
      be adversely affected.




**Revenue
      Recognition**




During
      the fiscal year ended October 31, 2002, the Company recognized product revenue
      upon shipment, provided that there was persuasive evidence of a sales
      arrangement, there were no uncertainties regarding acceptance, the sales price
      was fixed or determinable and collection of the resulting receivable was
      probable.




**Valuation
      of Intangible Assets and Other Long-Lived Assets**




Intangible
      assets with a defined life and other long-lived assets were reviewed for
      impairment in accordance with Statement of Financial Accounting Standards No.
      144, *Accounting
      for the Impairment or Disposal of Long-Lived Assets* .
      Impairment reviews are based on a cash flow approach that requires significant
      management judgment with respect to future volume, revenue and expense growth
      rates, changes in working capital use, appropriate discount rates and other
      assumptions and estimates. The use of alternative estimates and assumptions
      could increase or decrease the estimated fair market value of the asset, and
      potentially result in different impacts to the Company’s results of operations.
      Actual results may differ from management’s estimates.




Based
      on
      the Company’s financial performance during the fiscal year ended October 31,
      2002, the Company undertook an analysis of the likelihood of recovering the
      carrying amount of its intangible assets with a defined life. This impairment
      analysis indicated, based on the Company’s estimated future undiscounted cash
      flows, the Company would not be able to recover the full carrying amount of
      intangible assets related to the Solo-SafeTM Safety Syringe technology acquired
      by the Company on January 9, 2002 for $3,500,000. As a result, for the fiscal
      year ended October 31, 2002, the Company recognized an impairment loss of
      $3,500,000. Prior to this impairment loss, the Company had classified as
      intangible assets $3,450,000 related to the cost of the Solo-SafeTM Safety
      Syringe issued United States Patents and $50,000 related to the cost of the
      Solo-SafeTM Safety Syringe FDA 510(k) premarket notification.




-41-
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The
      Company also determined that the molds and assembly equipment related to the
      1cc
      version of the Elite Safety Syringe were impaired. The molds and the equipment
      were both located at Sam Woo, the Company’s third party contract manufacturer of
      the 1cc Elite Safety Syringe located in Korea. Sam Woo ceased operations in
      2003
      and was not able to complete the Company’s 1cc assembly machine. The partially
      completed machine was deemed to have no value to the Company. In addition,
      the
      Company determined that the molds being used by Sam Woo to manufacture the
      1cc
      Elite Safety Syringe were defective. Prior to this impairment loss, the Company
      had classified as equipment $182,129 related to the molds and $163,867 related
      to the assembly machine. The molds and assembly machine were being depreciated
      on a straight line method over a period of three and seven years, respectively.




The
      Company acquired the exclusive distribution rights to Syntest, a hormone
      replacement therapy drug manufactured by Syntho, pursuant to an exclusive
      license agreement dated November 20, 2001, as amended on February 7, 2002 and
      April 3, 2002, between the Company and Syntho. The Company paid Syntho
      $2,500,000 and agreed to purchase Syntest at a price per unit as agreed upon
      by
      the parties. The term of the agreement was for a period of five years commencing
      with the first commercial sale of the Syntest product, which occurred in October
      2002. In March 2003, regular sales of Syntest ceased when Syntho refused,
      beginning in January 2003, to sell any additional product to the Company
      resulting in the commencement of litigation by the Company against Syntho and
      other parties on May 12, 2003. The Company’s initial investment of $2,500,000
      was to be amortized over the five year life of the exclusive distribution
      agreement, commencing on the date of the first commercial sale of the product
      which occurred on October 14, 2002. On October 17, 2005, the Company sold its
      distribution and other rights and business with respect to Syntest, to
      Breckenridge. In consideration for the sale of such rights and the other
      benefits provided under the purchase and settlement agreement between
      Breckenridge and the Company,  Breckenridge
      agreed to pay the Company an aggregate of $1,000,000 as follows: (1) $250,000
      was paid shortly after the execution of the purchase and settlement agreement,
      and (2) $50,000 will be paid on the first day of each month for a 15 month
      period commencing on November 1, 2005 and ending on January 1, 2007. The
      difference between the original purchase price of $2,500,000 and the amount
      received through the sale of the distribution rights to Breckenridge has been
      written off as of the fiscal year ended October 31, 2002. See “Item 3. Legal
      Proceedings - Syntest Litigation.”







-42-
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          of Contents**





**Income
      Taxes**




The
      Company accounts for income taxes under SFAS No. 109, *Accounting
      for Income Taxes* .
      This
      statement requires that the Company recognize a current tax liability or asset
      for current taxes payable or refundable and a deferred tax liability or asset
      for the estimated future tax effects of temporary differences and carryforwards
      to the extent they are realizable. The Company records a valuation allowance
      to
      reduce the Company’s deferred tax assets to the amount that is more likely than
      not to be realized. While the Company has considered future taxable income
      and
      ongoing prudent and feasible tax planning strategies in assessing the need
      for
      the valuation allowance, in the event the Company was to determine that it
      would
      be able to realize the deferred tax assets in the future in excess of the net
      recorded amount, an adjustment to the deferred tax asset would increase income
      in the period such determination was made. Likewise, should the Company
      determine that it would not be able to realize all or part of its net deferred
      tax asset in the future, an adjustment to the deferred tax asset would be
      charged to income in the period such determination was made.




The
      valuation allowance as of October 31, 2002 primarily relates to net operating
      losses generated in fiscal 2002 and 2001 for which the Company can only realize
      a benefit through the generation of future taxable income for which realization
      is uncertain. The Company’s net deferred tax asset is currently $0.




**Stock-based
      Compensation**




Stock-based
      compensation charges represent the difference between the exercise price of
      options granted to employees and the fair value of the Company’s common stock on
      the date of grant for financial statement purposes in accordance with Accounting
      Principles Board Opinion No. 25 and its related interpretations. The
      Company recognizes this compensation charge over the vesting periods of the
      shares purchasable upon exercise of options. Should the Company’s assumptions of
      fair value change, the amount recorded as intrinsic value may increase or
      decrease in the future.




The
      Company did not record any deferred stock-based compensation or any related
      amortization during the fiscal year ended October 31, 2002. The Company
      applies a straight-line amortization policy for the deferred compensation.




Stock-based
      compensation charges also include the periodic revaluation of stock options
      that
      the Company has granted to non-employees, in accordance with the provisions
      of
      Statement of Financial Accounting Standards No. 123 and Emerging Issues
      Task Force No. 96-18. Pursuant to this accounting literature, equity
      instruments, such as options, are required to be recorded at the fair value
      of
      the consideration received, or the fair value of the equity instrument issued,
      whichever may be more readily measured. For grants to non-employees, the fair
      value of the equity instrument issued is more readily measured and the Company
      assigns value to the options using a Black-Scholes methodology. As required,
      the
      Company revalues these options over the period when earned in accordance with
      their respective terms. Should the Company’s input assumptions change, for
      example, fair value of common stock at the measurement date, the fair value
      of
      our non-employee consultant compensation will change.




-43-
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          of Contents**




As
      of
      October 31, 2002, the unamortized deferred stock-based compensation amounted
      to
      $26,180 relating to the grant of stock options to our non-employees.




**Legal
      Contingencies**




The
      Company is currently involved in certain legal proceedings. In connection with
      these legal proceedings, management periodically reviews estimates of potential
      costs to be incurred by the Company in connection with the adjudication or
      settlement, if any, of these proceedings. These estimates are developed in
      consultation with outside counsel and are based on an analysis of potential
      litigation outcomes and settlement strategies. In accordance with FASB Statement
      No. 5, *Accounting
      for Contingencies* ,
      loss
      contingencies are accrued if, in the opinion of management, an adverse outcome
      is probable and such outcome can be reasonably estimated. The Company does
      not
      believe that these proceedings will have a material adverse effect on its
      financial position; however, it is possible that future results for any
      particular quarter or annual period may be materially affected by changes in
      management’s assumptions or the effectiveness of the Company’s strategies
      relating to these proceedings. See “Item 3. Legal Proceedings.”




As
      of
      October 31, 2002, the Company accrued $589,300 related to the settlement of
      the
      class action lawsuits filed against the Company in 2002. The Company agreed
      to
      settle the class action litigation on August 18, 2003 and the United States
      District Court for the District of New Jersey approved the settlement on May
      3,
      2004. The $589,300 accrual represents a $400,000 cash payment made by the
      Company in conjunction with the settlement as well as the fair market value,
      on
      the date the settlement was executed (August 18, 2003), of the 861,990 shares
      of
      the Company’s common stock issued in conjunction with the settlement and $60,000
      of legal fees related to the settlement. See “Item 3. Legal Proceedings - Class
      Action Lawsuits.”




**Results
      of Operations**




Medi-Hut
      was subjected to corporate mismanagement in the form of accounting
      irregularities and securities fraud during the fiscal years ended October 31,
      2002 and 2001 due to the actions of the Company’s former management team.
      Financial and other information necessary for the Company’s current management
      to prepare accurate financial statements for such fiscal years is either missing
      or unverifiable. As a result, the Company’s current management is unable to
      report on the Company’s results of operations for the fiscal year ended October
      31, 2001 and the results of operations for fiscal year ended October 31, 2002.
      However, current management was able to prepare a balance sheet at October
      31,
      2002, which has been audited by the Company’s independent auditors. The Company
      believes that it will be able to include complete, audited financial statements
      and analysis with respect to the Company’s results of operations for fiscal
      2003, 2004 and 2005 in its annual reports on Form 10-KSB for the fiscal years
      ended October 31, 2003, 2004 and 2005, respectively.




**Liquidity
      and Capital Resources**




On
      February 26, 2002, the Company entered into the Loan Agreement with PNC Bank.
      Pursuant to the Loan Agreement, the Company secured a $750,000 Note under which
      the Company was permitted to draw-down money until February 1, 2003. Interest
      on
      the outstanding balance of the Note was charged at prime. In addition, the
      Company secured a $2,000,000 Line of Credit at a rate of prime plus .75% for
      a
      term of one year ending February 1, 2003. Pursuant to the terms of the Security
      Agreement entered into between the Company and PNC, both the Note and the Line
      of Credit were secured by all of the personal property of the Company including
      cash, accounts receivable, inventory, equipment and general intangibles. As
      of
      October 31, 2002, there was no outstanding balance on the Note or the Line
      of
      Credit. On November 13, 2002, the Company borrowed $1,500,000 on the Line of
      Credit. On December 13, 2002, the Company was notified by PNC that it was in
      default on the Note and the Line of Credit, and, in February 2003, it was
      notified that PNC would not extend the expiration date of the Note or the Line
      of Credit, at which time the outstanding balance on the Line of Credit was
      $1,500,000. As a result, in February and March 2003, the Company was required
      to
      repay $1,500,000 to PNC related to the Line of Credit and $159,404 related
      to a
      letter of credit and certain fees.




-44-
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          of Contents**




The
      Company currently does not have any lending or credit relationships with banks
      or other lending institutions and does not anticipate establishing such a
      relationship in the foreseeable future due to the Company’s limited operations
      and assets. On May 26, 2005, the Company closed on a private placement of
      Debentures. The gross proceeds received in connection with this private
      placement were $300,000. On August 25, 2005, the Company closed on a private
      placement of 4,000,000 shares of its common stock. The gross proceeds received
      in connection with this private placement were $200,000 ($.05 per share). On
      October 17, 2005, the Company and Breckenridge entered into a purchase and
      settlement agreement whereby Breckenridge agreed to pay the Company an aggregate
      of $1,000,000 as follows: (1) $250,000 was paid shortly after the execution
      of
      the purchase and settlement agreement, and (2) $50,000 will be paid on the
      first
      day of each month for a 15 month period commencing on November 1, 2005 and
      ending on January 1, 2007. The proceeds from the sale of the Debentures, the
      sale of common stock and the settlement with Breckenridge will be used to fund
      the Company’s pending litigation matters and for other business development and
      operational purposes.




No
      revenue is currently generated from the sale of the Company’s products. As of
      October 31, 2005, the Company’s cash position was approximately $611,000 and
      $750,000 is due from Breckenridge payable in $50,000 monthly installments
      through January 1, 2007 pursuant to the purchase and settlement agreement
      entered into on October 17, 2005 by the Company and Breckenridge. See “Item 3.
      Legal Proceedings.” The Company currently projects expending approximately
      $105,000 of its cash per month to continue operations and maintain the various
      lawsuits it has instituted. The Company anticipates that its future monthly
      expenses will include lease costs of approximately $3,000, accounting fees
      of
      approximately $3,500, payment of a portion (approximately $35,000) of the
      $50,000 monthly fee payable to Century Capital pursuant to the Consulting
      Services Agreement between the Company and Century Capital, insurance costs
      of
      $8,000, legal expenses of approximately $30,000 and general administrative
      expenses of approximately $25,500.




Management
      believes that the Company will require additional capital to be able to obtain
      other medical devices and products and otherwise implement its strategy for
      business development and increased revenues discussed elsewhere herein. Although
      a favorable outcome or settlement of one or more of the Company’s current
      lawsuits could increase the capital position of the Company, no assurance can
      be
      given that any such action will result in a favorable outcome or settlement
      to
      the Company or that if any such action is favorably decided or settled, such
      decision or settlement will occur in the near future.




Management
      believes that the Company will have to focus on obtaining additional capital
      through the private placement of its securities and the favorable outcome or
      settlement of one of its pending lawsuits.




**Inflation
      and Seasonality**




Inflation
      has had no material effect on the operations or financial condition of the
      Company’s business. In addition, the Company’s operations are not considered
      seasonal in nature.







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




Except
      for the Company’s balance sheet at October 31, 2002, all of the financial
      statements and supplementary data of the Company called for by this item have
      not been included in this report. Reference is made to the Note contained on
      page 1 herein and “Item 6. Management’s Discussion and Analysis or Plan of
      Operation.”




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




On
      January 28, 2002, the Company engaged Grant Thornton LLP as its independent
      auditors and dismissed Rosenberg. The decision to change auditors was
      recommended by the Audit Committee (the “Audit Committee”) of the Board of
      Directors of the Company. On February 15, 2002, Grant Thornton LLP resigned
      as
      the Company’s independent auditors. On February 20, 2002, the Company reengaged
      Rosenberg as its independent auditors. The decision to reengage Rosenberg was
      recommended by the Audit Committee. The Company did not have any disagreement
      with either of these accounting firms concerning the first dismissal of
      Rosenberg and the resignation of Grant Thornton LLP.




On
      March
      28, 2003, the Company dismissed Rosenberg as its independent auditors for a
      second and final time. The Company reported the dismissal of the Rosenberg
      firm
      as its independent auditors in a current report on Form 8-K, dated March 28,
      2003. In that current report on Form 8-K, the Company stated that in connection
      with its audits for the fiscal years ended October 31, 2002 and 2001,
      respectively, and during any subsequent periods preceding the date of dismissal,
      there were no disagreements with Rosenberg in any matter regarding accounting
      principles or practices, financial statement disclosure, or auditing scope
      or
      procedure. Pursuant to the procedure outlined in SEC Regulation S-K, Item 304,
      the Company amended its current report on Form 8-K, dated March 28, 2003, to
      include a letter from Rosenberg in which the accounting firm disagreed with
      the
      Company’s statements. On April 8, 2003, the SEC provided comments to the Company
      with respect to the disclosures in the Company’s current report on Form 8-K,
      dated March 28, 2003 and amended on April 4, 2003. Current management could
      not
      adequately respond to the SEC’s comments due to the incomplete and unverifiable
      information left behind by prior management. Consequently, the Company’s current
      report on Form 8-K, dated March 28, 2003 and amended on April 4, 2003, has
      been
      deemed deficient by the SEC. Although the SEC has not commenced an enforcement
      action against the Company for such deficient current report on Form 8-K, no
      assurance can be given that the SEC will not do so in the future. Any such
      action by the SEC could have significant adverse consequences to the
      Company.




On
      May
      15, 2003, the Company engaged the accounting firm Eisner as its independent
      auditors to perform an audit of the Company’s financial statements as of the
      fiscal years ended October 31, 2002 and October 31, 2001. Since that time,
      the
      Company has made exhaustive efforts to complete its audits of the 2002 and
      2001
      financial statements. As a result of these efforts, management determined that
      due to incomplete records, among other issues, they could not file complete
      audited financial statements for these periods. However, management determined
      that it would be able to file an audited balance sheet as of October 31, 2002.
      Further, management intends to file the required interim period and annual
      audited financial statements up to and including the fiscal year ended October
      31, 2005 as soon as practical.




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On
      March
      3, 2005, Company replaced Eisner as its independent auditors with the accounting
      firm, Weiser. Management believed that it is in the best interest of the Company
      to change auditors in order to facilitate the completion of the audit of the
      Company’s balance sheet as of October 31, 2002. The change in auditing firms was
      reviewed and recommended by the Company’s Audit Committee and approved by the
      Company’s Board of Directors. The Company reported the dismissal of the Eisner
      firm as its independent auditors in a current report on Form 8-K, dated March
      3,
      2005. In that current report on Form 8-K, the Company stated that in connection
      with its audits as of and for the fiscal years ended October 31, 2002 and 2001,
      respectively, and during any subsequent interim periods preceding the date
      of
      dismissal, there were no disagreements with Eisner on any matter regarding
      accounting principles or practices, financial statement disclosure, or auditing
      scope or procedure. In addition, during its engagement by the Company, Eisner
      did not issue any report on the financial statements or review any financial
      statements of the Company.




Pursuant
      to the procedure outlined in SEC Regulation S-B, Item 304, the Company included
      in the current report on Form 8-K a letter from Eisner in which the accounting
      firm agreed with the Company’s statements that there were no disagreements
      between the Company and Eisner on any matter regarding accounting principles
      or
      practices, financial statement disclosure, or auditing scope or
      procedure.







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**PART
      III**




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




**Current
      Officers and Directors**




The
      Company’s current executive officers and directors, their respective ages,
      positions with the Company and biographical information, including business
      experience, are set forth below.




Name
              
              Age
              
              Position
                  HeldDavid
                  R. LaVance
              
              51
              
              Chairman
                  of the Board, President and Chief Executive OfficerThomas
                  S. Gifford
              
              37
              
              Executive
                  Vice President, Chief Financial Officer (Treasurer), Secretary
                  and
                  DirectorJohn
                  A. Moore
              
              40
              
              DirectorRichard
                  E. Otto
              
              55
              
              Director




There
      are
      no family relationships among the current executive officers and directors
      of
      Medi-Hut. None of the current executive officers or directors of Medi-Hut are
      directors of any company with a class of securities registered pursuant to
      Section 12 of the Exchange Act or subject to the requirements of Section 15(d)
      of the Exchange Act or any company registered as an investment company under
      the
      Investment Company Act of 1940, as amended, except for Mr. LaVance who serves
      as
      a director of Hologic, Inc. (NASDAQ: HOLX) and Mr. Otto who serves as a director
      of Corautus Genetics Inc. (AMEX: VEGF).




*David
      R. LaVance* *:* Mr.
      LaVance became Medi-Hut’s President and Chief Executive Officer and the Chairman
      of its Board of Directors on March 21, 2003. He also is the President and
      co-founder of Century Capital which was founded in 1997. Mr. LaVance was a
      Managing Director of KPMG Health Ventures, an advisory group providing
      investment banking services to healthcare service providers from 1995 through
      1997. Prior to joining KPMG Health Ventures, Mr. LaVance was a founder of
      Physicians Data Corporation, a startup health informatics company formed in
      1994, and served as the President of Nuclear Care, Inc., a nuclear imaging
      clinical services provider from 1992 through 1995. Mr. LaVance currently is
      a
      member of the Board of Directors of Hologic, Inc. (NASDAQ: HOLX), a medical
      device company specializing in digital imaging and VectraMed, Inc., a privately
      held early stage drug development company. Mr. LaVance received a B.A. degree
      from Furman University in 1976 and a J.D. degree from Washington College of
      Law
      of the American University in 1979.




*Thomas
      S. Gifford* :
      Mr.
      Gifford became Medi-Hut’s Executive Vice President, Chief Financial Office
      (Treasurer) and a director on March 21, 2003. He later became the Secretary
      of
      Medi-Hut on July 22, 2003. Mr. Gifford is also the Vice President and co-founder
      of Century Capital. He is a licensed attorney in New York and New Jersey and
      is
      a Certified Public Accountant. He was formerly a Manager and Associate Director
      of KPMG Health Ventures. Prior to KPMG Health Ventures, Mr. Gifford was an
      accountant for KPMG Peat Marwick LLP from 1990 through 1994, where he provided
      auditing and financial due diligence services to various publicly traded and
      privately held emerging technology companies. Mr. Gifford currently serves
      on
      the Board of Directors of Maloy Risk Services, Inc., a privately held insurance
      brokerage. Mr. Gifford received a B.S. degree from Rutgers University in 1990
      and a J.D. degree from Seton Hall University School of Law in 1995.




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*John
      A. Moore* :
      Mr.
      Moore was elected as a director of the Company on May 6, 2003. Since July 2002,
      he has been the President of Edson Moore Healthcare Ventures, an investment
      entity that owns securities in various public and private life science
      companies. From 1994 through June 2002, Mr. Moore was the Chairman and Chief
      Executive Officer of Optimer, Inc., a research based polymer development
      company. Prior thereto, he worked for a number of Wall Street firms including
      Lehman Brothers and Hambrecht & Quist. Mr. Moore has been a director of
      Optimer since 1994. He is also a director and Chairman of ImaRx Therapeutics,
      a
      privately-held company engaged in medical technology development. Mr. Moore
      received a B.A. degree from Rutgers University.




*Richard
      E. Otto* :
      Mr.
      Otto was elected as a director of the Company on May 6, 2003. He has been the
      Chief Executive Officer and a director of Corautus Genetics Inc. (formerly
      GenStar Therapeutics Corporation), a publicly traded biopharmaceutical company
      (AMEX: VEGF) dedicated to the development of innovative gene therapy products
      for the treatment of cardio and vascular disease, since the merger of Corautus
      and Vascular Genetics Inc. on February 5, 2003. Prior to the merger, he served
      as Chief Executive Officer and a director of Vascular Genetics Inc., a developer
      of gene therapy for the treatment of severe cardiovascular disease, since
      January, 2002. From June 1995 through April 1998, he was Chief Executive Officer
      and director of CardioDynamics International Corporation (NASDAQ: CDIS), a
      publicly traded company that develops, manufactures and markets noninvasive
      heart-monitoring devices. Mr. Otto has served as a consultant to the founder
      of
      WebMD and as a consultant to key management positions with Cardiac Pacemakers
      Inc. (now a Guidant company). Mr. Otto also held positions at Intermedics,
      Inc.,
      Medtronic Inc., and Eli Lilly and Company. He received a B.S. degree from the
      University of Georgia.




**Officers
      and Directors for the Fiscal Year Ended October 31, 2002**




All
      of
      the Company’s executive officers and directors during the fiscal year ended
      October 31, 2002 are no longer with the Company. The names and titles of the
      persons who served as the Company’s executive officers and directors during the
      fiscal year ended October 31, 2002 are set forth below.




*Joseph
      A. Sanpietro* *:* ****** Joseph
      A. Sanpietro served as the President and Chief Executive Officer of Medi-Hut
      from January 1998 through March 21, 2003, and as director from January 1998
      through March 28, 2003. He served as the President of the Company’s predecessor
      from 1982 to 1998. Mr. Sanpietro was terminated by the Company as its President
      and Chief Executive Officer on March 21, 2003 and resigned as a director of
      Medi-Hut on March 28, 2003.




*Vincent
      J. Sanpietro* *:* ****** Vincent
      J. Sanpietro served as the Chief Operating Officer of Medi-Hut from January
      1998
      through March 21, 2003. Mr. Sanpietro also had been the Secretary of Medi-Hut
      from January 1998 through March 21, 2003 and served as a director for such
      period. He served as Secretary of the Company’s predecessor from 1982 through
      1998. Mr. Sanpietro was terminated by the Company as its Chief Operating Officer
      and Secretary on March 21, 2003 and resigned as a director of the Company on
      March 28, 2003.




-49-
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*Laurence
      M. Simon* *:* Mr.
      Simon
      served as Medi-Hut’s Chief Financial Officer from April 20, 2001 through March
      21, 2003, and also served as the Company’s Treasurer from May 14, 2002 through
      March 21, 2003, when he was terminated by the Company.




*Lawrence
      P. Marasco* :
      Mr.
      Marasco served as Medi-Hut’s Vice President of Sales and Marketing from April
      2000 until March 12, 2003, when he was terminated by the Company.




*Robert
      Russo* *:* ****** Mr.
      Russo ****** served
      as
      a director of Medi-Hut from March 1998 through March 6, 2003, when he resigned.
      He also served as the Company’s Treasurer from March 1998 through May 14, 2002.




*James
      G. Aaron* *:* Mr.
      Aaron served as a director of Medi-Hut from April 3, 2001 through February
      5,
      2004, when he resigned.




*James
      S. Vaccaro* :
      Mr.
      Vaccaro served as a director of the Company from April 3, 2001 through January
      25, 2003, when he resigned.




**Section
      16(a) Beneficial Ownership Reporting Compliance**




Section
      16(a) of the Exchange Act requires the Company’s directors, executive officers
      and persons who own more than 5% of the Company’s common stock, to file with the
      SEC initial reports of ownership and reports of changes in ownership of the
      Company common stock and other equity and derivative securities. Officers,
      directors and greater than 10% beneficial owners are required by SEC regulations
      to furnish Medi-Hut with copies of all Section 16(a) reports they file. To
      the
      knowledge of current management, based upon review of the copies of the forms
      furnished to the Company during the fiscal year ended October 31, 2002, other
      than **** James
      G.
      Aaron who filed a Form 5 in lieu of a late Form 4, all filings required to
      be
      made by the Company’s executive officers and directors pursuant to Section 16(a)
      of the Exchange Act for the fiscal year ended October 31, 2002 were filed within
      the time periods prescribed.







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




**Compensation
      of Executive Officers**




The
      following table sets forth information concerning the annual and long-term
      compensation for services in all capacities to the Company for the fiscal years
      ended October 31, 2002, 2001 and 2000 of the Company’s President and Chief
      Executive Officer and each other executive officer of the Company whose total
      annual salary and bonus for the fiscal year ended October 31, 2002 exceeded
      $100,000 (the “Named Executive Officers”).


**SUMMARY
                  COMPENSATION TABLE****Annual
                  Compensation**
              
              **Long
                  Term Compensation****Awards**
              
              **Payouts****Name
                  and Position(1)**
              
              **Year**
              
              **Salary
                  ($)**
              
              **Bonus
                  ($)**
              
              **Other
                  Annual Compensa -tion ($)**
              
              **Restricted
                  Stock Award(s) ($)**
              
              **Securities
                  UnderlyingOptions #**
              
              **LTIP**
                **Payouts
                  ($)**
              
              **All
                  Other Compensa-tion ($)**Joseph
                  A. Sanpietro,
              
              
              2002
              
              $
              205,833
              
              $
              –
              
              $
              –
              
              $
              –
              
              
              –
              
              $
              –
              
              $
              7,837
                  (2
              )former
                  President,
              
              
              2001
              
              
              93,555
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              10,454
                  (2
              )and
                  Chief Executive Officer
              
              
              2000
              
              
              77,225
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              6,000
                  (2
              )Vincent
                  J. Sanpietro,
              
              
              2002
              
              $
              142,083
              
              $
              –
              
              $
              –
              
              $
              –
              
              
              –
              
              $
              –
              
              $
              5,639
                  (2
              )former
                  Chief Operating
              
              
              2001
              
              
              62,340
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              5,906
                  (2
              )Officer
                  and Secretary
              
              
              2000
              
              
              51,428
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              5,000
                  (2
              )Laurence
                  M. Simon,
              
              
              2002
              
              $
              100,000
              
              $
              –
              
              $
              –
              
              $
              –
              
              
              –
              
              $
              –
              
              $
              1,313
                  (2
              )former
                  Chief Financial
              
              
              2001
              
              
              41,667
              (3)
              
              –
              
              
              –
              
              
              –
              
              
              20,000
                  (4
              )
              
              –
              
              
              2,061
                  (2
              )Officer
                  (Treasurer)
              
              
              2000
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              –





(1)
            Each
                of the Named Executive Officers for the fiscal year ended October
                31, 2002
                were terminated by the Company on March 21, 2003 as explained elsewhere
                herein. No further compensation was paid to any of these Named Executive
                Officers upon their termination.


(2)
            Represents
                amounts received in transportation
                allowances.


(3)
            For
                the period commencing April 20, 2001 through October 31,
                2001.


(4)
            Represents
                shares of common stock underlying options granted to Mr. Simon pursuant
                to
                his employment agreement. These options were cancelled on November
                29,
                2004 as part of the settlement and release agreement between the
                Company
                and Mr. Simon as explained elsewhere
                herein.








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**Year
      End Option Values**




The
      following table provides certain information with respect to options to purchase
      the Company’s common stock held by the Named Executive Officers at October 31,
      2002.


**Number
                    of Shares of Common Stock Underlying Unexercised Options at October
                    31,
                    2002**
                
                **Value
                    of Unexercised**
                  **In-the-Money
                    Options at**
                  **October
                    31, 2002 ($)****Name**
                
                **Exercisable**
                
                **Unexercisable**
                
                **Exercisable**
                
                **Unexercisable**Joseph
                    A. Sanpietro
                
                
                –
                
                
                –
                
                $
                –
                
                $
                --Vincent
                    J. Sanpietro
                
                
                –
                
                
                –
                
                $
                –
                
                $
                --Laurence
                    M. Simon
                
                
                10,480(1
                )
                
                9,520(1)(2
                )
                $
                –
                
                $
                –


(1)
            The
                exercise price for these options was $6.75 per share and the per
                share
                market price of the Company’s common stock on October 31, 2002 was $3.26.
                Therefore, none of these options were in-the-money at October 31,
                2002.
                These options were cancelled on November 29, 2004 as part of the
                settlement and release agreement between the Company and Mr. Simon
                as
                explained elsewhere herein.


(2)
            Stock
                options to purchase 6,800 shares which were not vested terminated
                upon the
                Company’s termination of Mr. Simon’s employment on March 21, 2003. The
                remainder of these options were cancelled on November 29, 2004 as
                part of
                the settlement and release agreement between the Company and Mr.
                Simon as
                explained elsewhere herein.




No
      options were exercised by the Named Executive Officers during the fiscal year
      ended October 31, 2002.




**Compensation
      of Directors**




Currently,
      the Company does not provide any cash compensation to its directors. However,
      each of the outside directors that participated on the board during 2003, which
      excludes David R. LaVance and Thomas S. Gifford, received a warrant, dated
      July
      24, 2003, to purchase 200,000 shares of the Company’s common stock. An aggregate
      of 800,000 shares could be issued pursuant to these warrants. The per share
      exercise price of the warrants is $.26, subject to adjustment from time to
      time
      as provided in the warrant certificates. 66,666 shares underlying the warrant
      became eligible for purchase on July 24, 2003, another 66,666 of the shares
      underlying a warrant became available for purchase on July 24, 2004 and the
      remainder of the shares underlying the warrant, totaling 66,668, became
      available for purchase on July 24, 2005. There is no accounting effect for
      the
      above transaction as of October 31, 2002. The warrants had a fair value of
      approximately $155,138 at the date of issuance.




Each
      of
      the outside directors that participated on the board during 2004, which excludes
      Mr. LaVance and Mr. Gifford, received a warrant dated May 14, 2004 to purchase
      200,000 shares of the Company’s common stock. An aggregate of 600,000 shares of
      common stock could be issued pursuant to these warrants. The per share exercise
      price of the warrants is $.04, subject to adjustment from time to time as
      provided in the warrant certificates. 66,600 shares underlying a warrant became
      available for purchase on May 14, 2004 and the remainder of the shares
      underlying the warrant, totaling 133,400, became available for purchase on
      May
      14, 2005. There is no accounting effect for the above transaction as of October
      31, 2002. The warrants had a fair value of approximately $32,137 at the date
      of
      issuance.




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Each
      of
      the outside directors that participated on the board during 2005, which excludes
      Mr. LaVance and Mr. Gifford, received a warrant dated February 25, 2005 to
      purchase 200,000 shares of the Company’s common stock. An aggregate of 400,000
      shares of common stock could be issued pursuant to these warrants. The per
      share
      exercise price of the warrants is $.03, subject to adjustment from time to
      time
      as provided in the warrant certificates. 100,000 shares underlying a warrant
      became available for purchase on February 25, 2005 and the remainder of the
      shares underlying the warrant, totaling 100,000, shall become eligible for
      purchase on and after February 25, 2006. All underlying shares shall immediately
      vest ten days prior to a change of control, as such term is defined in the
      warrant certificates. There is no accounting effect for the above transaction
      as
      of October 31, 2002. The warrants had a fair value of approximately $6,378
      at
      the date of issuance. See “Item 11. Security Ownership of Certain Beneficial
      Owners and Management and Related Stockholder Matters - Equity Compensation
      Plans.”




For
      the
      fiscal year ended October 31, 2002, the Company paid its directors $500 for
      each
      meeting of the Board he attended and $300 for each Board committee meeting
      he
      attended.




**Employment
      Agreements**




On
      November 1, 2001, Medi-Hut entered into an employment agreement with its former
      Chief Financial Officer, Laurence M. Simon. The term of the employment agreement
      was two years and two months. The employment agreement provided that Mr. Simon
      would receive an annual salary of $100,000 and the following benefits:
      insurance, vacation, sick leave and use of a company vehicle. In addition,
      pursuant to the employment agreement, Medi-Hut granted stock options to Mr.
      Simon to purchase an aggregate of 20,000 shares of common stock at $6.75 per
      share. Options for 3,680 shares vested on December 31, 2001 and the remainder
      vested at a rate of 680 common shares each month through December 31, 2003.
      Of
      these options, 6,800 shares that were not vested terminated upon the Company’s
      termination of Mr. Simon’s employment on March 21, 2003. The agreement provided
      that Mr. Simon could be terminated for gross negligence or willful misconduct
      in
      the performance of his duties, if he is convicted of a felony or if the Board
      of
      Directors determines it is in the Company’s best interest not to continue his
      employment.




On
      August
      1, 2002, Mr. Simon purportedly entered into a new employment agreement with
      the
      Company. However, inasmuch as the new employment agreement was never formally
      approved by the Company’s Board of Directors, the Company did not recognize the
      validity of such agreement and as such no accrual was deemed necessary as of
      October 31, 2002.




Mr.
      Simon
      was terminated by the Company on March 21, 2003 for, among other things,
      participating in various fraudulent schemes which resulted in significant damage
      to the Company. On August 19, 2003, Mr. Simon pled guilty to conspiracy to
      inflate the revenue and earnings of the Company and lying to investigators.
      On
      December 4, 2003, the Company commenced an action against Mr. Simon and certain
      other former officers and directors of the Company to recover damages
      attributable to their fraudulent behavior. On November 29, 2004 the Company
      and
      Mr. Simon entered into a settlement and release agreement which, among other
      consideration, included the cancellation of the outstanding options held by
      him
      and a release related to any claim Mr. Simon may have had pursuant to the
      November 1, 2001 employment agreement or the August 1, 2002 purported
      agreement.




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On
      August
      1, 2002, Joseph A. Sanpietro, the Company’s former President and Chief Executive
      Officer, and Vincent J. Sanpietro, the Company’s former Chief Operating Officer
      and Secretary, purportedly entered into employment agreements with the Company.
      However, inasmuch as these employment agreements were never formally approved
      by
      the Company’s Board of Directors, the Company did not recognize the validity of
      such agreements. Any rights that Joseph A. Sanpietro and Vincent J. Sanpietro
      may have claimed pursuant to these purported employment agreements were
      terminated pursuant to the settlement and release agreement between the Company
      and Joseph A. Sanpietro dated April 14, 2004 and the settlement and release
      agreement between the Company and Vincent J. Sanpietro dated February 4,
      2003.




Currently,
      there exists no employment agreement with any of the Company’s executive
      officers other than the amended and restated Consulting Services Agreement
      with
      Century Capital related to the services of David R. LaVance and Thomas S.
      Gifford. See “Consulting Services Agreement.”




**Consulting
      Services Agreement**




*Original
      Agreement Dated February 1, 2003*




The
      Company entered into a Consulting Services Agreement with Century Capital,
      effective as February 1, 2003, in order to engage Century Capital to provide
      (1)
      general corporate and business advisory services, (2) strategic business
      advisory services, and (3) financial advisory services to the Company. The
      Consulting Services Agreement was approved by the Company’s Board of Directors.
      The initial term of the Consulting Services Agreement was two years, which
      ended
      on January 31, 2005.




Mr.
      LaVance and Mr. Gifford are members of Century Capital. On March 21, 2003,
      pursuant to the Consulting Services Agreement, the Board appointed Mr. LaVance
      as Chief Executive Officer of the Company, and Mr. Gifford as Executive Vice
      President and Chief Financial Officer of the Company. Mr. LaVance and Mr.
      Gifford were also appointed as directors of the Company to fill vacancies on
      the
      Board as of the same date. Mr. LaVance assumed the position of Chairman of
      the
      Board when he was appointed as a director.




During
      the initial term of the Consulting Services Agreement, Century Capital was
      entitled to receive a monthly consulting fee in the amount of $75,000 and was
      entitled to be reimbursed for all reasonable and customary business expenses.
      For each one year period commencing on February 1 and ending on January 31
      during the term of the Consulting Services Agreement, Century Capital was
      entitled to be paid a minimum annual cash bonus in an amount not less than
      $125,000. Century Capital was eligible to earn an annual bonus in excess of
      $125,000 at the discretion of the Company’s Board of Directors. There is no
      accounting effect for the above transaction as of October 31, 2002.




In
      addition, the Company issued Century Capital a ten year warrant to purchase
      1,500,000 shares of the Company’s common stock at a purchase price of $1.34 per
      share (the “Underlying Purchase Price”). The per share purchase price was
      subject to certain pricing adjustments which included an adjustment if the
      average closing price of the Company’s common stock over a period of thirty days
      is less than the then existing Underlying Purchase Price. 375,000 shares of
      the
      Company’s common stock underlying the warrant became available for purchase as
      of February 1, 2003 and an additional 46,875 of the shares underlying the
      warrant became available for purchase on and after the last day of each month
      commencing February 28, 2003 and ending January 31, 2005.




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As
      a
      result of the application of the pricing adjustment, the Underlying Purchase
      Price adjusted to $.08 per share as of May 14, 2004, the date when Century
      Capital exercised its right to purchase 937,500 shares of the Company’s common
      stock underlying the warrant. The Underlying Purchase Price adjusted to $.02
      per
      share as of November 1, 2004 when Century Capital exercised its right to
      purchase 421,876 shares of the Company’s common stock underlying the warrant. On
      February 25, 2005, Century Capital exercised its right to purchase 140,624
      shares of the Company’s common stock underlying the warrant at $.02 per share.
      As of February 28, 2005, all 1,500,000 shares of the Company’s common stock
      underlying the warrant had been purchased. On February 1, 2003, the date of
      issuance, the warrant had a fair value of approximately $1,294,525. As of April
      30, 2004, after accounting for the reduction of the Underlying Purchase Price
      to
      $.08 per share, the fair value of the warrant decreased to approximately
      $101,710. As of October 31, 2004, after accounting for the further reduction
      of
      the Underlying Purchase Price to $.02 per share, the fair value of the
      unexercised warrant decreased to approximately $8,783. See “Item 11. Security
      Ownership of Certain Beneficial Owners and Management and Related Stockholder
      Matters - Equity Compensation Plans.”




On
      May
      14, 2004, in lieu of the minimum annual cash bonus due Century Capital for
      the
      period that began on February 1, 2003 and ended on January 31, 2004, Century
      Capital agreed to accept the following: (1) $50,000 cash payment to be made
      on
      September 1, 2004; (2) 1,875,000 shares of the Company’s common stock and (3)
      the forgiveness of $75,000 due to the Company from Century Capital related
      to
      the purchase by Century Capital of 937,500 shares of the Company’s common stock
      underlying the warrant issued to it on February 1, 2003. On February 25, 2005,
      Century Capital agreed to accept 500,000 shares of the Company’s common stock as
      payment of the $50,000 due to Century Capital on September 1, 2004.




Also,
      on
      May 14, 2004, the Company issued Century Capital a ten year, non-cancelable
      warrant to purchase 700,000 shares of the Company’s common stock at a purchase
      price of $.04 per share. 100,000 shares of the Company’s common stock underlying
      the warrant became available for purchase as of May 14, 2004, with the remaining
      shares underlying the warrant becoming available for purchase upon the
      achievement of specific milestones as follows: 100,000 shares shall be available
      for purchase upon the Company’s receipt of at least $2,000,000 in cumulative
      proceeds related to the Syntho Litigation; 100,000 shares shall be available
      for
      purchase upon the filing of the Company’s annual report on Form 10-KSB for the
      fiscal year ended October 31, 2002; 100,000 shares shall be available for
      purchase upon the filing of the Company’s quarterly reports on Form 10-QSB for
      the quarters ended January 31, 2003, April 30, 2003 and July 31, 2003; 100,000
      shares shall be available for purchase upon the Company’s receipt of at least
      $500,000 in cumulative proceeds from the litigation against certain former
      officers, directors and others and/or the litigation against the Rosenberg
      and
      Koenig accounting firms; 100,000 shares shall be available for purchase upon
      the
      Company becoming eligible to register its common stock pursuant to the
      Securities Act; and 100,000 shares shall be available for purchase upon the
      acquisition by the Company of a product or line of business. On November 1,
      2004, Century Capital exercised its right to purchase 200,000 shares of the
      Company’s common stock underlying the warrant. Of the shares purchased, 100,000
      shares became available for purchase on May 14, 2004 and the other 100,000
      shares became available for purchase prior to November 1, 2004 as a result
      of
      the Company’s receipt of at least $500,000 of cumulative proceeds from the
      litigation against certain former officers, directors and others. The warrant
      had a fair value of approximately $44,211 at the date of issuance.




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Commencing
      July 1, 2004, Century Capital agreed to defer $25,000 of its monthly consulting
      fee for a three month period (through September 30, 2004) in an effort to
      minimize the Company’s cash burn. Century Capital later agreed to continue the
      $25,000 monthly deferment through January 31, 2005, at which point the total
      amount due and owing to Century Capital related to the deferment of its monthly
      consulting fee was $175,000. On November 1, 2004, Century Capital exercised
      warrants to purchase 621,876 shares of the Company’s common stock (421,876
      shares pursuant to the warrant dated February 1, 2003 and 200,000 shares
      pursuant to the warrant dated May 14, 2004). The $16,438 due to the Company
      from
      Century Capital related to these warrant exercises were offset against the
      deferred monthly consulting fees due to Century Capital. On February 25, 2005,
      Century Capital agreed to forgive $60,000 of the monthly deferred consulting
      fees in exchange for 600,000 shares of the Company’s common stock. Further, on
      February 25, 2005, Century Capital exercised warrants to purchase 140,624 shares
      of the Company’s common stock pursuant to the warrant dated February 1, 2003.
      The $2,812 due to the Company from Century Capital as a result of this exercise
      was offset by the Company against the deferred monthly consulting fees due
      to
      Century Capital. On August 25, 2005, Century Capital agreed to forgive $50,000
      of the deferred monthly consulting fees in exchange for 1,000,000 shares of
      the
      Company’s common stock.




During
      the entire term of the original Consulting Services Agreement, Mr. LaVance
      and
      Mr. Gifford were treated as independent contractors for purposes of
      compensation, were not paid any salary or other compensation directly by the
      Company and neither of Mr. LaVance or Mr. Gifford participated in any of the
      Company’s employee benefit plans.




As
      provided in the original Consulting Services Agreement, Mr. LaVance and Mr.
      Gifford were added as covered parties under the Company’s directors’ and
      officers’ liability insurance policies (“D&O Policies”). The Company is
      required to maintain such D&O Policies while Mr. LaVance and Mr. Gifford
      hold positions as officers and/or directors of the Company and for a period
      of
      two years following termination of their service in such positions. The Company
      also agreed in the original Consulting Services Agreement to indemnify and
      hold
      harmless Century Capital and its representatives, including Mr. LaVance and
      Mr.
      Gifford, from and against any and all claims, demands, liabilities, obligations,
      losses, fines, and expenses, including reasonable attorneys’ and accountants’
      fees and expenses incurred in connection with the Company’s failure to perform
      under the original Consulting Services Agreement or any threatened, pending
      or
      completed action, suit or proceeding arising out of Century Capital’s
      relationship, or the relationship of any Century Capital representative, with
      the Company.




*Amended
      and Restated Agreement Dated February 1, 2005*




Effective
      February 1, 2005, the original Consulting Services Agreement was replaced by
      an
      amended and restated Consulting Services Agreement. Pursuant to the amended
      and
      restated Consulting Services Agreement, Century Capital agreed to provide the
      services of Mr. LaVance and Mr. Gifford as the Company’s corporate officers. As
      provided in the amended and restated Consulting Services Agreement, Mr. LaVance
      will continue to serve as the Company’s President and Chief Executive Officer
      and Mr. Gifford will continue to serve as the Company’s Executive Vice
      President, Chief Financial Officer, Treasurer and Secretary. The amended and
      restated Consulting Services Agreement also provides that Mr. LaVance and Mr.
      Gifford will continue to be treated as independent contractors for the purposes
      of compensation, will not be paid any salary or other compensation directly
      by
      the Company and will not participate in the Company’s employee benefit
      plans.




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The
      initial term of the amended and restated Consulting Services Agreement is one
      year, ending on January 31, 2006. Thereafter, the amended and restated
      Consulting Services Agreement shall continue until either party elects to
      terminate the amended and restated Consulting Services Agreement by providing
      sixty days written notice. During the term of the amended and restated
      Consulting Services Agreement, Century Capital is entitled to receive a monthly
      consulting fee in the amount of $50,000 and is entitled to be reimbursed for
      all
      reasonable and customary business expenses. Century Capital is also entitled
      to
      receive an annual bonus in an amount not less than $125,000 upon the successful
      completion of the objectives which are established by the independent members
      of
      the Company’s Board of Directors and Century Capital.




The
      Company may terminate the amended and restated Consulting Services Agreement
      for
      cause if Century Capital fails to materially perform the consulting services
      and
      does not cure such non-performance within sixty days of receipt of written
      notice of such non-performance from the Board. Century Capital can terminate
      the
      amended and restated Consulting Services Agreement for cause for, among other
      reasons, (1) any breach of the amended and restated Consulting Services
      Agreement by the Company which is not cured within thirty days of receipt of
      written notice from Century Capital, (2) the failure of the Company to pay
      any
      compensation or bonus to Century Capital when due or payable, (3) the removal
      of
      David R. LaVance as President and Chief Executive Officer of the Company without
      the prior written approval of Century Capital, (4) the removal of Thomas S.
      Gifford as Executive Vice President, Chief Financial Officer (Treasurer) and
      Secretary of the Company, without the prior written approval of Century Capital
      (5) the removal of or failure to elect David R. LaVance and Thomas S. Gifford
      as
      members of the Company’s Board of Directors without the prior written approval
      of Century Capital, or (6) the Company becoming insolvent or
      bankrupt.




If
      the
      amended and restated Consulting Services Agreement is terminated by the Company
      for cause, Century Capital shall be paid all unpaid monthly fees and
      reimbursable expenses through the termination date. If the amended and restated
      Consulting Services Agreement is terminated by Century Capital for cause, then
      Century Capital shall be paid on the termination date a lump sum amount equal
      to
      the sum of all unpaid monthly fees and reimbursable expenses plus the full
      amount of the bonus target established for the year of termination, plus an
      amount equal to the product of Century Capital’s monthly fee multiplied by the
      greater of (1) six months and (2) the number of full months remaining in the
      initial term.




During
      the term of the amended and restated Consulting Services Agreement and for
      a
      period of twenty-four months after the termination of the amended and restated
      Consulting Services Agreement, Century Capital shall be entitled to receive
      a
      cash bonus upon the consummation by the Company of certain corporate
      transactions. The bonus compensation shall be an amount not less than 2.5%
      of
      the aggregate consideration to be paid in connection with a sale or acquisition
      of the Company or in connection with a change in control of the Company (which
      means a change in more than 50% of the issued and outstanding shares of the
      Company’s common stock). Century Capital shall be entitled to receive the bonus
      compensation for any corporate transaction which commences before, but is
      consummated after, the end of the twenty-four month period following the
      effective termination date of the amended and restated Consulting Services
      Agreement.




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Upon
      the
      execution of the amended and restated Consulting Services Agreement, the Company
      issued Century Capital a ten year, non-cancelable warrant to purchase 500,000
      shares of the Company’s common stock at a purchase price of $.03 per share. The
      500,000 shares of the Company’s common stock underlying the warrant shall be
      available for purchase as follows: (a) 250,000 of the shares underlying the
      warrant became available for purchase as of February 1, 2005; (b) an additional
      20,833 of the shares underlying the warrant become available for purchase on
      the
      last day of each month commencing February 28, 2005 and ending December 31,
      2005
      and (c) 20,837 of the shares underlying the warrant become available for
      purchase on January 31, 2006. The warrant has customary terms and provisions
      as
      set forth in a warrant certificate, dated as of February 1, 2005, including,
      without limitation, anti-dilution adjustments, registration rights, and
      acceleration of vesting upon a change in control of the Company. The warrant
      had
      a fair value of approximately $10,674 at the date of issuance. On February
      25,
      2005, Century Capital exercised its right to purchase 250,000 shares of the
      Company’s common stock underlying the warrant. The $7,500 due to the Company
      from Century Capital as a result of this exercise was offset by the Company
      against amounts due and owing to Century Capital related to the deferred monthly
      consulting fees related to the original Consulting Services Agreement. On both
      May 20, 2005 and August 25, 2005, Century Capital exercised warrants to purchase
      62,500 shares of the Company’s common stock (125,000 shares in total). The
      $3,750 due to the Company from Century Capital as a result of these exercises
      was offset by the Company against the deferred monthly consulting fees due
      to
      Century Capital related to the original Consulting Services
      Agreement.




As
      provided in the original Consulting Services Agreement the Company is obligated
      to maintain D&O Policies while Mr. LaVance and Mr. Gifford hold positions as
      officers and/or directors of the Company and for a period of two years following
      termination of their service in such positions. The Company also agreed to
      indemnify and hold harmless Century Capital and its representatives, including
      Mr. LaVance and Mr. Gifford, from and against any and all claims, demands,
      liabilities, obligations, losses, fines, and expenses, including reasonable
      attorneys’ and accountants’ fees and expenses incurred in connection with the
      Company’s failure to perform under the amended and restated Consulting Services
      Agreement or any threatened, pending or completed action, suit or proceeding
      arising out of Century Capital’s relationship, or the relationship of any
      Century Capital representative with, the Company.




Commencing
      July 2005, Century Capital began deferring a portion of its monthly consulting
      fee due pursuant to the amended and restated Consulting Services Agreement
      in
      order to minimize the Company’s cash burn. As of October 31, 2005, $80,000 is
      due to Century Capital related to deferred monthly consulting fees for the
      period commencing July 1, 2005 and ending October 31, 2005. In addition, as
      of
      October 31, 2005, $34,500 was due and owing to Century Capital related to
      deferred monthly consulting fees pursuant to the original Consulting Services
      Agreement and $125,000 was due and owing to Century Capital related to the
      minimum annual bonus for the period beginning February 1, 2004 and ending
      January 31, 2005.







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




**Security
      Ownership of Certain Beneficial Owners and Management**




The
      following table sets forth information as of October 31, 2005, with respect
      to
      the beneficial ownership of the Company’s outstanding common stock by (1) each
      of the Company’s current officers and directors, (2) each of the Named Executive
      Officers and directors for the fiscal year ended October 31, 2002, (3) all
      current executive officers and current directors as a group, and (4) each person
      or group of persons known by the Company to be the beneficial owner of 5% of
      the
      Company’s outstanding common stock. Beneficial ownership is determined in
      accordance with the rules of the SEC and generally includes voting or investment
      power with respect to securities. Except as indicated by footnote, the persons
      named in the table below have sole voting power and investment power with
      respect to the shares of common stock shown as beneficially owned by
      them.


**Beneficial
                Ownership of**
              **Medi-Hut’s
                Common Stock****Name
                of Beneficial Owner**
            
            **No.
                of Shares (1)**
            
            **Percent
                of Class**David
                R. LaVance (2)(3)(4)
            
            
            3,187,499
            
            
            14.87
            %Thomas
                S. Gifford (3)(5)(6)
            
            
            3,498,437
            
            
            16.32
            %John
                A. Moore (3)(7)
            
            
            1,500,000
            
            
            6.94
            %Richard
                E. Otto (3)(8)
            
            
            500,000
            
            
            2.30
            %Joseph
                A. Sanpietro (9)
            
            
            --
            
            
            --Vincent
                J. Sanpietro (10)
            
            
            --
            
            
            --Laurence
                M. Simon (11)
            
            
            --
            
            
            --Robert
                S. Russo (12)
            
            
            --
            
            
            --James
                S. Vaccaro (13)
            
            
            2,000
            
            
            *James
                G. Aaron (14)
            
            
            130,166
            
            
            *Richard
                S. Rimer (15)(16)
            
            
            3,375,000
            
            
            15.86
            %All
                current executive officers and directors as a group
                (4)(6)(7)(8)
            
            
            8,374,998
            
            
            37.33
            %





*
            Less
                than one percent.


(1)
            In
                accordance with Rule 13d-3 of the Exchange Act, a person is deemed
                to be
                the beneficial owner, for purposes of this table, of any shares of
                Medi-Hut’s common stock if he or she has voting or investment power with
                respect to such security. This includes shares (1) subject to options
                and
                warrants exercisable within sixty days, and (2)(a) owned by a spouse,
                (b)
                owned by other immediate family members, or (c) held in trust or
                held in
                retirement accounts or funds for the benefit of the named individuals,
                over which shares the person named in the table may possess voting
                and/or
                investment power.


(2)
            Such
                person serves as the Company’s President and Chief Executive
                Officer.


(3)
            Such
                person serves as a director of the Company and maintains a mailing
                address
                of 215 Morris Avenue, Spring Lake, New Jersey
                07762.


(4)
            Includes
                162,499 shares subject to the warrants issued on May 14, 2004 and
                February
                25, 2005 to Century Capital which are available for purchase within
                sixty
                days of October 31, 2005. Mr. LaVance has an ownership interest in
                and
                serves as President of Century Capital. Mr. LaVance disclaims beneficial
                ownership of these securities except to the extent of his ownership
                interest in Century Capital. Also includes 310,938 shares held by
                the
                LaVance Trust for Children. Mr. LaVance disclaims beneficial ownership
                of
                these securities.


(5)
            Such
                person serves as the Company’s Executive Vice President, Chief Financial
                Officer (Treasurer) and Secretary.


(6)
            Includes
                162,499 shares subject to the warrants issued on May 14, 2004 and
                February
                25, 2005 to Century Capital which are available for purchase within
                sixty
                days of October 31, 2005. Mr. Gifford has an ownership interest in
                and
                serves as Vice President of Century Capital. Mr. Gifford disclaims
                beneficial ownership of these securities except to the extent of
                his
                ownership interest in Century Capital. Also includes 310,938 shares
                held
                by the LaVance Trust for Children. Mr. Gifford is the trustee for
                the
                LaVance Trust for Children. Mr. Gifford disclaims beneficial ownership
                of
                these securities.


(7)
            Includes
                333,400 shares currently available for purchase or which are available
                for
                purchase within sixty days of October 31, 2005 under the warrants
                issued
                by the Company to him on July 24, 2003, May 14, 2004 and February
                25,
                2005.


(8)
            Represents
                the shares currently available for purchase or which are available
                for
                purchase within sixty days of October 31, 2005 under the warrants
                issued
                by the Company to him on July 24, 2003, May 14, 2004 and February
                25,
                2005.


(9)
            As
                of October 31, 2002, Mr. Sanpietro directly owned 3,179,200 shares
                of the
                Company’s common stock. In April 2004, as part of the settlement between
                the Company and Mr. Sanpietro related to litigation filed by the
                Company,
                Mr. Sanpietro returned the 3,179,200 shares of common stock to the
                Company. The last known mailing address for Mr. Sanpietro is 212
                Stillhouse Road, Freehold, New Jersey 07728.


(10)
            As
                of October 31, 2002, Mr. Sanpietro directly owned 554,800 shares
                of the
                Company’s common stock. In February 2004, as part of the settlement
                between the Company and Mr. Sanpietro related to litigation filed
                by the
                Company, Mr. Sanpietro returned the 554,800 shares of common stock
                to the
                Company. The last known mailing address for Mr. Sanpietro is 1911
                Waters
                Edge Drive, Toms River, New Jersey 08753.


(11)
            As
                of October 31, 2002, Mr. Simon directly owned 30,000 shares of the
                Company’s common stock and held vested stock options which were
                exercisable to purchase 10,480 shares. In November 2004, as part
                of the
                settlement between the Company and Mr. Simon related to litigation
                filed
                by the Company, Mr. Simon returned to the Company the 30,000 shares
                of
                common stock that he held directly. In addition, all options either
                vested
                or not vested that were issued by the Company to Mr. Simon were cancelled.
                The last known mailing address for Mr. Simon is 6 Woodruff Court,
                Englishtown, New Jersey 07726.


(12)
            As
                of October 31, 2002, Mr. Russo directly owned 105,000 shares of the
                Company’s common stock and shared voting and investment power of 20,000
                shares held by his wife. In May 2004, as part of the settlement between
                the Company and Mr. Russo related to litigation filed by the Company,
                Mr.
                Russo returned to the Company 105,000 shares of common stock that
                he held
                directly and the 20,000 shares held by his wife. Mr. Russo maintains
                a
                mailing address at 277 West Clay Avenue, Roselle Park, New Jersey
                07204.


(13)
            Mr.
                Vaccaro maintains a mailing address at 627 Second Avenue, Long Branch,
                New
                Jersey 07740.


(14)
            Mr.
                Aaron shares voting and investment power of 37,000 shares held by
                ERBA
                Co., Inc., 20,000 shares held by the Aaron Family Limited Partnership
                and
                6,500 held by the James and Barth Aaron Family Trust. Mr. Aaron disclaims
                beneficial ownership of these securities except to the extent of
                his
                ownership interest in ERBA Co., Inc. and the family trust. Includes
                66,666
                shares currently available for purchase under a warrant issued by
                the
                Company to Mr. Aaron on July 24, 2003. Mr. Aaron maintains a mailing
                address at Ansell Zaro Grimm & Aaron, P.C., 1500 Lawrence Avenue, CN
                7807, Ocean, New Jersey 07712.


(15)
            Mr.
                Rimer maintains a mailing address at 17 Chemin De La Sapinere, 1253
                Vandoeuvres, Geneva, Switzerland.


(16)
            Includes
                375,000 shares subject to a convertible debenture issued as of May
                1,
                2005.






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          of Contents**




**Executive
      Compensation Plans**




The
      following table provides information on the number of securities to be issued
      upon the exercise of outstanding options, warrants and rights and the number
      of
      securities remaining available for future issuance under the Company’s 2002
      Equity Incentive Plan and certain other compensation arrangements entered into
      or established for the officers and directors of the Company.




**EQUITY
                COMPENSATION PLAN TABLE****Plan
                Category**
            
            **Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights**
              **(a)**
            
            **Weighted-average
                exercise price of outstanding options, warrants and
                rights**
              **(b)**
            
            **Number
                of securities remaining available for future issuance under equity
                compensation plans (excluding securities reflected in column
                (a))**
              **(c)**Equity
                Compensation Plans approved by security holders(1)
            
            
            270,000
                (2)(3
            )
            $
            .07
            
            
            1,730,000Equity
                Compensation Plans not approved by security holders
            
            
            2,105,000
                (4)(5)(6)(7)(8
            )
            $
            .39
            
            
            --**Total**
            
            
            2,375,000
                (2)(3)(4)(5)(6) (7)(8
            )
            $
            .36
            
            
            1,730,000





(1)
            Medi-Hut
                has no equity compensation plans other than the Company’s 2002 Equity
                Incentive Plan described herein which has been approved by the Company’s
                shareholders.


(2)
            Includes
                shares available for purchase at a price of $.08 per share pursuant
                to
                stock options granted to employees of Medi-Hut on December 23, 2003
                as
                follows: Allan J. Jones - 100,000 shares; Adele Ehlin - 75,000 shares;
                and
                Alan D. Jones - 10,000 shares.


(3)
            Includes
                shares available for purchase at a price of $.08 per share pursuant
                to
                stock options granted to Adele Ehlin, an employee of Medi-Hut, on
                May 4,
                2004, and shares available for purchase at a price of $.02 per share
                pursuant to stock options granted to employees of Medi-Hut on December
                23,
                2004 as follows: Allan J. Jones - 25,000 shares and Adele Ehlin -
                60,000
                shares.


(4)
            Includes
                90,000 shares available for purchase at a price of $4.50 per share
                under a
                warrant issued to Muhammed Malik, a former consultant to the Company,
                on
                August 1, 2002, and 90,000 shares available for purchase at a price
                of
                $2.45 per share under a warrant issued to Mr. Malik on August 1,
                2002.


(5)
            Includes
                500,000 shares available for purchase at a price of $.04 per share
                under
                the warrant issued to Century Capital on May 14, 2004 and 125,000
                shares
                available for purchase at a price of $.03 per share under the warrant
                issued to Century Capital on February 25,
                2005.


(6)
            Includes
                400,000 shares available for purchase at a price of $.26 per share
                under
                warrants issued on July 24, 2003 (200,000 shares per warrant) to
                the
                current directors of the Company, John A. Moore and Richard E. Otto.
                Also
                includes 133,333 shares available for purchase at a price of $.26
                per
                share under the warrant granted on July 24, 2003 to Salvatore J.
                Badalamenti, a former director of the Company, and 66,666 shares
                available
                for purchase at a price of $.26 per share under the warrant granted
                on
                July 24, 2003 to James G. Aaron, a former director of the
                Company.


(7)
            Includes
                333,400 shares available for purchase at a price of $.04 per share
                under
                warrants issued on May 14, 2004 to the current directors of the Company,
                John A. Moore (133,400 shares available for purchase) and Richard
                E. Otto
                (200,000 shares available for purchase). Also includes 66,600 shares
                available for purchase at a price of $.04 per share under the warrant
                granted on May 14, 2004 to Salvatore J. Badalamenti, a former director
                of
                the Company.


(8)
            Includes
                100,000 shares available for purchase at a price of $.03 per share
                under
                the warrant issued on February 25, 2005 to John A. Moore, a current
                director of the Company, and 200,000 shares available for purchase
                at a
                price of $.03 per share under the warrant issued on February 25,
                2005 to
                Richard E. Otto, a current director of the
                Company.






-60-
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          of Contents**




*2002
      Equity Incentive Plan*




General




On
      July
      5, 2002, the shareholders approved the Company’s 2002 Equity Incentive Plan (the
“Equity Incentive Plan”) effective as of January 1, 2002. The Equity Incentive
      Plan was placed into effect in order to promote the long-term success of the
      Company and to (1) encourage employees, independent directors and consultants
      of
      the Company to focus on critical long-range objectives, (2) encourage the
      attraction and retention of employees, independent directors and consultants
      with exceptional qualifications, and (3) link employees, independent directors
      and consultants directly to shareholders’ interests through increased stock
      ownership.




The
      Equity Incentive Plan provides for awards in the form of restricted shares,
      incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”) (ISOs and
      NSOs are sometimes collectively referred to as “Options”) and stock appreciation
      rights (“SARs”). The aggregate number of shares of common stock which may be
      awarded under the Equity Incentive Plan is 2,000,000 shares.




Incentive
      Stock Options (ISOs)




Only
      employees of the Company or a parent or a subsidiary of the Company are eligible
      to receive grants of ISOs. Unless otherwise provided in a stock option
      agreement, the first $100,000 of optioned shares that are part of an option
      grant and can be exercised first in a given year shall be considered ISOs,
      and
      the remainder shall be considered NSOs. The exercise price of an ISO may not
      be
      less then 100% of the fair market value of a share of common stock on the date
      of grant. The term of an ISO shall in no event exceed ten years from the date
      of
      grant.




Non-Statutory
      Stock Options (NSOs)




Employees,
      independent directors and consultants of the Company are eligible to receive
      grants of NSOs. Option grants to any optionee in a single fiscal year of the
      Company cannot cover more than 500,000 shares of common stock (750,000 shares
      of
      common stock for new employees in the fiscal year of the Company in which
      service as an employee first commences). Each individual stock option agreement
      shall specify the exercise price for the awards as determined by the Board.
      Options may be awarded in combination with SARs.




-61-
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          of Contents**




Automatic
      Option Grants to Independent Directors




Upon
      the
      conclusion of each annual meeting of the Company’s shareholders commencing in
      2002, each independent director who continues to serve on the Board after such
      annual meeting shall receive an NSO at the discretion of the Board. All NSOs
      granted to an independent director shall also become exercisable in full in
      the
      event of: (1) the termination of such independent director’s service because of
      death, total and permanent disability or retirement at or after age 65; or
      (2) a
      change in control with respect to the Company, with certain exceptions. The
      exercise price under all NSOs granted to an independent director shall be equal
      to 100% of the fair market value of a share of common stock on the date of
      grant. All NSOs granted to an independent director shall terminate on the
      earlier of (a) the 6 th anniversary of the date of grant or (b) the date 12 months after the termination
      of such independent director’s service for any reason. The Board may permit an
      independent director to elect to receive his or her annual retainer payments,
      if
      any, and/or meeting fees from the Company in the form of cash, NSOs, or
      restricted shares or a combination thereof, as determined by the Board. As
      of
      January 31, 2005, no option grants have been made to any of the Company’s
      independent directors under the Equity Incentive Plan.




Stock
      Appreciation Rights




SARs
      granted to any optionee in a single fiscal year cannot cover more than 500,000
      shares of common stock (750,000 shares of common stock for new employees in
      the
      fiscal year of the Company in which service as an employee first commences).
      Each SAR agreement shall specify the exercise price. SARs may be awarded in
      combination with Options, which may vary in accordance with a predetermined
      formula while the SARs are outstanding. A SAR may be included in an ISO only
      at
      the time of grant but may be included in an NSO at the time of grant or
      thereafter. Upon exercise of an SAR, the optionee shall receive from the Company
      (a) shares of common stock, (b) cash, or (c) a combination of common stock
      and
      cash, as the Board shall determine.




Restricted
      Shares




The
      holders of restricted shares shall have the same voting, dividend and other
      rights as the Company’s shareholders, subject to any special restrictions
      contained in the restricted share agreement.




The
      Equity Incentive Plan also contains customary protection against dilution.
      Options and SARs shall terminate immediately prior to the dissolution or
      liquidation of the Company. Unless the applicable agreement provides otherwise,
      in the event of any change in control, the vesting and exercisability of each
      outstanding award shall automatically accelerate so that each such award shall,
      immediately prior to the effective date of the change in control, become fully
      exercisable for all of the shares of common stock at the time subject to such
      award and may be exercised for any or all of those shares as fully-vested common
      stock, except under certain circumstances.







-62-
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          of Contents**





A
      copy of
      the Equity Incentive Plan was attached as “Exhibit B” to the Company’s
      definitive proxy statement filed with the SEC on June 10, 2002. To date, options
      to purchase 270,000 shares of the Company’s common stock have been granted under
      the Equity Incentive Plan to employees of the Company.




**Warrants
      Issued to Century Capital**




*Warrant
      Dated February 1, 2003*




On
      February 1, 2003, a warrant to purchase 1,500,000 shares of common stock of
      the
      Company was issued to Century Capital. The warrant has a ten year term and
      was
      exercisable at $1.34 per share until February 1, 2013. The purchase price was
      subject to certain pricing adjustments which included an adjustment if the
      average closing price of the Company’s common stock over a period of thirty days
      was less than the then existing Underlying Purchase Price. 375,000 shares of
      common stock underlying the warrant vested immediately upon issuance with
      another 46,875 shares vesting on and after the last day of each month commencing
      February 28, 2003 and ending January 31, 2005. The warrant contains limited
      registration rights and the shares of common stock issued upon the exercise
      of
      the warrant shall be restricted securities.




As
      a
      result of the application of the pricing adjustment, the Underlying Purchase
      Price adjusted to $.08 per share as of May 14, 2004, the date when Century
      Capital exercised its right to purchase 937,500 shares of the Company’s common
      stock underlying the warrant. The $75,000 due from Century Capital to the
      Company as a result of the purchase of the 937,500 shares was forgiven by the
      Company as part of Century Capital’s bonus for the period February 1, 2003
      through January 31, 2004. The Underlying Purchase Price adjusted to $.02 per
      share as of November 1, 2004 when Century Capital exercised its right to
      purchase 421,876 shares of the Company’s common stock underlying the warrant.
      The $8,438 due to the Company from Century Capital as a result of this exercise
      was offset by the Company against monthly consulting fees due and owing to
      Century Capital that had been deferred for payment. On February 25, 2005,
      Century Capital exercised its right to purchase 140,624 shares of the Company’s
      common stock underlying the warrant at $.02 per share. The $2,812 due to the
      Company from Century Capital as a result of this exercise was offset by the
      Company against monthly consulting fees due and owing to Century Capital that
      had been deferred for payment. As of February 28, 2005, all 1,500,000 shares
      underlying the warrant had been purchased. On February 1, 2003, the date of
      issuance, the warrant had a fair value of approximately $1,294,525. As of April
      30, 2004, after accounting for the reduction of the Underlying Purchase Price
      to
      $.08 per share, the fair value of the warrant decreased to approximately
      $101,710. As of October 31, 2004, after accounting for the further reduction
      of
      the Underlying Purchase Price to $.02 per share, the fair value of the
      unexercised warrant decreased to approximately $8,783.




*Warrant
      Dated May 14, 2004*




On
      May
      14, 2004, the Company issued Century Capital ten year, non-cancelable warrant
      to
      purchase 700,000 shares of the Company’s common stock at a purchase price of
      $.04 per share. 100,000 shares of the Company’s common stock underlying the
      warrant became available for purchase as of May 14, 2004, with the remaining
      shares underlying the warrant becoming available for purchase upon the
      achievement of specific milestones as follows: 100,000 shares shall be available
      for purchase upon the Company’s receipt of at least $2,000,000 in cumulative
      proceeds related to the Syntho litigation; 100,000 shares shall be available
      for
      purchase upon the filing of the Company’s annual report on Form 10-KSB for the
      fiscal year ended October 31, 2002; 100,000 shares shall be available for
      purchase upon the filing of the Company’s quarterly reports on Form 10-QSB for
      the quarters ended January 31, 2003, April 30, 2003 and July 31, 2003; 100,000
      shares shall be available for purchase upon the Company’s receipt of at least
      $500,000 in cumulative proceeds from the litigation against certain former
      officers, directors and others and/or the litigation against the Rosenberg
      and
      Koenig accounting firms; 100,000 shares shall be available for purchase upon
      the
      Company becoming eligible to register its common stock pursuant to the
      Securities Act; and 100,000 shares shall be available for purchase upon the
      acquisition by the Company of a product or line of business. In the event of
      a
      change in control of the Company, the warrant becomes fully vested as of ten
      days prior to the change in control. For purposes of the warrant, a change
      of
      control means any recapitalization, reorganization, reclassification,
      consolidation, merger, sale of all or substantially all of the Company’s assets
      to another individual, partnership, corporation or other such entity and any
      transaction which is effected in such a way that holders of more than 50% of
      the
      shares of common stock then outstanding are entitled to receive (either directly
      or upon subsequent liquidation) stock, securities or assets of another
      individual, partnership, corporation or other such entity with respect to or
      in
      exchange for their common stock. The warrant also contains standard
      anti-dilution provisions and limited registration rights. The shares of common
      stock issued upon the exercise of the warrant shall be restricted securities.
      The warrant had a fair value of approximately $44,211 at the date of
      issuance.




-63-
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          of Contents**




On
      November 1, 2004, Century Capital exercised its right to purchase 200,000 shares
      of the Company’s common stock underlying the warrant. Of the shares purchased,
      100,000 shares became available for purchase on May 14, 2004 and the other
      100,000 shares became available for purchase prior to November 1, 2004 as a
      result of the Company’s receipt of $500,000 of cumulative proceeds from the
      litigation against certain former officers, directors and others which occurred
      in 2004. The $8,000 due to the Company from Century Capital as a result of
      this
      exercise was offset by the Company against monthly consulting fees due and
      owing
      to Century Capital that had been deferred for payment. As of October 31, 2005,
      200,000 shares underlying the warrant had been purchased and 500,000 shares
      underlying the warrant remain unvested and are not yet available for purchase.




*Warrant
      Dated February 25, 2005*




On
      February 25, 2005, a warrant to purchase 500,000 shares of common stock of
      the
      Company was issued to Century Capital. The warrant has a ten year term and
      is
      exercisable at $.03 per share until February 25, 2015. The warrant vests as
      follows: (a) 250,000 of the shares of the Company’s common stock underlying the
      warrant became available for purchase as of February 1, 2005; (b) an additional
      20,833 of the shares underlying the warrant become available for purchase on
      the
      last day of each month commencing February 28, 2005 and ending December 31,
      2005
      and (c) 20,837 of the shares underlying the warrant become available for
      purchase on January 31, 2006. The warrant has customary terms and provisions
      as
      set forth in a warrant certificate, dated as of February 1, 2005, including,
      without limitation, anti-dilution adjustments, registration rights, and
      acceleration of vesting upon a change in control of the Company. In the event
      of
      a change in control of the Company, the warrant becomes fully vested as of
      ten
      days prior to the change in control. For purposes of the warrant, a change
      of
      control means any recapitalization, reorganization, reclassification,
      consolidation, merger, sale of all or substantially all of the Company’s assets
      to another individual, partnership, corporation or other such entity and any
      transaction which is effected in such a way that holders of more than 50% of
      the
      shares of common stock then outstanding are entitled to receive (either directly
      or upon subsequent liquidation) stock, securities or assets of another
      individual, partnership, corporation or other such entity with respect to or
      in
      exchange for common stock. The warrant also contains standard anti-dilution
      provisions and limited registration rights. The shares of common stock issued
      upon the exercise of the warrant shall be restricted securities. The warrant
      had
      a fair value of approximately $10,674 at the date of issuance.




On
      February 25, 2005, Century Capital exercised its right to purchase 250,000
      shares of the Company’s common stock underlying the warrant. The $7,500 due to
      the Company from Century Capital as a result of this exercise was offset by
      the
      Company against amounts due and owing to Century Capital related to deferred
      monthly consulting fees. On both May 20, 2005 and August 25, 2005, Century
      Capital exercised a portion of the warrant and purchased 62,500 shares of the
      Company’s common stock (125,000 shares in total). The $3,750 due to the Company
      from Century Capital as a result of these exercises was offset by the Company
      against deferred monthly consulting fees due to Century Capital. As of October
      31, 2005, 375,000 shares underlying the warrant have been purchased, 41,666
      shares underlying the warrant are available for purchase and 83,334 shares
      underlying the warrant remain unvested and are not yet available for
      purchase.




-64-
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          of Contents**




**Warrants
      Issued to Directors**




*Warrants
      Dated July 24, 2003*




On
      July
      24, 2003, a warrant to purchase 200,000 shares of common stock of the Company
      was issued to each of its directors, other than Mr. LaVance and Mr. Gifford.
      An
      aggregate amount of 800,000 shares of common stock could be issued pursuant
      to
      these warrants. Each warrant has a five year term and is exercisable at $.26
      per
      share until July 24, 2008, subject to adjustment. The shares of common stock
      underlying each warrant vest equally on and after the date of issue (66,666),
      on
      and after the first anniversary date (66,666) and on and after the second
      anniversary date (66,668). In the event of a change in control of the Company,
      each warrant becomes fully vested as of ten days prior to the change in control.
      For purposes of the warrants, a change of control means any recapitalization,
      reorganization, reclassification, consolidation, merger, sale of all or
      substantially all of the Company’s assets to another individual, partnership,
      corporation or other such entity and any transaction which is effected in such
      a
      way that holders of more than 50% of the shares of common stock then outstanding
      are entitled to receive (either directly or upon subsequent liquidation) stock,
      securities or assets of another individual, partnership, corporation or other
      such entity with respect to or in exchange for their common stock. Each warrant
      also contains standard anti-dilution provisions and limited registration rights.
      The shares of common stock issued upon the exercise of each warrant shall be
      restricted securities. As of October 31, 2005, an aggregate of 599,998 shares
      of
      the Company’s common stock are available for purchase under the warrants and an
      aggregate of 200,002 shares underlying the warrants have been cancelled. The
      warrants had a fair value of approximately $155,138 at the date of
      issuance.







-65-
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*Warrants
      Dated May 14, 2004*




On
      May
      14, 2004, a warrant to purchase 200,000 shares of common stock of the Company
      was issued to each of its directors, other than Mr. LaVance and Mr. Gifford.
      An
      aggregate amount of 600,000 shares of common stock could be issued pursuant
      to
      these warrants. Each warrant has a five year term and is exercisable at $.04
      per
      share until May 14, 2009. The shares of common stock underlying each warrant
      vest equally on and after the date of issue (66,600) and on and after the first
      anniversary date (133,400). In the event of a change in control of the Company,
      each warrant becomes fully vested as of ten days prior to the change in control.
      For purposes of the warrants, a change of control means any recapitalization,
      reorganization, reclassification, consolidation, merger, sale of all or
      substantially all of the Company’s assets to another individual, partnership,
      corporation or other such entity and any transaction which is effected in such
      a
      way that holders of more than 50% of the shares of common stock then outstanding
      are entitled to receive (either directly or upon subsequent liquidation) stock,
      securities or assets of another individual, partnership, corporation or other
      such entity with respect to or in exchange for their common stock. Each warrant
      also contains standard anti-dilution provisions and limited registration rights.
      The shares of common stock issued upon the exercise of each warrant shall be
      restricted securities. As of October 31, 2005, an aggregate of 66,600 shares
      of
      the Company’s common stock underlying the warrants have been purchased, an
      aggregate of 400,000 shares underlying the warrants are available for purchase
      and an aggregate of 133,400 shares underlying the warrants have been cancelled.
      The warrants had a fair value of approximately $32,137 at the date of
      issuance.




*Warrants
      Dated February 25, 2005*




On
      February 25, 2005, a warrant to purchase 200,000 shares of common stock of
      the
      Company was issued to each of its directors, other than Mr. LaVance and Mr.
      Gifford. An aggregate amount of 400,000 shares of common stock could be issued
      pursuant to these warrants. Each warrant has a five year term and is exercisable
      at $.03 per share until February 25, 2010. The shares of common stock underlying
      each warrant vest equally on and after the date of issue (100,000) and on and
      after the first anniversary date (100,000). In the event of a change in control
      of the Company, each warrant becomes fully vested as of ten days prior to the
      change in control. For purposes of the warrants, a change of control means
      any
      recapitalization, reorganization, reclassification, consolidation, merger,
      sale
      of all or substantially all of the Company’s assets to another individual,
      partnership, corporation or other such entity and any transaction which is
      effected in such a way that holders of more than 50% of the shares of common
      stock then outstanding are entitled to receive (either directly or upon
      subsequent liquidation) stock, securities or assets of another individual,
      partnership, corporation or other such entity with respect to or in exchange
      for
      their common stock. Each warrant also contains standard anti-dilution provisions
      and limited registration rights. The shares of common stock issued upon the
      exercise of each warrant shall be restricted securities. As of October 31,
      2005,
      an aggregate of 100,000 shares underlying the warrants have been purchased,
      an
      aggregate of 100,000 shares underlying the warrants are available for purchase
      and an aggregate of 200,000 shares underlying the warrants remain unvested
      and
      are not yet available for purchase. The warrants had a fair value of
      approximately $6,378 at the date of issuance.




**Warrant
      Issued to Consultant**




On
      May
      11, 2005, a warrant to purchase 100,000 shares of common stock of the Company
      was issued to Dr. William Sear, a consultant to the Company, for consulting
      services rendered by Dr. Sear to the Company. The warrant has a five year term
      and is exercisable at $.05 per share until May 11, 2010. All of the shares
      of
      common stock underlying the warrant vested on the date of issuance, May 11,
      2005. On May 13, 2005, all 100,000 of the shares underlying the warrant were
      purchased. The warrants had a fair value of approximately $2,813 at the date
      of
      issuance.




-66-
 **Table
          of Contents**




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




Mr.
      David
      R. LaVance, the Company’s Chairman, President and Chief Executive Officer, and
      Mr. Thomas S. Gifford, the Company’s Executive Vice President, Chief Financial
      Officer (Treasurer) and Secretary, are principals of Century Capital. Effective
      February 1, 2005, the Company and Century Capital entered into an amended and
      restated Consulting Service Agreement, pursuant to which Messrs. LaVance and
      Gifford currently provide services to the Company. See “Item 11. Security
      Ownership of Certain Beneficial Owners and Management and Related Stockholder
      Matters - Consulting Services Agreement.”




In
      May
      2004, the Company relocated its principal offices to 215 Morris Avenue, Spring
      Lake, New Jersey 07762, the location of Century Capital’s office, in order to
      reduce its monthly operating expenses and to more appropriately accommodate
      its
      current operations. The Company and Century Capital entered into a Shared
      Services Agreement whereby the Company rented three fully furnished, business
      equipped offices approximating 340 square feet inside Century Capital’s existing
      offices. This agreement commenced on May 1, 2004 and has a month to month term
      that requires sixty day written notice to terminate. The monthly rental is
      $2,500.




Joseph
      A.
      Sanpietro is the Company’s founder and former Chief Executive Officer and
      Chairman. On March 28, 2003, the Company entered into a consulting agreement
      with Mr. Sanpietro in order to facilitate the transition of certain product
      knowledge and relationships to the Company’s new management team. The agreement
      had no term and services rendered by Mr. Sanpietro were billed to the Company
      at
      an hourly rate. The Company ceased using Mr. Sanpietro’s services in May
      2003.




Robert
      Russo, a former officer and director of the Company, is also the managing member
      of Koenig, Russo & Associates LLC. The Company paid Koenig, Russo &
      Associates LLC for the accounting services provided to the Company by Mr. Russo.
      For the fiscal year ended October 31, 2002, the Company paid approximately
      $3,257 to Koenig, Russo & Associates LLC for Mr. Russo’s services. As of
      October 31, 2002, the Company owed Koenig, Russo & Associates LLC $138 for
      Mr. Russo’s services incurred during fiscal 2002. This amount was paid in full
      by the Company during the fiscal year ended October 31, 2003. Neither Mr. Russo
      nor Koenig currently provide any accounting or other service to the
      Company.




James
      G.
      Aaron, a former member of the Company’s Board of Directors, is a shareholder of
      the law firm of Ansell Zaro Grimm & Aaron, P.C., which served as Medi-Hut’s
      general counsel during the fiscal year ended October 31, 2002. The Company
      paid
      approximately $36,164 in legal fees for the fiscal year ended October 31, 2002
      to Ansell Zaro Grimm & Aaron, P.C. As of October 31, 2002, the Company owed
      Ansell Zaro Grimm & Aaron, P.C. $7,107 for legal services incurred during
      fiscal 2002. This amount was paid in full by the Company during the year ended
      October 31, 2003. Neither Mr. Aaron nor his law firm currently provide any
      legal
      services to the Company.




-67-
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          of Contents**




Lawrence
      P. Marasco, the Company’s former Vice President of Sales and Marketing was the
      sole officer, director and shareholder of Larval Corporation (“Larval”), a
      privately held wholesaler of pharmaceutical products, until February 12, 2002,
      when he transferred his ownership in Larval to his sister-in-law. During fiscal
      year ended October 31, 2002, the Company purchased product and sold product
      to
      Larval. The actual amount of products purchased from Larval and sold to Larval
      cannot be definitively determined due to the limitation on financial reporting
      previously discussed. As of October 31, 2002, accounts receivable from Larval
      was $479,339 which was collected in full during the fiscal year ended October
      31, 2003. The Company ceased all business with Larval during fiscal 2003.




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




a)
            Exhibits:




Reference
      is made to the Index of Exhibits beginning on page E-1 herein.




b)
            Reports
                on Form 8-K:




During
      the three months ended October 31, 2002, the Company did not file any current
      reports on Form 8-K with the SEC.




**Item
              14.**
            **Controls
                and Procedures**




Pursuant
      to Rule 13a-15 of the Exchange Act, within ninety days prior to the filing
      date
      of this report, the Company was required to carry out an evaluation of the
      effectiveness of the design and operation of the Company’s disclosure controls
      and procedures. Inasmuch as the Company was subjected to corporate mismanagement
      in the form of accounting irregularities and securities fraud involving prior
      management during the fiscal year ended October 31, 2002 and 2001, current
      management does not believe that such an evaluation was conducted by prior
      management.




In
      addition, as a result of the misconduct by prior management, the Company’s
      current management was unable to report on the Company’s results of operations
      for the fiscal years ended October 31, 2002 and 2001 and has not been able
      to
      file quarterly reports on Form 10-QSB for fiscal 2003, 2004 and 2005 and the
      Company’s annual report on Form 10-KSB for the years ended October 31, 2003 and
      2004 in a timely manner. Once those reports are filed, current management
      anticipates full compliance by the Company of the requirements of Rule 13a-15
      for all reports filed thereafter.







-68-
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          of Contents**





**SIGNATURES**




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




**MEDI-HUT
                CO., INC.**Date: November
                22, 2005
              By:
              /s/ David
                R. LaVanceDavid
                  R. LaVance
                Chairman of the Board of Directors,
                President and Chief Executive Officer
 In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the Registrant and in the capacities and on
      the
      dates indicated.


Signatures
              
              Title
              
              Date/s/
                  David R. LaVance
              
              Chairman
                  of the Board of Directors,
                  President and Chief
                  Executive Officer
              
              November
                  22, 2005David
                  R. LaVance/s/
                  Thomas S. Gifford
              
              Executive
                  Vice President, Chief
                  Financial Officer, Secretary
                  and Director
              
              November
                  22, 2005Thomas
                  S. Gifford/s/
                  John A. Moore
              
              Director
              
              November
                  22, 2005John
                  A. Moore/s/
                  Richard E. Otto
              
              Director
              
              November
                  22, 2005Richard
                  E. Otto


-69-
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          of Contents**





**MEDI-HUT
      CO., INC.**





**Balance
      Sheet**





**Contents**




**October
      31, 2002**


Report
                  of Independent Registered Public Accounting Firm
              F-1Balance
                  Sheet at October 31, 2002
              F-2Notes
                  to the Balance Sheet
              F-3










**Table
          of Contents**





REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
      FIRM







To
      the
      Board of Directors and


Stockholders
      of Medi-Hut Co., Inc.




We
      have
      audited the accompanying balance sheet of Medi-Hut Co., Inc. (the “Company”) as
      of October 31, 2002. This financial statement is the responsibility of the
      Company’s management. Our responsibility is to express an opinion on this
      financial statement based upon our audit.





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





In
      our
      opinion, the financial statement referred to above presents fairly, in all
      material respects, the financial position of Medi-Hut Co., Inc. as of October
      31, 2002 in conformity with U.S. generally accepted accounting
      principles.





/s/
      Weiser LLP





New
      York,
      New York





October
      17, 2005





F-1
 **Table
          of Contents**





**MEDI-HUT
      CO., INC.**


**Balance
      Sheet**


**October
                31,****2002****Assets**Current
                assets:Cash
                and cash equivalents
            
            $
            3,695,890Accounts
                receivable, less reserve of $471,210
            
            
            4,471,185Related
                party account receivable
            
            
            479,339Inventories
            
            
            278,724Prepaid
                expenses
            
            
            148,260Total
                current assets
            
            
            9,073,398Other
                assets:Note
                receivable - related party, less reserve of $304,318
            
            
            –Distribution
                rights
            
            
            1,000,000Income
                tax refund
            
            
            287,388Other
            
            
            34,080Total
                other assets
            
            
            1,321,468Total
                assets
            
            $
            10,394,866**Liabilities
                and stockholders' equity**Current
                liabilities:Accounts
                payable
            
            $
            5,345,457Accounts
                payable - related party
            
            
            7,107Accrued
                expenses
            
            
            135,509Reserve
                for class action lawsuit settlement
            
            
            529,299Total
                current liabilities
            
            
            6,017,372Commitments
                and contingenciesStockholders'
                equity:Common
                stock, $.001 par value; 100,000,000 shares authorized;14,558,800
                shares issued; 14,413,900 outstanding
            
            
            14,559Additional
                paid in capital
            
            
            18,620,572Treasury
                stock at cost, 144,900 shares
            
            
            (363,717
            )Stock
                subscription receivable
            
            
            (300,000
            )Deferred
                compensation
            
            
            (26,180
            )Accumulated
                deficit
            
            
            (13,567,740
            )Total
                stockholders' equity
            
            
            4,377,494Total
                liabilities and stockholders' equity
            
            $
            10,394,866*The
                accompanying notes are an integral part of this financial statement.*









F-2
 **Table
          of Contents**





**MEDI-HUT
      CO., INC.**


**Notes
      to the Balance Sheet**





**1.**
            **Organization
                and Description of
                Business**




Medi-Hut
      Co., Inc. (“Medi-Hut” or the “Company”) is a Nevada corporation headquartered in
      Spring Lake, New Jersey. The Company was incorporated in the State of New Jersey
      in November 1982. On January 28, 1998, the Company entered into an Agreement
      and
      Plan of Reorganization with Indwest, Inc., a Utah corporation, whereby the
      Company changed its domicile to the State of Utah and became subject to the
      reporting requirements of the Securities Exchange Act of 1934, as amended (the
      “Exchange Act”). On February 2, 1998, the Company completed a second change of
      domicile transaction and became a Delaware corporation, and, on October 31,
      2001, completed a third and final change of domicile transaction and became
      a
      Nevada corporation.




During
      the fiscal year ended October 31, 2002, the Company’s business included the
      distribution of over-the-counter medical devices and disposable clinical
      supplies, such as condoms and alcohol preparation pads; generic and name brand
      pharmaceuticals; and a hormone replacement therapy drug named Syntest which
      was
      manufactured and supplied to the Company by a third party manufacturer pursuant
      to an exclusive distribution agreement. These products were generally sold
      by
      the Company to wholesalers, distributors, drug store chains and occasionally
      directly to physicians and other healthcare providers. The Company did not
      manufacture any of the products that it sold but rather purchased products
      from
      wholesalers or distributors or directly from the manufacturer. During the fiscal
      year ended October 31, 2002, the Company also continued to develop and commenced
      manufacturing of the Elite Safety Syringe and continued the development of
      the
      Solo-Safe Safety TM Syringe.




In
      March
      2003, the Company exited from the business of selling branded and generic
      pharmaceuticals due to the low profit margins attributed to such sales. In
      addition, in March 2003, the Company ceased selling Syntest due to a dispute
      with the manufacturer and the Company’s contract sales representative for the
      product which resulted in the commencement of litigation by the Company against
      such parties as well as other related litigation involving the Company. See
      Notes 8 and 16.




During
      2003, the Company continued to develop the manufacturing and distribution
      capabilities of the Elite Safety Syringe (3cc version) but was not able to
      commence commercial sales of the product due to certain manufacturing problems
      and the inability of the Company to secure appropriate distribution for the
      product. The Company terminated further development of the Solo-Safe TM Safety
      Syringe in May 2003 due to the Company’s limited financial
      resources.




In
      December 2004, the Company terminated further development
      and marketing of the Elite Safety Syringe due to the cost associated with
      correcting certain product design issues, costs associated with establishing
      sufficient manufacturing capabilities to support a market launch and the lack
      of
      a sufficient market for safety syringes to support the product launch. In
      addition, in October 2004, the Company stopped selling its condoms and other
      disposable medical supplies due to decreasing profit margins and the shrinkage
      of the customer base. Since the second quarter of 2003, the Company has not
      had
      any significant recurring revenue from the sale of products.




F-3
 **Table
          of Contents**




**2.**
            **Basis
                of Presentation**




The
      Company does not have any recurring revenue from the sale of products and is
      in
      the process of identifying a product or company to acquire in order to develop
      a
      new business. In
      May
      2004, as part of management’s efforts to reduce expenditures, the Company
      relocated its principal offices to 215 Morris Avenue, Spring Lake, New Jersey
      07762. In connection with the relocation of its principal offices, the Company
      and Monmouth/Atlantic Realty Associates, L.L.C., the landlord of the Company’s
      former office space in Wall Township, New Jersey, reached an agreement to
      terminate the remaining term of the existing lease (44 months resulting in
      a
      lease obligation of approximately $454,000 plus an additional $154,000 for
      common area charges) for a one-time payment by the Company of $100,000 plus
      the
      forfeiture of the $33,338 security deposit.




On
      May
      26, 2005, the Company closed on a private placement of 8% convertible debentures
      (the “Debentures”). The gross proceeds received in connection with this private
      placement were $300,000 and will be used for operating expenses. On August
      25,
      2005, the Company closed on a private placement of 4,000,000 shares of its
      common stock. The gross proceeds received in connection with this private
      placement were $200,000 ($.05 per share). On October 17, 2005, the Company
      and
      Breckenridge Pharmaceutical Inc. (“Breckenridge”) entered into a purchase and
      settlement agreement pursuant to which the Company sold its distribution and
      other rights and business with respect to the hormone replacement drug, Syntest,
      to Breckenridge. In consideration for the sale of such rights and the other
      benefits provided under the purchase and settlement agreement,  Breckenridge
      agreed to pay the Company an aggregate of $1,000,000 as follows: (1) $250,000
      was paid shortly after the execution of the purchase and settlement agreement,
      and (2) $50,000 will be paid on the first day of each month for a 15 month
      period commencing on November 1, 2005 and ending on January 1, 2007. The
      proceeds from the sale of the Debentures, the sale the Company’s common stock
      and the settlement with Breckenridge will be used to fund the Company’s pending
      litigation matters and for other business development and operational purposes.




Since
      the
      second quarter of 2003, the Company has not had any significant recurring
      revenue from the sale of products. Management believes it has adequate cash
      resources to satisfy current obligations as they come due through November
      2006.
      The Company projects expending approximately $105,000 of its cash per month
      to
      continue operations and maintain the various lawsuits it has instituted. The
      Company anticipates that its future monthly expenses will include lease costs
      of
      approximately $3,000, accounting fees of approximately $3,500, payment of a
      portion (approximately $35,000) of the $50,000 monthly fee payable to Century
      Capital pursuant to the Consulting Services Agreement between the Company and
      Century Capital, insurance costs of $8,000, legal expenses of approximately
      $30,000 and general administrative expenses of approximately $25,500.




Management
      believes the funds received in connection with the issuance of the Debentures
      and sale of common stock and the proceeds received from the purchase and
      settlement agreement with Breckenridge, together with funds currently available
      to the Company, will be sufficient to support planned operations through October
      31, 2006.




Management
      believes that the Company will require additional capital to be able to obtain
      other medical devices and products and otherwise implement its strategy for
      business development and increased revenues discussed elsewhere herein. Although
      a favorable outcome or settlement of one or more of the Company’s current
      lawsuits could increase the capital position of the Company, no assurance can
      be
      given that any such action will result in a favorable outcome or settlement
      to
      the Company or that if any such action is favorably decided or settled, such
      decision or settlement will occur in the near future.




F-4
 **Table
          of Contents**




**3.**
            **Limitation
                on Financial Reporting**




The
      balance sheet as of October 31, 2002 was prepared by the Company’s current
      management team. On March 21, 2003, the Company terminated the employment of
      its
      four senior officers as follows: Joseph A. Sanpietro, President and Chief
      Executive Officer; Vincent J. Sanpietro, Chief Operating Officer; Laurence
      M.
      Simon, Chief Financial Officer; and Lawrence P. Marasco, Vice President of
      Sales
      (collectively, the “Former Officers”) due to corporate mismanagement in the form
      of accounting irregularities and securities fraud during the fiscal years ended
      October 31, 2002 and 2001. At the time of their termination, each of the former
      officers was the subject of an investigation by the United States Department
      of
      Justice (“USDJ”) and the Securities and Exchange Commission (“SEC”). As a result
      of the investigation by the USDJ, on August 19, 2003, each of the Former
      Officers pled guilty to conspiring to inflate the revenue and earnings of the
      Company and/or obstruction of justice. In addition, on August 19, 2003, each
      of
      the Former Officers agreed to a consent decree with the SEC.




In
      March
      2003, the current management team commenced an extensive review of the Company’s
      financial statements for the fiscal years ended October 31, 2002 and October
      31,
      2001. In 2005, the current management team of the Company concluded that
      insufficient documentation existed to adequately verify the financial
      information for the fiscal year ended October 31, 2001 and certain statement
      of
      operations and cash flow activities for the fiscal year ended October 31, 2002.
      Accordingly, the Company is only presenting a balance sheet as of October 31,
      2002 and the related footnotes. Since
      a
      complete set of financial statements are not included herein, no assurance
      can
      be given that the SEC will not take an enforcement or other action against
      the
      Company. Any such action by the SEC could have significant adverse consequences
      to the Company.




**4.**
            **Legal
                Proceedings**




Due
      to
      certain events that occurred prior to October 31, 2002 and the actions of the
      Former Officers, the Company, the Former Officers and/or certain former
      directors became involved in several separate legal proceedings.




***SEC
      Investigation*** ****




On
      February 21, 2002, the SEC commenced an investigation and review of Medi-Hut’s
      filings with the SEC and its financial disclosures in general, as well as the
      sufficiency of the Company’s system of internal accounting controls. See Note
      16.




***Class
      Action Lawsuits*** ****




Beginning
      in February 2002, the Company and certain of its former officers and directors
      were named in an aggregate of eleven class action lawsuits filed in the United
      States District Court for the District of New Jersey. The lawsuits alleged
      that,
      among other contentions, the Company and certain of its former officers and
      directors failed to disclose a related party transaction between the Company
      and
      the Company’s former Vice President of Sales, in its periodic reports filed with
      the SEC. See Note 16.




F-5
 **Table
          of Contents**




**5.**
            **Summary
                of Significant Accounting
                Policies**




The
      Company’s significant accounting policies related to the accompanying balance
      sheet are as follows.




***Use
      of Estimates***




The
      preparation of the balance sheet in conformity with U.S. generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and disclosure of
      contingent assets and liabilities at the date of the balance sheet. Significant
      estimates relied upon in preparing the balance sheet include allowances for
      accounts receivable and for non-saleable inventory, expected future cash flows
      used to evaluate the recoverability of long-lived assets and investments, any
      contingent liabilities, and utilization of the Company’s net deferred tax assets
      and related valuation allowance.




Although
      the Company regularly assesses these estimates, actual results could differ
      materially from these estimates. Changes in estimates are recorded in the period
      in which they become known. The Company based its estimates on historical
      experience and various other assumptions that it believes to be reasonable
      under
      the circumstances. Actual results may differ from management’s estimates if past
      experience or other assumptions do not turn out to be substantially accurate.




***Cash
      and Cash Equivalents***




The
      Company considers all highly liquid investments with an original maturity (at
      date of purchase) of three months or less to be cash equivalents. Cash and
      cash
      equivalents consist of cash on deposit with banks and money market instruments.
      The Company places its cash and cash equivalents with high quality, U.S.
      financial institutions.




***Concentration
      of Credit Risk***




The
      Company has no significant off balance sheet risk such as foreign exchange
      contracts, option contracts or other foreign hedging arrangements. The Company’s
      financial instruments that are exposed to concentration of credit risks consist
      primarily of cash and cash equivalents, trade account receivables and notes
      receivable. The Company maintains its cash and cash equivalents in bank accounts
      which, at times, exceed federally insured limits. The Company invests its cash
      in high-quality money market instruments and  has
      not
      experienced any losses in such accounts and accordingly believes it is not
      exposed to significant credit risk on cash and cash equivalents.




The
      Company extends credit to its customers pursuant to contract terms in the normal
      course of business and performs ongoing credit evaluations. The Company
      generally has not experienced any material losses related to trade receivables
      from individual customers. As of October 31, 2002, 824 Drug Inc, McKesson
      Corporation and Eckerd Corporation accounted for approximately 35%, 28% and
      9%
      of accounts receivable, respectively. Subsequent to October 31, 2002, all
      accounts receivable, less reserves, have been collected in full.







F-6
 **Table
          of Contents**





***Fair
      Value of Financial Instruments***




The
      Company’s financial instruments mainly consist of cash and cash equivalents,
      accounts receivable, a note receivable, accounts payable and accrued expenses.
      The carrying amounts of the Company’s cash and cash equivalents, accounts
      receivable, accounts payable and accrued expenses approximate fair value due
      to
      the short-term nature of these instruments. The Company has reserved for 100%
      of
      the outstanding balance of the note receivable due from Medi-Hut International
      (Mfg.) Co., Ltd. (“MHI”), a related party, due to the Company’s potential
      inability to collect on the note resulting from the financial condition of
      MHI.
      See Note 7.




***Accounts
      Receivable and Revenue Recognition***




The
      Company records trade receivables when revenue is recognized (see Revenue
      Recognition). Trade receivables are periodically evaluated for collectibility
      based upon past credit history with customers and their current financial
      condition. Those accounts that are doubtful of collection are included in the
      allowance. Trade receivables are charged off when there is certainty as to
      their
      being uncollectible. Trade receivables are considered delinquent when payment
      has not been made within sales terms.




The
      Company also records a provision for estimated sales returns and allowances
      on
      product sales in the same period as the related revenues are recorded. These
      estimates are based on the specific facts and circumstances of particular
      orders, analysis of credit memo data and other known factors. If the data the
      Company uses to calculate these estimates does not properly reflect reserve
      requirements, then a change in the allowances would be made in the period in
      which such a determination is made.




The
      accounts receivable reserves amounted to $0 for doubtful accounts at October
      31,
      2002. The reserve for sales returns and allowances on product sales was $471,000
      at October 31, 2002.




The
      Company recognizes product revenue upon shipment, provided that there is
      persuasive evidence of an arrangement, there are no uncertainties regarding
      acceptance, the sales price is fixed or determinable and collection of the
      resulting receivable is probable.




***Inventory***




Inventory
      is stated at the lower of cost (first-in, first-out basis) or market. Inventory
      that is deemed obsolete or defective is written off. A provision is made for
      any
      excess or potentially obsolete inventories. As of October 31, 2002, inventory
      consisted solely of finished goods.




***Concentration
      of Suppliers***




As
      of
      October 31, 2002, the Company had accounts payable to two suppliers, Kinray
      Inc.
      and Syntho Pharmaceuticals Inc. (“Syntho”), of $2,309,905 (43% of total accounts
      payable) and $2,475,135 (46% of total accounts payable), respectively.







F-7
 **Table
          of Contents**





***Property
      and Equipment***




Property
      and equipment are stated at cost, less accumulated depreciation and
      amortization. Depreciation is computed using the straight-line method over
      the
      estimated useful lives of the respective assets which average from 3-7 years.
      Leasehold improvements are amortized over the lesser of the lease term or the
      estimated useful lives of the related assets, generally 5 years. Expenditures
      for repairs and maintenance are expensed as incurred. Gross assets as of October
      31, 2002 amounted to approximately $74,000 and accumulated depreciation amounted
      to approximately $40,000. The net book value of $34,000 is included in other
      assets.




***Intangible
      Assets and Other Long-Lived Assets***




The
      Company assesses the impairment of its intangible assets that have a defined
      life and other long-lived assets in accordance with Statement of Financial
      Accounting Standards No. 144, “Accounting for the Impairment or Disposal of
      Long-Lived Assets” (SFAS 144). Pursuant to SFAS 144, the Company identifies and
      records impairment losses, as circumstances dictate, on long-lived assets used
      in operations when events and circumstances indicate that the assets might
      be
      impaired and the discounted cash flows estimated to be generated by those assets
      are less than the carrying amounts of those assets. In the event that assets
      are
      found to be carried at amounts which are in excess of estimated future cash
      flows, the assets will be adjusted for impairment to a level commensurate with
      the discounted cash flow analysis of the underlying assets. The Company
      determined that the Solo-Safe Safety Syringe was impaired as of October 31,
      2002
      and, as a result, wrote the carrying value of the asset down to zero. See Note
      9.




***Income
      Taxes***




The
      Company provides for deferred income taxes in accordance with Statement of
      Financial Accounting Standards No. 109, “Accounting for Income Taxes” (SFAS
      109). SFAS 109 requires an asset and liability approach for financial accounting
      and reporting for income taxes based on tax effects of differences between
      the
      financial statement and tax bases of assets and liabilities, based on enacted
      rates expected to be in effect when such basis differences reverse in future
      periods. Deferred tax assets are periodically reviewed for realizability.
      Valuation allowances are recorded when realizability of deferred tax assets
      is
      not likely.




***Foreign
      Currency Translation and Comprehensive Income (Loss)***




The
      financial statements of the Company’s joint venture company, MHI, are translated
      in accordance with Statement of Financial Accounting Standards No. 52, “Foreign
      Currency Translation.” ** The
      reporting currency for the Company is the U.S. dollar (dollar). The functional
      currency of MHI is the South Korean Won. Accordingly, the assets and liabilities
      of the Company’s investment are translated into U.S. dollars using the exchange
      rate in effect at each balance sheet date. Revenue and expense accounts
      generally are translated using an average rate of exchange during the period.
      Foreign currency translation adjustments are accumulated as a component of
      other
      comprehensive loss as a separate component of stockholders’ equity.







F-8
 **Table
          of Contents**





***Stock-Based
      Compensation***




As
      permitted under the FASB Statement of Financial Accounting Standard No. 123R
      “Share-Based Payment” (SFAS 123R) which replaces SFAS No. 123, “Accounting for
      Stock-Based Compensation,” and supersedes Accounting Principles Board Opinion
      No. 25, “Accounting for Stock Issued to Employees.” (APB 25), the Company
      applies the intrinsic value method prescribed in APB 25 to measure compensation
      expense for stock-based awards to employees and thus, recognizes no stock-based
      compensation expense for options granted with exercise prices equal to or
      greater than the fair value of the Company’s common stock on the date of grant.
      The Company records deferred stock-based compensation when the deemed fair
      value
      of the Company’s common stock for financial accounting purposes exceeds the
      exercise price of the stock options on the date of grant. Any such deferred
      stock-based compensation is amortized over the vesting period of the individual
      options.




The
      Company accounts for options granted to non-employees under SFAS 123
      and
      Emerging Issues Task Force Consensus No. 96-18, “Accounting for Equity
      Investments that are Issued to Other than Employees for Acquiring, or in
      Conjunction with Selling, Goods or Services” (EITF 96-18), and may be subject to
      periodic re-valuation over their vesting terms. The resulting stock-based
      compensation expense is recorded over the service period in which the
      non-employee provides services to the Company.




***Recent
      Accounting Pronouncements***




In
      January 2003, the FASB issued Interpretation No. 46, “Consolidation of
      Variable Interest Entities,” which is an interpretation of Accounting Research
      Bulletin No. 51, “Consolidated Financial Statements” to expand upon and
      strengthen accounting guidance that addresses when a company should include
      in
      its financial statements the assets, liabilities and activities of another
      entity. The consolidation requirements of FIN 46 apply immediately to variable
      interest entities created after January 31, 2003 and to older entities in the
      first fiscal year or interim period beginning after December 15, 2003. Certain
      of the disclosure requirements apply in all financial statements issued after
      January 31, 2003, regardless of when the variable interest entity was
      established.




In
      May 2003, SFAS No. 150, “Accounting for Certain Financial Instruments
      with Characteristics of both Liabilities and Equity” (SFAS 150) was issued. This
      statement requires redeemable preferred stock to be classified, in certain
      circumstances, as a liability upon adoption by a public company at the beginning
      of the first interim period beginning after June 15, 2003. SFAS 150 provides
      that mandatory redeemable preferred stock should be classified as a liability
      if
      it embodies an unconditional obligation requiring the issuer to redeem the
      shares by transferring its assets at a specified or determinable date or upon
      an
      event certain to occur. The Company has not issued mandatory redeemable
      preferred stock. The Company does not believe that the provisions of SFAS 150
      will have a material impact on the Company’s results of operations or financial
      position.




In
      October 2004, the FASB concluded that the proposed Statement 123R *,* “Share-Based
      Payment,” which would require all companies to measure compensation cost for all
      share-based payments, including employee stock options, at fair value, would
      be
      effective for public companies (except small business issuers as defined in
      SEC
      Regulation S-B) for interim or annual periods beginning after June 15, 2005.
      Small business issuers, such as Medi-Hut, would not have to adopt Statement
      123R
      until December 15, 2005.




F-9
 **Table
          of Contents**




In
      November of 2004, the FASB issued SFAS No. 151, “Inventory Costs,” (SFAS 151)
      which amends the guidance in APB No. 43, Chapter 4, “Inventory Pricing,” to
      clarify the accounting for abnormal amounts of idle facility expense, freight,
      handling costs and wasted material (spoilage). This statement requires that
      those items be recognized as current-period charges regardless of whether they
      meet the criterion of “so abnormal” as stated in ARB No. 43. Additionally, SFAS
      151 requires that allocation of fixed production overheads to the costs of
      conversion be based on the normal capacity of the production facilities. The
      Company is required to adopt the provisions of SFAS 151 in the first quarter
      of
      2006. The Company does not expect SFAS 151 to have a material impact on its
      consolidated results of operations or financial condition.




In
      December of 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets
      - An Amendment of APB Opinion No. 29” (SFAS 153). SFAS 153 eliminates the
      exception for nonmonetary exchanges of similar productive assets and replaces
      it
      with a general exception for exchanges of nonmonetary assets that do not have
      commercial substance. SFAS 153 is effective for fiscal years beginning after
      June 15, 2005 and is required to be adopted by the Company in the first quarter
      of 2006. The Company does not believe that the adoption of SFAS 153 will have
      a
      material impact on the Company’s consolidated results of operations or financial
      condition.




The
      FASB
      has issued SFAS No. 154, “Accounting Changes and Error Corrections,” replacing
      APB Opinion No. 20, Accounting Changes. Among other changes, SFAS 154 requires
      that a voluntary change in accounting principle be applied retrospectively
      with
      all prior period financial statements presented on the new accounting principle,
      unless it is impracticable to do so. SFAS 154 also provides that (1) a change
      in
      method of depreciating or amortizing a long-lived nonfinancial asset be
      accounted for as a change in estimate (prospectively) that was effected by
      a
      change in accounting principle, and (2) correction of errors in previously
      issued financial statements should be termed a “restatement.” The new standard
      is effective for accounting changes and correction of errors made in fiscal
      years beginning after December 15, 2005. Early adoption of this standard is
      permitted for accounting changes and correction of errors made in fiscal years
      beginning after June 1, 2005. The Company presently does not believe there
      will
      be any impact from the adoption of this new statement on its financial
      statements.




**6.**
            **Investment
                in Joint Venture**




On
      November 16, 2000, the Company entered into a joint venture agreement (the
      “JVA”) with COA International Ind., Inc. (“COA”), a corporation organized and
      existing under the laws of the Republic of Korea (“Korea”), to establish MHI.
      MHI, a corporation organized and existing under the laws of the Korea, was
      created by the parties in order to construct a manufacturing facility in Korea
      capable of manufacturing the Company’s Elite Safety Syringe and other standard
      syringes. The Company contributed $1,000,000 for a 44% stock ownership interest
      in MHI and COA contributed $400,000 for a 56% stock ownership in MHI. Subsequent
      to the execution of the JVA, COA’s 56% stock ownership was transferred into the
      names of certain citizens of Korea, one of which is the Chief Executive Officer
      of MHI who currently owns 46% of MHI. The Company accounts for this investment
      under the equity method of accounting. The Company evaluates its equity method
      investment for loss in value on an annual basis. The carrying value of the
      equity investee would be reduced if impairment in value is deemed to be other
      than temporary. Based upon management’s evaluation of certain criteria, the
      Company has concluded that the investment in this joint venture has been
      impaired and has written down the value of the investment to $0 as of October
      31, 2002.




**7.**
            **Note
                Receivable**




In
      June
      2002, the Company provided MHI with $300,000 in working capital to fund the
      MHI
      operations. Effective June 7, 2002, the Company and MHI entered into a loan
      agreement (the “MHI Loan Agreement”) pursuant to which MHI agreed to repay the
      principal plus accrued interest to the Company as follows: $75,000 on December
      31, 2004; $125,000 on December 31, 2005 and $100,000 on December 31, 2006.
      Interest accrues at a rate of 4% per annum through December 31, 2004; 5% per
      annum for the period January 1, 2005 through December 31, 2005 and 6% per annum
      after January 1, 2006. As of October 31, 2002, the Company had reserved for
      the
      entire balance of principal ($300,000) and interest ($4,318) due to the
      financial condition of MHI.




**8.**
            **Distribution
                Rights**




On
      November 20, 2001, as amended on February 7, 2002 and April 3, 2002, the Company
      entered into an exclusive license agreement with Syntho. Pursuant to the
      agreement, the Company acquired the exclusive distribution rights to Syntest,
      a
      hormone replacement therapy drug manufactured by Syntho. The Company paid Syntho
      $2,500,000 and agreed to purchase the Syntest product at a price per unit as
      agreed upon by the parties. The term of the agreement was for a period of five
      years commencing with the first commercial sale of the Syntest product, which
      occurred on October 14, 2002.




In
      March
      2003, regular sales of Syntest ceased when Syntho refused, beginning in January
      2003, to sell any additional product to the Company resulting in the
      commencement of litigation by the Company against Syntho and other parties
      on
      May 12, 2003. The Company’s initial investment of $2,500,000 was to be amortized
      over the five year life of the exclusive distribution agreement, commencing
      on
      October 14, 2002 which was the date of the first commercial sale of the product.
      On October 17, 2005, the Company sold its distribution and other rights and
      business with respect to Syntest, to Breckenridge. In consideration for the
      sale
      of such rights and the other benefits provided under the purchase and settlement
      agreement between Breckenridge and the Company,  Breckenridge
      agreed to pay the Company an aggregate of $1,000,000 as follows: (1) $250,000
      was paid shortly after the execution of the purchase and settlement agreement,
      and (2) $50,000 will be paid on the first day of each month for a 15 month
      period commencing on November 1, 2005 and ending on January 1, 2007. The
      difference between the original purchase price of $2,500,000 and the amount
      received through the sale of the distribution rights to Breckenridge has been
      written off as of the fiscal year ended October 31, 2002. See Note
      16.




**9.**
            **Product
                Acquisition**




On
      February 25, 2002, the Company acquired certain intellectual property related
      to
      the Solo-Safe TM Safety
      Syringe from Spectrum Biotech, Inc. (“Spectrum”). In consideration for the
      issued patents, patents pending and the U.S. Food and Drug Administration
      (“FDA”) 510(k) approval related to the Solo-Safe TM Safety
      Syringe, the Company issued 700,000 shares of restricted common stock to the
      shareholders of Spectrum based on a price per share of $5.00 for a total
      purchase price of $3,500,000. The Company recorded the purchase as an intangible
      asset as follows: $3,450,000 related to the cost of the Solo-Safe TM Safety
      Syringe issued United States Patents and $50,000 related to the cost of the
      Solo-Safe TM Safety
      Syringe FDA 510(k) premarket notification.




F-10
 **Table
          of Contents**




Based
      on
      the Company’s financial performance in fiscal 2002, the Company undertook an
      analysis of the likelihood of recovering the carrying amount of the Solo-Safe
      intangible assets in accordance with SFAS 144, “Accounting for the Impairment or
      Disposal of Long-Lived Assets.” The Company engaged a third party asset
      valuation firm to conduct the analysis. The impairment analysis indicated,
      based
      on the Company’s estimated future undiscounted cash flows, the Company would not
      be able to recover any of the carrying amount of intangible assets related
      to
      the Solo-Safe TM Safety
      Syringe technology acquired by the Company on February 26, 2002 for $3,500,000.
      As a result, as of October 31, 2002, the Company recognized an impairment loss
      of $3,500,000 against its previously recorded intangible assets.




**10.**
            **Investment
                in Private Company**




In
      August
      2002, the Company completed a $195,000 investment in a development stage medical
      technology company, A.L. Tech Biomedical, Inc. (“AL Tech)”). In exchange for its
      investment, the Company received a 6.7% interest in AL Tech in the form of
      common shares. Due to a number of factors, including the early development
      stage
      of AL Tech’s technology and the insolvent financial state of AL Tech, the
      Company recognized an impairment loss of $195,000 investment as of October
      31,
      2002.




**11.**
            **Income
                Taxes**




In
      determining the realizability of the Company’s deferred tax assets, the Company
      considered numerous factors, including historical profitability, estimated
      future taxable income and the industry in which it operates. At October 31,
      2002, a valuation allowance was recorded to fully offset the net deferred tax
      asset, as it was determined by management that the realization of the deferred
      tax asset was not likely to occur in the foreseeable future.




The
      tax
      effect of significant items comprising the Company’s net deferred tax assets are
      as follows:


October
                31,2002Net
                operating loss
            
            $
            560,057Write-down
                of impaired assets
            
            
            2,106,569Reserve
                on note receiveable-related party
            
            
            121,545Reserve
                on accounts receiveable-related party
            
            
            303,063Accrual
                for class action lawsuit settlement
            
            
            211,402Accrual
                for sales discounts
            
            
            188,201Other
                reserves
            
            
            18,038Depreciation
                and amortization
            
            
            19,759Consulting
                expense
            
            
            176,135Other
            
            
            14,9343,719,703Valuation
                allowance
            
            
            3,719,703Net
                deferred tax assets
            
            $
            –




F-11
 **Table
          of Contents**




As
      of
      October 31, 2002, the Company had federal and state operating losses of
      approximately $2,383,219 and $2,369,152, respectively, which will expire as
      follows:


Federal
            
            StateYear
                expiring
            
            Amount
            
            Year
                expiring
            
            Amount2021
            
            $
            980,973
            
            
            2008
            
            $
            966,9062022
            
            
            1,402,246
            
            
            2009
            
            
            1,402,246$
            2,383,219
            
            
            
            
            $
            2,369,152


Utilization
      of the net operating loss carryforwards may be subject to a substantial annual
      limitation due to the ownership change limitations provided by the Internal
      Revenue Code of 1986, as amended (the “Internal Revenue Code”), and similar
      state provisions. The Company has not performed a detailed analysis to determine
      whether an ownership change under Section 382 of the Internal Revenue Code
      occurred. The effect of an ownership change would be the imposition of an annual
      limitation on the use of net operating loss carryforwards attributable to
      periods before the change.




**12.**
            **Related
                Party Transactions**




Robert
      Russo, director of the Company during the fiscal year ended October 31, 2002,
      provided accounting services to the Company through his accounting firm, Koenig,
      Russo & Associates LLC (“Koenig”). Mr. Russo is the managing member of
      Koenig. As of October 31, 2002, the Company owed Koenig $138 for Mr. Russo’s
      services rendered during fiscal 2002. This amount was paid in full by the
      Company during its fiscal year ended October 31, 2003.




James
      G.
      Aaron, a member of the Company’s Board of Directors during the fiscal year ended
      October 31, 2002, is a shareholder of the law firm of Ansell Zaro Grimm &
      Aaron, P.C., which served as Medi-Hut’s general counsel during the fiscal year
      ended October 31, 2002. As of October 31, 2002, the Company owed Ansell Zaro
      Grimm & Aaron, P.C. $7,107 for legal services rendered during fiscal 2002.
      This amount was paid in full by the Company during its fiscal year ended October
      31, 2003.




Lawrence
      P. Marasco, the Company’s Vice President of Sales and Marketing during the
      fiscal year ended October 31, 2002, was the sole officer, director and
      shareholder of Larval Corporation (“Larval”), a privately held wholesaler of
      pharmaceutical products, until February 12, 2002, when he transferred his
      ownership in Larval to his sister-in-law. During fiscal year ended October
      31,
      2002, the Company purchased product and sold product to Larval. The actual
      amount of products purchased from Larval and sold to Larval cannot be
      definitively determined due to the limitation on financial reporting discussed
      above in Note 3. As of October 31, 2002, accounts receivable from Larval was
      $479,339 which was collected in full during fiscal year ended October 31, 2003.
      The Company ceased all business with Larval during the year ended October 31,
      2003.







F-12
 **Table
          of Contents**





**13.**
            **Stockholders’
                Equity**




***Stock
      Option Plan***




On
      July
      5, 2002, the shareholders approved the Company’s 2002 Equity Incentive Plan (the
“Equity Incentive Plan”), effective as of January 1, 2002. The Equity Incentive
      Plan was placed into effect in order to promote the long-term success of the
      Company and to (1) encourage employees, independent directors and consultants
      of
      the Company to focus on critical long-term objectives, (2) encourage the
      attraction and retention of employees, independent directors and consultants
      with exceptional qualifications, and (3) link employees, independent directors
      and consultants directly to shareholders’ interests through increased stock
      ownership.




The
      Equity Incentive Plan provides for awards in the form of restricted shares,
      incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”) (ISOs and
      NSOs are sometimes collectively referred to as “Options”) and stock appreciation
      rights (“SARs”). The aggregate number of shares of common stock which may be
      awarded under the Equity Incentive Plan is two million (2,000,000).




Incentive
      Stock Options (ISOs)




Only
      employees of the Company are eligible to receive grants of ISOs. Unless
      otherwise provided in a stock option agreement, the first $100,000 of optioned
      shares that are part of an option grant and can be exercised first in a given
      year shall be considered ISOs, and the remainder shall be considered NSOs.
      The
      exercise price of an ISO may not be less then 100% of the fair market value
      of a
      share of common stock on the date of grant. The term of an ISO shall in no
      event
      exceed ten years from the date of grant.




Non-Statutory
      Stock Options (NSOs)




Employees,
      independent directors and consultants of the Company are eligible to receive
      grants of NSOs. Option grants to any optionee in a single fiscal year of the
      Company cannot cover more than 500,000 shares of common stock (750,000 shares
      of
      common stock for new employees in the fiscal year of the Company in which
      service as an employee first commences). Each individual stock option agreement
      shall specify the exercise price for the awards as determined by the Board.
      Options may be awarded in combination with SARs.




Automatic
      Option Grants to Independent Directors




Upon
      the
      conclusion of each annual meeting of the Company’s shareholders commencing in
      2002, each independent director who continues to serve on the Board after such
      annual meeting shall receive an NSO at the discretion of the Board. All NSOs
      granted to an independent director shall also become exercisable in full in
      the
      event of: (a) the termination of such independent director’s service because of
      death, total and permanent disability or retirement at or after age 65; or
      (b) a
      change in control with respect to the Company, with certain exceptions. The
      exercise price under all NSOs granted to an independent director shall be equal
      to 100% of the fair market value of a share of common stock on the date of
      grant. All NSOs granted to an independent director shall terminate on the
      earlier of (1) the 6 th anniversary of the date of grant or (2) the date 12 months after the termination
      of such independent director’s service for any reason. The Board may permit an
      independent director to elect to receive his or her annual retainer payments,
      if
      any, and/or meeting fees from the Company in the form of cash, NSOs, or
      restricted shares or a combination thereof, as determined by the
      Board.




F-13
 **Table
          of Contents**




Stock
      Appreciation Rights




SARs
      granted to any optionee in a single fiscal year cannot cover more than 500,000
      shares of common stock (750,000 shares of common stock for new employees in
      the
      fiscal year of the Company in which service as an employee first commences).
      Each SAR agreement shall specify the exercise price. SARs may be awarded in
      combination with Options, which may vary in accordance with a predetermined
      formula while the SARs are outstanding. A SAR may be included in an ISO only
      at
      the time of grant but may be included in an NSO at the time of grant or
      thereafter. Upon exercise of a SAR, the optionee shall receive from the Company
      (a) shares of common stock, (b) cash, or (c) a combination of common stock
      and
      cash, as the Board shall determine.




Restricted
      Shares




The
      holders of restricted shares shall have the same voting, dividend and other
      rights as the Company’s shareholders, subject to any special restrictions
      contained in the restricted share agreement.




The
      Equity Incentive Plan also contains customary protection against dilution.
      Options and SARs shall terminate immediately prior to the dissolution or
      liquidation of the Company. Unless the applicable agreement provides otherwise,
      in the event of any change in control, the vesting and exercisability of each
      outstanding award shall automatically accelerate so that each such award shall,
      immediately prior to the effective date of the change in control, become fully
      exercisable for all of the shares of common stock at the time subject to such
      award and may be exercised for any or all of those shares as fully-vested common
      stock, except under certain circumstances.




As
      of
      October 31, 2002, the Company had available to issue 2,000,000 options under
      the
      Equity Incentive Plan.




Prior
      to
      the adoption of the Equity Incentive Plan, the Company granted stock options
      to
      Laurence M. Simon, the Company’s former Chief Financial Officer, to purchase an
      aggregate of 20,000 shares of common stock at $6.75 per share. Options for
      3,680
      shares vested on December 31, 2001 and the remainder vested at a rate of 680
      common shares each month through December 31, 2003. Of these options, 6,800
      shares that were not vested terminated upon the Company’s termination of Mr.
      Simon’s employment on March 21, 2003.





The
      following table summarizes information about vested stock options
      outstanding.


October
                31, 2002Vested
                stock options
            
            
            10,480Weighted
                average exercise price
            
            $
            6.75






F-14
 **Table
          of Contents**




The
      following table summarizes information about stock options outstanding at
      October 31, 2002. These options were subsequently terminated by the Company
      (see
      Note 16).





Exercise
                Price
            
            Options
                Outstanding
            
            Options
                Vested
            
            Weighted
                Average Remaining Contractual Life (Years)$6.75
            
            
            20,000
            
            
            10,480
            
            
            1.2


***Warrants
      to Purchase Common Stock***




On
      October 5, 2001, the Company entered into an agreement to sell 600,000 units
      to
      Empire Fund Managers, LLC (“Empire”) in accordance with the provisions of
      Section 4(2) and Regulation D of the Securities Act of 1933, as amended (the
      “Securities Act”). The purchase price of each unit was $5.30. Each unit was
      comprised of one share of the Company's common stock and one warrant to purchase
      a share of common stock at a purchase price of $6.75. The warrants were
      exercisable beginning on the closing date of the transaction and extended over
      a
      two year period ending October 5, 2003. Upon the closing of the transaction,
      the
      Company recorded a stock subscription receivable, reflected as a contra-equity
      account on the balance sheet, for $3,000,000 ($3,180,000 less a 6% commission).
      During fiscal year ended October 31, 2002, the Company received payment for
      400,000 units or $2,000,000. On June 17, 2002, the Company cancelled the
      remaining 200,000 units issued due to Empire’s failure to make payment on the
      remaining $1,000,000 of receivable. The 200,000 shares within the cancelled
      units were retired by the Company on October 29, 2002. As of October 31, 2002,
      400,000 warrants with an exercise price of $6.75 were outstanding.





On
      August
      1, 2002, the Company engaged Muhammed Malik, a consultant, to provide assistance
      in adding products to the Company’s distribution pipeline. The term of the
      agreement was for thirty-six months commencing on August 1, 2002 and ending
      on
      July 31, 2005, unless terminated sooner by either of the parties. As
      compensation for these future services, on August 1, 2002, the Company issued
      to
      Mr. Malik a warrant to purchase 90,000 shares of common stock of the Company,
      exercisable at $4.50 per share and a warrant to purchase 90,000 shares of common
      stock of the Company, exercisable at $2.45 per share. Each warrant was fully
      vested on the date of issuance and each is exercisable until October 31, 2006,
      unless the above noted consulting agreement is terminated. In the event of
      a
      termination of the consulting agreement, each of the warrants expire within
      twenty (20) days of the termination of the consulting agreement. The fair value
      of each warrant issued was estimated on the grant date using the Black-Scholes
      pricing model with the following weighted average assumptions; dividend yield
      of
      0%, risk-free interest of 3.03%; volatility of 75.97%; and an expected life
      of
      4.25 years for the warrants. The warrants had a fair value of approximately
      $215,122. Such amount was expensed as of October 31, 2002.





As
      of
      October 31, 2002, none of the warrants had been exercised and warrants to
      purchase 580,000 shares of the Company’s common stock were outstanding at a
      weighted average exercise price of $5.73 per share.




F-15
 **Table
          of Contents**





***Treasury
      Stock***




On
      June
      6, 2002, the Company’s Board of Directors authorized the Company to purchase up
      to 1,500,000 shares of its common stock in the open market. As of October 31,
      2002, the Company had purchased 144,900 shares for total consideration of
      $363,717.




***Notes
      Receivable on Exercised Warrants***




On
      October 1, 2000, as amended on February 5, 2001, the Company entered in an
      agreement with Columbia Financial Group (“Columbia”), a public relations firm.
      As part of the compensation to Columbia, the Company issued a warrant to
      purchase 600,000 shares of common stock of the Company at an exercise price
      of
      $2.50 per share. The fair value of the warrant issued was estimated on the
      grant
      date using the Black-Scholes pricing model with the following weighted average
      assumptions: dividend yield of 0%; risk free interest of 4.8%; volatility of
      33.3% and an expected life of 6 months. The warrant had a fair value of
      approximately $2,512,942 on the date of grant.




On
      May 1,
      2001, the warrant was fully exercised and 600,000 shares of the Company’s common
      stock were issued to Columbia in exchange for a $1,500,000 promissory note
      bearing interest at 8% per annum due May 1, 2002, subject to certain
      acceleration provisions. The Company recorded the note as a contra-equity
      account. On March 5, 2002, pursuant to the terms of the promissory note, the
      Company demanded payment in full by March 15, 2002. Columbia failed to make
      payment on the note by March 15, 2002 and on March 26, 2002, the Company filed
      a
      civil complaint against Columbia in the United States District Court for the
      District of New Jersey. On May 31, 2002, the Company and Columbia entered into
      a
      settlement agreement whereby, among other provisions, a principal amount of
      $1,620,000 bearing interest at 3% per annum would be paid by Columbia to the
      Company pursuant to a payment schedule commencing May 31, 2002 and ending
      November 1, 2004. Columbia paid two scheduled payments totaling $50,000 and
      then
      defaulted on the remaining payments in July 2002. In October 2002, the Company
      was informed that Columbia filed for bankruptcy. As a result, the Company
      determined that it was unlikely that the promissory note issued by Columbia
      would be paid. Accordingly, the Company wrote-off the receivable as of October
      31, 2002.




**14.**
            **Credit
                Facilities**




On
      February 26, 2002, the Company entered into a loan agreement (the “Loan
      Agreement”) with PNC Bank. Pursuant to the Loan Agreement, the Company secured a
      $750,000 note (the “Note”) under which the Company was permitted to draw-down
      money until February 1, 2003. Interest on the outstanding balance of the Note
      was charged at prime. In addition, the Company secured a $2,000,000 line of
      credit (“Line of Credit”) at a rate of prime plus .75% for a term of one year
      ending February 1, 2003. Pursuant to the terms of the Security Agreement entered
      into between the Company and PNC, both the Note and the Line of Credit were
      secured by all of the personal property of the Company including cash, accounts
      receivable, inventory, equipment and general intangibles. From the inception
      of
      the Loan Agreement through October 31, 2002, there were no borrowings under
      this
      credit facility and the outstanding balance on both the Note and the Line of
      Credit was $0. See Note 16.




F-16
 **Table
          of Contents**




**15.**
            **Commitments**




***Operating
      Leases***




In
      July
      2002, the Company leased an office facility under a non-cancelable operating
      lease that commenced on November 24, 2002 and was due to expire on November
      24,
      2007, with an option to renew for an additional five year term. The Company
      moved its corporate headquarters to this facility located in Wall Township,
      New
      Jersey in December 2003. On May 6, 2004, the Company reached an agreement with
      the owner of the office facility to terminate the lease (see Note 16). Annual
      future minimum lease obligations for the office facility as well as other
      property and equipment leased by the Company, as of October 31, 2002, are as
      follows:


Fiscal
                Year Ended October 31,2003
            
            $
            115,1232004
            
            
            184,0582005
                and thereafter
            
            
            –Total
                Minimum Lease Payments
            
            $
            299,181


***Other
      Commitments***




On
      November 1, 2001, the Company entered into an employment agreement with its
      former Chief Financial Officer, Laurence M. Simon. The term of the employment
      agreement was two years and two months. The employment agreement provided that
      Mr. Simon would receive an annual salary of $100,000. In addition, Medi-Hut
      granted stock options to purchase an aggregate of 20,000 shares of common stock
      at $6.75 per share. Options for 3,680 shares vested on December 31, 2001 and
      the
      remainder vested at a rate of 680 common shares each month through December
      31,
      2003. Of these options, 6,800 terminated upon the Company’s termination of Mr.
      Simon’s employment on March 21, 2003. The Company’s common stock had a fair
      value of $9.50 on the date the options were issued. Accordingly, pursuant to
      APB
      25, the options had an intrinsic value of $55,000, which represents the
      difference between the fair market value of the Company’s stock on the date the
      options were issued and the exercise price of the options. The Company recorded
      the intrinsic value of the options as deferred compensation and amortized the
      deferred compensation pro rata in accordance with the vesting schedule of the
      options until Mr. Simon’s termination on March 21, 2003.




On
      December 14, 2001, the Company entered into an agreement with Bond-Brown Sales
      Design, LLC (“Bond-Brown”) to assist the Company in the identification and
      establishment of relationships with distributors for the Elite Safety Syringe.
      The agreement required the Company to pay Bond-Brown a minimum fee of $10,600
      per month for a minimum of six months commencing on January 21, 2002.
      Thereafter, the agreement continued on a month-to-month basis and was terminated
      by the Company in August 2003. As of October 31, 2002, there were no amounts
      owed by the Company pursuant to this agreement.




On
      July
      1, 2002, the Company entered into a license agreement with Cuppy Medical
      Products, Inc. (“Cuppy”), which had a five year term. Pursuant to this license
      agreement, Cuppy granted Medi-Hut the exclusive, non-transferable license to
      manufacture, use, sell and distribute a patented safety engineered intravenous
      catheter system (the “Cuppy Catheter”) within the United States, United States
      Possessions, Canada and Mexico. The Company agreed to pay Cuppy an annual
      royalty of 6% of net sales of the Cuppy Catheter for a period of five years
      commencing July 1, 2002. In addition, upon execution of the license agreement,
      the Company paid $125,000 as an advance against future royalty payments, of
      which $85,000 was non-refundable and $40,000 was refundable in the event the
      Cuppy Catheter did not receive 510(k) approval by the FDA. Further, the Company
      agreed to make annual non-refundable payments as advances against future
      royalties as follows: $25,000 on July 1, 2003, $40,000 on July 1, 2004, $65,000
      on July 1, 2005 and $85,000 on July 1, 2006. The license agreement also provided
      that, upon the notification of receipt of 510(k) approval by the FDA, the
      Company would grant and issue to Cuppy restricted shares of the Company’s common
      stock with a total fair market value of $125,000 and afford the holder of the
      restricted shares with certain registration rights. On November 7, 2003, Cuppy
      terminated the license agreement with the Company due to the Company’s failure
      to make the $25,000 license payment that was due on July 1, 2003. The Company
      does not believe it has any further payment or other obligations under the
      terminated license agreement nor does it believe it will receive any refunds
      thereunder. As of October 31, 2002, the Company has not accrued for any further
      payments due under this license agreement.




F-17
 **Table
          of Contents**




On
      March
      25, 2002, the Company and Making Distribution Intelligent, LLC (“MDI”) entered
      into a logistics services agreement pursuant to which MDI was engaged to
      warehouse the Company’s hormone replacement therapy drug, Syntest, ship the
      product pursuant to the Company’s instructions, bill the Company’s customers and
      provide customer service. The agreement, which commenced on March 25, 2002
      and
      was amended on June 17, 2002, required the Company to pay MDI a one-time fee
      of
      $15,000, a base monthly fee of $12,250 and a series of variable fees based
      on a
      per unit/case/pallet basis for receiving product, storing product, shipping
      product, invoicing customers and accepting returns. On August 29, 2003, the
      Company and MDI entered into a termination and mutual release agreement in
      which
      the parties agreed to terminate the remaining term of the March 25, 2002
      logistics services agreement (21 months resulting in an obligation of $257,250)
      for a one-time payment of $50,000. The parties also agreed to a mutual release
      of all potential claims against each other. As of October 31, 2002, $29,376
      was
      accrued by the Company related to this agreement.




On
      April
      1, 2002, the Company and Schrader Associates entered into a three year brokerage
      agreement in which Schrader Associates agreed to market and sell the Syntest
      products to certain drug wholesalers, drug store chains and managed care
      companies on an exclusive basis, in exchange for a commission that ranged from
      $3.50 to $4.00 per bottle sold by Schrader Associates. There were no fixed
      monthly fees associated with this agreement. All amounts due under this
      agreement related to fiscal 2002 were paid as of October 31, 2002.




**16.**
            **Subsequent
                Events**




***Government
      Proceedings and Investigations***




FBI
      Investigation .
      On
      November 22, 2002, the Federal Bureau of Investigation (“FBI”) executed a search
      warrant and removed certain documents and computers from the Company’s premises.
      The Company was not advised of the reasons for the FBI’s actions. As of October
      17, 2005, no indictments or charges have been issued against the
      Company.




NASDAQ
      Delisting . ** On
      March
      21, 2003, trading of Medi-Hut’s shares of common stock on the NASDAQ SmallCap
      Market was halted. The Company’s common stock was later delisted from the NASDAQ
      SmallCap Market on March 28, 2003 for, among other things, failure by the
      Company to file with the SEC its annual report on Form 10-KSB for the fiscal
      year ended October 31, 2002.




F-18
 **Table
          of Contents**




SEC
      Investigation .
      On
      August 19, 2003, the SEC’s investigation into the Company resulted in the
      commencement of an action against Medi-Hut and the Company’s former President
      and Chief Executive Officer, Joseph A. Sanpietro, former Chief Financial
      Officer, Laurence M. Simon, and former Vice President of Sales, Lawrence P.
      Marasco. Without admitting or denying the allegations of the complaint, the
      Company consented to a final judgment against it and is permanently restrained
      from making any untrue or misleading disclosures, whether such disclosures
      are
      in a report filed with the SEC or are contained in a press release or other
      general public disclosure, and must make and keep accurate books, records and
      accounts and maintain a system of internal accounting control sufficient to
      ensure for fair and accurate financial disclosure.




Guilty
      Pleas of Former Officers and Directors . ** On
      August
      19, 2003, the USDJ investigation resulted in the guilty pleas of Joseph A.
      Sanpietro, Laurence M. Simon and Lawrence P. Marasco to conspiracy to inflate
      the revenue and earnings of the Company and lying to investigators. In addition,
      Vincent J. Sanpietro pled guilty to obstruction of justice. The Company no
      longer has any business relationships with these former officers and
      directors.





***Consulting
      Agreements with Century Capital***




Original
      Agreement Dated February 1, 2003 . ** The
      Company entered into a Consulting Services Agreement with Century Capital
      Associates LLC (“Century Capital”), effective as of February 1, 2003, in order
      to engage Century Capital to provide (1) general corporate and business advisory
      services, (2) strategic business advisory services, and (3) financial advisory
      services to the Company. The Consulting Services Agreement was approved by
      the
      Company’s Board of Directors. The initial term of the Consulting Services
      Agreement was two years, which ended on January 31, 2005. All fees related
      to
      the Consulting Services Agreement were expensed by the Company during the period
      of the agreement.




David
      R.
      LaVance and Thomas S. Gifford are members of Century Capital. On March 21,
      2003,
      pursuant to the Consulting Services Agreement, the Board appointed Mr. LaVance
      as Chief Executive Officer of the Company, and Mr. Gifford as Executive Vice
      President and Chief Financial Officer of the Company. Mr. LaVance and Mr.
      Gifford were also appointed as directors of the Company to fill vacancies on
      the
      Board as of the same date. Mr. LaVance assumed the position of Chairman of
      the
      Board when he was appointed as a director.




During
      the initial term of the Consulting Services Agreement, Century Capital received
      a monthly consulting fee in the amount of $75,000 and was reimbursed for all
      reasonable and customary business expenses. The Company also issued Century
      Capital a ten year warrant to purchase 1,500,000 shares of the Company’s common
      stock (see Note 16 - Warrants to Purchase Common Stock) with a fair value of
      $1,294,525 at the date of issuance. In addition, for each one year period
      commencing on February 1 and ending on January 31 during the term of the
      Consulting Services Agreement, Century Capital was entitled to be paid a minimum
      annual cash bonus in an amount not less than $125,000. Century Capital was
      eligible to earn an annual bonus in excess of $125,000 at the discretion of
      the
      Company’s Board of Directors.




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On
      May
      14, 2004, in lieu of the minimum annual cash bonus due Century Capital for
      the
      period that began on February 1, 2003 and ended on January 31, 2004, Century
      Capital agreed to accept the following: (1) $50,000 cash payment to be made
      on
      September 1, 2004; (2) 1,875,000 shares of the Company’s common stock (fair
      market value on the date of issuance was $150,000 based on the closing price
      of
      the Company’s common stock on that date) and (3) the forgiveness of $75,000
      (representing the exercise price) due to the Company from Century Capital
      related to the purchase by Century Capital of 937,500 shares of the Company’s
      common stock underlying the warrant issued to it on February 1, 2003 (see Note
      16 - Warrants to Purchase Common Stock). On February 25, 2005, Century Capital
      agreed to accept 500,000 shares of the Company’s common stock as payment of the
      $50,000 due to Century Capital on September 1, 2004 (fair market value on the
      date of issuance was $15,000 based on the closing price of the Company’s common
      stock on that date).




Commencing
      July 1, 2004, Century Capital agreed to defer $25,000 of its monthly consulting
      fee for a three month period (through September 30, 2004) in an effort to
      minimize the Company’s cash burn. Century Capital later agreed to continue the
      $25,000 monthly deferment through January 31, 2005, at which point the total
      amount due and owing to Century Capital related to the deferment of its monthly
      consulting fee was $175,000. On November 1, 2004, Century Capital exercised
      warrants to purchase 621,876 shares of the Company’s common stock (421,876
      shares pursuant to the warrant dated February 1, 2003 and 200,000 shares
      pursuant to the warrant dated May 14, 2004 - see Subsequent Events: Warrants
      to
      Purchase Common Stock). The $16,438 due to the Company from Century Capital
      related to these warrant exercises were offset against deferred monthly
      consulting fees due to Century Capital. On February 25, 2005, Century Capital
      agreed to forgive $60,000 of the monthly deferred consulting fees in exchange
      for 600,000 shares of the Company’s common stock (fair market value on the date
      of issuance was $18,000 based on the closing price of the Company’s common stock
      on that date). In addition, on February 25, 2005, Century Capital exercised
      warrants to purchase 390,624 shares of the Company’s common stock (140,624
      shares pursuant to the warrant dated February 1, 2003 and 250,000 shares
      pursuant to the warrant dated February 25, 2005 - see Subsequent Events:
      Warrants to Purchase Common Stock). The $10,312 due to the Company from Century
      Capital as a result of this exercise was offset by the Company against deferred
      monthly consulting fees due to Century Capital. On both May 20, 2005 and August
      25, 2005, Century Capital exercised warrants to purchase 62,500 shares of the
      Company’s common stock (125,000 shares in total) pursuant to the warrant dated
      February 25, 2005. The $3,750 due to the Company from Century Capital as a
      result of these exercises was offset by the Company against deferred monthly
      consulting fees due to Century Capital. In addition, on August 25, 2005, the
      Company issued 1,000,000 shares of the Company’s common stock to Century Capital
      as payment of $50,000 of the deferred monthly consulting fees (fair market
      value
      of the common stock on the date of issuance was $40,000). See Note 16 - Amended
      and Restated Agreement dated February 1, 2005.




During
      the entire term of the original Consulting Services Agreement, Mr. LaVance
      and
      Mr. Gifford were treated as independent contractors for purposes of
      compensation, were not paid any salary or other compensation directly by the
      Company and neither of Mr. LaVance or Mr. Gifford participated in any of the
      Company’s employee benefit plans.




Amended
      and Restated Agreement Dated February 1, 2005 .
      Effective February 1, 2005, the original Consulting Services Agreement was
      replaced by an amended and restated Consulting Services Agreement. Pursuant
      to
      the amended and restated Consulting Services Agreement, Century Capital agreed
      to provide the services of Mr. LaVance and Mr. Gifford as the Company’s
      corporate officers. As provided in the amended and restated Consulting Services
      Agreement, Mr. LaVance will continue to serve as the Company’s President and
      Chief Executive Officer and Mr. Gifford will continue to serve as the Company’s
      Executive Vice President, Chief Financial Officer, Treasurer and Secretary.
      The
      amended and restated Consulting Services Agreement also provides that Mr.
      LaVance and Mr. Gifford will continue to be treated as independent contractors
      for the purposes of compensation, will not be paid any salary or other
      compensation directly by the Company and will not participate in the Company’s
      employee benefit plans.




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The
      initial term of the amended and restated Consulting Services Agreement is one
      year, ending on January 31, 2006. Thereafter, the amended and restated
      Consulting Services Agreement shall continue until either party elects to
      terminate the amended and restated Consulting Services Agreement by providing
      sixty days written notice. During the term of the amended and restated
      Consulting Services Agreement, Century Capital is entitled to receive a monthly
      consulting fee in the amount of $50,000 and is entitled to be reimbursed for
      all
      reasonable and customary business expenses. Century Capital is also entitled
      to
      receive an annual bonus in an amount not less than $125,000 upon the successful
      completion of to be determined objectives which are established by the
      independent members of the Company’s Board of Directors and Century
      Capital.




During
      the term of the amended and restated Consulting Services Agreement and for
      a
      period of twenty-four months after the termination of the amended and restated
      Consulting Services Agreement, Century Capital shall be entitled to receive
      a
      cash bonus upon the consummation by the Company of certain corporate
      transactions. The bonus compensation shall be an amount not less than 2.5%
      of
      the aggregate consideration to be paid in connection with a sale or acquisition
      of the Company or in connection with a change in control of the Company (which
      means a change in more than 50% of the issued and outstanding shares of the
      Company’s common stock). Century Capital shall be entitled to receive the bonus
      compensation for any corporate transaction which commences before, but is
      consummated after, the end of the twenty-four month period following the
      effective termination date of the amended and restated Consulting Services
      Agreement.




Upon
      the
      execution of the amended and restated Consulting Services Agreement, the Company
      issued Century Capital a ten year, non-cancelable warrant to purchase 500,000
      shares of the Company’s common stock at a purchase price of $.03 per share (see
      Note 16 - Warrants to Purchase Common Stock). The warrant had a fair value
      of
      $10,674 on the date of issuance.




Commencing
      July 2005, Century Capital began deferring a portion of its monthly consulting
      fee due pursuant to the amended and restated Consulting Services Agreement
      in
      order to minimize the Company’s cash burn.




***Warrants
      to Purchase Common Stock***




Century
      Capital Warrant Dated February 1, 2003 . ** Pursuant
      to the original Consulting Services Agreement, on February 1, 2003, a warrant
      to
      purchase 1,500,000 shares of common stock of the Company was issued to Century
      Capital. The warrant had a ten year term and was exercisable at $1.34 per share
      (the “Underlying Purchase Price”). The purchase price was subject to certain
      pricing adjustments which included an adjustment if the average closing price
      of
      the Company’s common stock over a period of thirty days was less than the then
      existing Underlying Purchase Price. 375,000 shares of common stock underlying
      the warrant vested immediately upon issuance with another 46,875 shares vesting
      on and after the last day of each month commencing February 28, 2003 and ending
      January 31, 2005.




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As
      a
      result of the application of the pricing adjustment, the Underlying Purchase
      Price adjusted to $.08 per share as of May 14, 2004, the date when Century
      Capital exercised its right to purchase 937,500 shares of the Company’s common
      stock underlying the warrant. The $75,000 due from Century Capital to the
      Company as a result of the purchase of the 937,500 shares was forgiven by the
      Company as part of Century Capital’s bonus for the period February 1, 2003
      through January 31, 2004. The Underlying Purchase Price adjusted to $.02 per
      share as of November 1, 2004 when Century Capital exercised its right to
      purchase 421,876 shares of the Company’s common stock underlying the warrant.
      The $8,438 due to the Company from Century Capital as a result of this exercise
      was offset by the Company against monthly consulting fees due and owing to
      Century Capital that had been deferred for payment. On February 25, 2005,
      Century Capital exercised its right to purchase 140,624 shares of the Company’s
      common stock underlying the warrant at $.02 per share. The $2,812 due to the
      Company from Century Capital as a result of this exercise was offset by the
      Company against monthly consulting fees due and owing to Century Capital that
      had been deferred for payment. As of February 28, 2005, all 1,500,000 shares
      underlying the warrant had been purchased. On February 1, 2003, the date of
      issuance, the warrant had a fair value of approximately $1,294,525. As of April
      30, 2004, after accounting for the reduction of the Underlying Purchase Price
      to
      $.08 per share, the fair value of the warrant decreased to approximately
      $101,710. As of October 31, 2004, after accounting for the further reduction
      of
      the Underlying Purchase Price to $.02 per share, the fair value of the
      unexercised warrant decreased to approximately $8,783.




Century
      Capital Warrant Dated May 14, 2004 . ** On
      May
      14, 2004, the Company issued Century Capital ten year, non-cancelable warrant
      to
      purchase 700,000 shares of the Company’s common stock at a purchase price of
      $.04 per share. 100,000 shares of the Company’s common stock underlying the
      warrant became available for purchase as of May 14, 2004, with the remaining
      shares underlying the warrant becoming available for purchase upon the
      achievement of specific milestones as follows: 100,000 shares shall be available
      for purchase upon the Company’s receipt of at least $2,000,000 in cumulative
      proceeds related to the Syntho litigation; 100,000 shares shall be available
      for
      purchase upon the filing of the Company’s annual report on Form 10-KSB for the
      fiscal year ended October 31, 2002; 100,000 shares shall be available for
      purchase upon the filing of the Company’s quarterly reports on Form 10-QSB for
      the quarters ended January 31, 2003, April 30, 2003 and July 31, 2003; 100,000
      shares shall be available for purchase upon the Company’s receipt of at least
      $500,000 in cumulative proceeds from the litigation against certain former
      officers, directors and others and/or the litigation against the Rosenberg,
      Rich, Baker, Berman & Company and Koenig accounting firms; 100,000 shares
      shall be available for purchase upon the Company becoming eligible to register
      its common stock pursuant to the Securities Act; and 100,000 shares shall be
      available for purchase upon the acquisition by the Company of a product or
      line
      of business. The warrant had a fair value of approximately $44,211 on the date
      of issuance.




On
      November 1, 2004, Century Capital exercised its right to purchase 200,000 shares
      of the Company’s common stock underlying the warrant. Of the shares purchased,
      100,000 shares became available for purchase on May 14, 2004 and the other
      100,000 shares became available for purchase prior to November 1, 2004 as a
      result of the Company’s receipt of $500,000 of cumulative proceeds from the
      litigation against certain former officers, directors and others that was
      commenced on December 4, 2003. The $8,000 due to the Company from Century
      Capital as a result of this exercise was offset by the Company against monthly
      consulting fees due and owing to Century Capital that had been deferred for
      payment.




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Century
      Capital Warrant Dated February 25, 2005 .
      Pursuant to the amended and restated Consulting Services Agreement, on February
      25, 2005, a warrant to purchase 500,000 shares of common stock of the Company
      was issued to Century Capital. The warrant has a ten year term and is
      exercisable at $.03 per share until February 25, 2015. The warrant vests as
      follows: (a) 250,000 of the shares of the Company’s common stock underlying the
      warrant became available for purchase as of February 1, 2005; (b) an additional
      20,833 of the shares underlying the warrant become available for purchase on
      the
      last day of each month commencing February 28, 2005 and ending December 31,
      2005
      and (c) 20,837 of the shares underlying the warrant become available for
      purchase on January 31, 2006. The warrant had a fair value of approximately
      $10,674 on the date of issuance.




On
      February 25, 2005, Century Capital exercised its right to purchase 250,000
      shares of the Company’s common stock underlying the warrant. The $7,500 due to
      the Company from Century Capital as a result of this exercise was offset by
      the
      Company against amounts due and owing to Century Capital related to deferred
      monthly consulting fees. On both May 20, 2005 and August 25, 2005, Century
      Capital exercised warrants to purchase 62,500 shares of the Company’s common
      stock (125,000 shares in total). The $3,750 due to the Company from Century
      Capital as a result of these exercises was offset by the Company against
      deferred monthly consulting fees due to Century Capital.




Director
      Warrants Dated July 24, 2003 .
      On July
      24, 2003, a warrant to purchase 200,000 shares of common stock of the Company
      was issued to each of its directors, other than Mr. LaVance and Mr. Gifford.
      An
      aggregate amount of 800,000 shares of common stock could be issued pursuant
      to
      these warrants. Each warrant has a five year term and is exercisable at $.26
      per
      share until July 24, 2008, subject to adjustment. The shares of common stock
      underlying each warrant vest equally on and after the date of issue (66,666),
      on
      and after the first anniversary date (66,666) and on and after the second
      anniversary date (66,668). In the event of a change in control of the Company,
      each warrant becomes fully vested as of ten days prior to the change in control.
      The warrants had a fair value of approximately $155,138 at the date of
      issuance.




Director
      Warrants Dated May 14, 2004 .
      On May
      14, 2004, a warrant to purchase 200,000 shares of common stock of the Company
      was issued to each of its directors, other than Mr. LaVance and Mr. Gifford.
      An
      aggregate amount of 600,000 shares of common stock could be issued pursuant
      to
      these warrants. Each warrant has a five year term and is exercisable at $.04
      per
      share until May 14, 2009. The shares of common stock underlying each warrant
      vest equally on and after the date of issue (66,600) and on and after the first
      anniversary date (133,400). In the event of a change in control of the Company,
      each warrant becomes fully vested as of ten days prior to the change in control.
      The warrants had a fair value of approximately $32,137 at the date of issuance.




Director
      Warrants Dated February 25, 2005 .
      On
      February 25, 2005, a warrant to purchase 200,000 shares of common stock of
      the
      Company was issued to each of its directors, other than Mr. LaVance and Mr.
      Gifford. An aggregate amount of 400,000 shares of common stock could be issued
      pursuant to these warrants. Each warrant has a five year term and is exercisable
      at $.03 per share until February 25, 2010. The shares of common stock underlying
      each warrant vest equally on and after the date of issue (100,000) and on and
      after the first anniversary date (100,000). In the event of a change in control
      of the Company, each warrant becomes fully vested as of ten days prior to the
      change in control. The warrants had a fair value of approximately $6,378 at
      the
      date of issuance.




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Consultant
      Warrant Dated May 11, 2005 .
      On May
      11, 2005, a warrant to purchase 100,000 shares of common stock of the Company
      was issued to Dr. William Sear, a consultant to the Company, for consulting
      services rendered by Dr. Sear to the Company. The warrant has a five year term
      and is exercisable at $.05 per share until May 11, 2010. All of the shares
      of
      common stock underlying the warrant vested on the date of issuance, May 11,
      2005. As of May 15, 2005, all 100,000 of the shares underlying the warrant
      had
      been purchased. The warrant had a fair value of approximately $2,847 at the
      date
      of issuance.




***Litigation***




Class
      Action Lawsuits . ** On
      January 13, 2003, the class action lawsuits filed against the Company in 2002
      were consolidated. On July 11, 2003, the Company and Executive Risk Indemnity,
      Inc. (“Executive Risk”), the insurance company that provided the Company with
      its director and officer insurance coverage for a portion of the class period,
      reached an agreement whereby Executive Risk paid $475,000 to the Company. In
      exchange for the $475,000 payment, the Company agreed to terminate the director
      and officer insurance coverage provided by Executive Risk and release and hold
      harmless Executive Risk for any claims for coverage which could be made by
      any
      former director or officer. On August 18, 2003, the Company reached settlement
      of the consolidated class action lawsuit, which was subject to the approval
      of
      the United States District Court for the District of New Jersey. As part of
      the
      settlement, the Company agreed to pay $400,000 in cash to the plaintiffs and
      issue 861,990 shares of Medi-Hut common stock (fair value of approximately
      $129,300 as of August 18, 2003) which was equivalent to six percent of
      Medi-Hut’s issued and outstanding shares of common stock on the date the
      settlement was reached. The Company utilized the $475,000 received from
      Executive Risk to fund the settlement and to offset a portion of its legal
      costs
      and expenses incurred by the Company in connection with the class action
      lawsuit. On September 12, 2003, the complaint and the pending consolidated
      class
      action lawsuit against the Company and the other defendants were amended. The
      amended class action complaint included additional information, including
      information regarding the alleged improper conduct of certain former officers
      and directors of the Company. On January 12, 2004, the United States District
      Court for the District of New Jersey issued a Preliminary Approval Order and
      issued its final approval of the settlement on May 3, 2004.




Syntest
      Litigation .
      On
      April 18, 2003, Scott Schrader (“Schrader”) and his affiliates, namely Schrader
& Associates, LLC (“Schrader Associates”), Bluegrass Drug LLC (“Bluegrass”)
      and Medpharm Corporation (“Medpharm”) (collectively, the “Schrader Group”)
      commenced three separate actions in Kentucky against the Company alleging,
      among
      other things, that the Company breached the brokerage agreement entered into
      by
      the Company and members of the Schrader Group. In its complaint, the Schrader
      Group sought unspecified monetary damages.




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On
      May
      12, 2003, the Company commenced an action in the United States District Court
      for the Eastern District of New York against Syntho and its president, Muhammed
      Malik (collectively, the “Syntho Group”), Breckenridge and its principal owner,
      Larry Runsdorf (collectively, the “Breckenridge Group”), the Schrader Group
      relating to the Company’s exclusive right to distribute the hormone replacement
      therapy drug, Syntest, under an agreement with Syntho which expires no earlier
      than November 2006 (the “Syntest Agreement”). In its complaint, the Company
      alleged, among other things, that Syntho permitted Breckenridge, Medpharm and
      Bluegrass to distribute Syntest in violation of the Syntest Agreement and that
      Schrader Associates, which had been appointed by the Company as the exclusive
      broker with respect to sales of Syntest to drug wholesalers, chain drug stores
      and managed care companies, offered discounts, incentives and rebates to
      customers of the Company without the Company’s authorization.




On
      May
      12, 2003, Breckenridge commenced an action against the Company in the United
      States District Court for the Southern District of Florida, alleging that the
      Company was interfering with plaintiff’s alleged exclusive rights to distribute
      Syntest. This action was later moved to the United States District Court for
      the
      Eastern District of New York.




In
      June
      2003, the Syntho Group filed an answer to the Company’s complaint which
      contained counterclaims against the Company for alleged: (1) breach of contract,
      (2) failure to pay for product, (3) tortious interference with Syntho’s
      agreement with Breckenridge, and (4) conversion of property.




On
      April
      21, 2004, the Company entered into a settlement agreement and limited release
      with the Schrader Group. Pursuant to this agreement, the Company and the
      Schrader Group agreed to dismiss with prejudice the actions which were pending
      in the United States District Court for the District of Kentucky and the actions
      against each other which were pending in the United States District Court for
      the Eastern District of New York. As part of the settlement reached by the
      Company and the Schrader Group, the Schrader Group paid to the Company a cash
      payment of $375,000. In addition, the parties released each other from certain
      claims arising out of the distribution and sale of Syntest.




On
      October 17, 2005, the Company and Breckenridge entered into a purchase and
      settlement agreement pursuant to which the Company sold its distribution and
      other rights and business with respect to the hormone replacement drug, Syntest,
      to Breckenridge. In consideration for the sale of such rights and the other
      benefits provided under the purchase and settlement agreement,  Breckenridge
      agreed to pay the Company an aggregate of $1,000,000 as follows: (1) $250,000
      was paid shortly after the execution of the purchase and settlement agreement,
      and (2) $50,000 will be paid on the first day of each month for a 15 month
      period commencing on November 1, 2005 and ending on January 1, 2007. Further,
      pursuant to the settlement agreement, the Company and Breckenridge dismissed
      their actions against each other and released each other from any further claims
      arising out of the distribution and sale of Syntest, except as provided under
      the purchase and settlement agreement. Pursuant to the purchase and settlement
      agreement, the Company has reserved all of its rights to its claims for damages
      against the Syntho Group that were incurred by the Company as a result of the
      alleged breach by the Syntho Group of the Syntho Agreement and other wrongful
      actions by the Syntho Group.




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Litigation
      Against Certain Former Officers and Directors and Others . ** On
      December 4, 2003, Medi-Hut commenced litigation in the Superior Court of New
      Jersey against the Former Officers and a former director, Healthgen
      Distributors, Inc. (formerly known as Larval Corp.), Kinray, Inc. and Santi
      Grieco, an officer of Kinray, Inc. In its complaint, Medi-Hut alleged that
      the
      Former Officers caused the Company to suffer significant damage and incur
      substantial costs by engaging in a scheme to overstate Medi-Hut’s revenues and
      earnings through fraudulent accounting practice. The Company also alleged in
      its
      complaint that these former officers and directors, in furtherance of their
      scheme to defraud, filed materially false and misleading documents with the
      SEC
      and disseminated materially false and misleading information to the general
      public, investors and financial advisors and brokers. In addition to the
      foregoing, the Company alleged in its complaint that the Former Officers, with
      the assistance of Larval Corp., an entity controlled by Lawrence P. Marasco,
      Kinray, Inc., a New York based pharmaceutical distributor, and Santi Grieco,
      an
      officer of Kinray, Inc., committed violations of state and federal laws
      prohibiting forgery and fraudulent practices and otherwise participated in
      “racketeering activity” as that term is defined in 18 U.S.C .
      §1961(1) and N.J.S.A .
      2C:41-1. The defendants in this action have counterclaimed against the Company
      for alleged: (1) breach of contract, (2) breach of implied covenant of good
      faith and fair dealing, (3) fraud, (4) misrepresentation, (5) fraudulent
      concealment, (6) violation of the New Jersey Consumer Fraud Act, (7) conversion,
      and (8) failure to pay for delivered product.




In
      addition, as set forth in the complaint, the Company sought payment of a
      promissory note in the principal amount of $575,000 issued to it by former
      officer and director, Robert S. Russo, plus all accrued interest thereon. The
      promissory note, due and payable on October 24, 2003, was issued by Mr. Russo
      as
      payment for 100,000 shares of Medi-Hut common stock which he purchased in a
      private placement by the Company during the fall of 2001. The Company also
      sought to recover damages from Mr. Russo for his alleged breach of fiduciary
      duties to the Company during the time he was serving as an officer of the
      Company .




On
      May
      14, 2004, the Company entered into a settlement and release agreement with
      Mr.
      Russo. In exchange for a one-time payment of $300,000, the return of 125,000
      shares of the Company’s common stock and other non-monetary consideration, the
      Company agreed to discharge its claims against Mr. Russo.




On
      February 4, 2004, the Company entered into a settlement and release agreement
      with Vincent J. Sanpietro. In exchange for a one time payment of $20,000, the
      return of 554,800 shares of the Company’s common stock and certain other
      non-monetary considerations, the Company agreed to discharge its claims against
      Mr. Sanpietro.




On
      April
      14, 2004, the Company entered into a settlement and release agreement with
      Joseph A. Sanpietro. In exchange for a one-time payment of $60,000 and the
      return of 3,179,200 shares of the Company’s common stock and certain other
      non-monetary consideration, the Company agreed to discharge its claims against
      Mr. Sanpietro.




On
      July
      6, 2004, the Company amended the complaint against certain of its former
      officers and directors and others and commenced litigation against Muhammed
      Malik, Intermax Pharmaceuticals, Inc. and Syntho. In its complaint, Medi-Hut
      alleges that Muhammed Malik, in his capacity as a consultant to the Company
      and
      as President of Intermax Pharmaceuticals, Inc. and Syntho: (1) provided
      substantial assistance to the former officers and certain former directors
      of
      the Company in carrying out the scheme to overstate Medi-hut’s revenues and
      earnings through fraudulent accounting practices; (2) committed violations
      of
      state and federal laws prohibiting forgery and fraudulent practices; and (3)
      otherwise participated in “racketeering activity” as that term is defined in 18 U.S.C .
      §1961(1) and N.J.S.A .
      2C:41-1. The Company continues to pursue this litigation.




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On
      September 16, 2004, the Company entered into a settlement agreement and release
      with Lawrence P. Marasco. As part of the settlement, Mr. Marasco paid to the
      Company the sum of $60,000, returned 405,000 shares of the Company’s common
      stock and agreed to provide certain other non-monetary
      consideration.




On
      November 29, 2004, the Company entered into a settlement agreement and release
      with Laurence M. Simon. In exchange for the return of 30,000 shares of the
      Company’s common stock and certain other non-monetary consideration, the Company
      agreed to dismiss its claims against Mr. Simon.




On
      January 19, 2005, the Company entered into a settlement agreement and release
      in
      connection with its action against Kinray, Inc. and its officer, Santi
      Greco.  Kinray,
      Inc. agreed to pay to the Company the sum of $300,000. This settlement was
      entered into without any admission of liability or any inferences of wrongdoing
      by any settling party.




Litigation
      Against Former Accounting Firms .
      On
      January 9, 2004, the Company commenced litigation against two of its former
      accounting firms, Rosenberg, Rich, Baker, Berman & Company (“Rosenberg”),
      which served as the Company’s independent auditor and principal accounting firm
      from February 1998 to March 2003, excluding a three week period in early 2002,
      and Koenig, an accounting consultant engaged by Medi-Hut to review various
      tax
      documents, financial statements and filings by the Company with the SEC. Robert
      S. Russo, a former officer and director of the Company and a defendant in a
      litigation commenced by the Company against certain of its former officers
      and
      directors in December 2003, is a principal of Koenig. In its complaint, the
      Company alleged that Rosenberg and Koenig, through their negligence and
      accounting malpractice, caused the Company to suffer significant damage and
      incur substantial costs. The Company alleged in its complaint that as a result
      of such negligence and accounting malpractice, Rosenberg and Koenig failed
      to
      detect or simply ignored a scheme by certain of the Company’s former officers
      and directors to overstate Medi-Hut’s revenues and earnings through fraudulent
      accounting practices, which had a devastating impact on the Company. The Company
      also alleged in its complaint that, as a result of their negligence and
      accounting malpractice, Rosenberg and Koenig failed to uncover and/or disclose
      the materially false and misleading financial information contained in the
      periodic reports filed by the Company with the SEC and otherwise disseminated
      to
      the general public, investors and financial advisors and brokers.




The
      Company is seeking compensatory damages, consequential damages and punitive
      damages, and the costs of the litigation, including approximately $800,000
      incurred by the Company for legal costs and expenses associated with actions
      by
      the SEC and others against the Company and certain of its former officers and
      directors.




On
      May
      14, 2004, the Company entered into a settlement and release agreement with
      Koenig. In exchange for mutual releases among other things, the Company agreed
      to discharge its claims against Koenig.




F-27
 **Table
          of Contents**




Lexington
      Insurance Lawsuit . ** On
      April
      14, 2004, a complaint was served on Medi-Hut by National Union Fire Insurance
      Co. (“National Union”) in the United States District Court for the District of
      New Jersey. On January 19, 2005, the complaint was amended by National Union
      in
      order to properly state the name of the plaintiff as Lexington Insurance Company
      (“Lexington”). In this action, the Lexington alleged that the Company owes it
      $235,000, representing unpaid insurance premiums.




On
      March
      10, 2005, the Company filed a third party complaint against Universal Business
      Insurance, Inc. (“Universal”) and Brett D. Mayer (“Mayer”) in the United States
      District Court for the District of New Jersey. Universal was the retail broker
      that advised the Company during the Company’s business dealings with Lexington
      and Mayer was the individual employed by Universal that dealt directly with
      the
      Company. In its complaint, the Company alleged that Universal and Mayer were
      negligent and breached their fiduciary duty to the Company in providing services
      related to the Company’s procurement of directors and officers insurance.




On
      September 28, 2005, the Company and Lexington entered into an agreement in
      which
      Lexington agreed to dismiss its complaint against the Company and both Lexington
      and the Company agreed to release each other from any and all claims which
      could
      have been asserted as a result of the Lexington lawsuit. On October 13, 2005,
      the Company, Universal and Mayer entered into an agreement in which the Company
      agreed to dismiss its third party complaint against Universal and Mayer in
      exchange for a one time payment from Universal and Mayer of $8,500.




Loures
      Lawsuit .
      On
      January 18, 2005, a complaint was served on the Company, its former officers
      and
      certain of its former directors, by James J. Loures, Jr. and Christine Loures
      in
      the Superior Court of New Jersey. The plaintiffs allege that the Company, its
      former officers and certain of its former directors engaged in a scheme to
      inflate the Company’s revenues and earnings through a series of accounting
      irregularities and fraudulent financial disclosures during the period June
      2001
      through March 2003 which resulted in the plaintiff’s loss of approximately
      $120,000. The plaintiffs allegations are the same as those raised in the Class
      Action Lawsuits discussed above. The plaintiffs were one of eight parties that
      opted out of the settlement related to the Class Action Lawsuits. The Company
      intends to vigorously defend this action.




***Medi-Hut
      International***




Medi-Hut
      International Loan Agreement .
      On
      September 18, 2003, the Company entered into a loan agreement with MHI, its
      joint venture partner, to memorialize certain financial assistance that Medi-Hut
      had been providing to MHI. MHI acknowledged that it had received loan
      installments from Medi-Hut during the period from June 7, 2002 through February
      28, 2003 in the total amount of $450,000. The loan amount is to be repaid over
      time with interest as follows plus any and all accrued interest: $75,000 on
      or
      before December 31, 2004; $125,000 on or before December 31, 2005; $125,000
      on
      or before December 31, 2006; and $125,000 on or before December 31, 2007. MHI
      failed to make the $75,000 payment due on December 31, 2004. For the portion
      of
      the loan outstanding at October 31, 2002 ($304,318), which includes accrued
      interest of $4,318, the Company has provided for a full reserve against this
      balance.







F-28
 **Table
          of Contents**




Return
      of Defective Inventory .
      On
      September 18, 2003, the Company entered into an agreement with MHI to return
      to
      MHI certain 3cc Elite Safety Syringes manufactured by MHI that were determined
      to be defective. Pursuant to the agreement, the Company returned $220,855 of
      Elite Safety Syringes to MHI. MHI agreed to reimburse the Company $220,855
      by
      granting the Company a 5% discount off of the purchase price for each future
      shipment of Elite Safety Syringe products until the obligation is repaid by
      MHI.
      As of February 28, 2005, the Company has not purchased any additional Elite
      Safety Syringes from MHI. As of October 31, 2002, the Company had written-off
      $98,244 of inventory related to the defective 3cc Elite Safety Syringe, which
      represented 100% of the Elite Safety Syringe inventory as of that
      date.




Medi-Hut
      International License .
      On
      September 18, 2003, the Company, COA and MHI entered into an agreement under
      which the Company granted a non-exclusive license to MHI to make, manufacture
      and export the Elite Safety Syringe. The territorial boundary of this license
      is
      limited to within Korea. In accordance with the license, MHI must obtain the
      Company’s permission prior to any sales to a third party. MHI is to pay to the
      Company a royalty based upon the total net sales under the license. The royalty
      amount is to be negotiated in good faith at the time of such sales.




***Other
      Agreements and Events***




PNC
      Credit Facility .
      On
      November 13, 2002, the Company borrowed $1,500,000 under the Line of Credit.
      On
      December 13, 2002, the Company was notified by PNC that it was in technical
      default on the Note and the Line of Credit, and, in February 2003, it was
      notified that PNC would not extend the expiration date of the Note or the Line
      of Credit, at which time the outstanding balance on the Line of Credit was
      $1,500,000. As a result, in February and March 2003, the Company was required
      to
      pay PNC $1,500,000 related to the Line of Credit and $159,404 related to a
      letter of credit and certain fees. As of October 17, 2005, the Company does
      not
      have a lending relationship with a commercial bank.




Termination
      of Prior Management .
      On
      March 21, 2003, Joseph A. Sanpietro, the President and Chief Executive Officer
      of the Company and Laurence M. Simon, the Chief Financial Officer of the
      Company, were terminated by the Company. In addition, Vincent J. Sanpietro,
      the
      Chief Operating Officer of the Company and Joseph Sanpietro, Jr., an employee
      of
      the Company, were also terminated by the Company. Shortly thereafter, Joseph
      A.
      Sanpietro and Vincent J. Sanpietro resigned from the Company’s Board of
      Directors.




Consulting
      Agreement with Former Chief Executive Officer . ** On
      March
      28, 2003, the Company entered into a consulting agreement with Joseph A.
      Sanpietro, the Company’s founder and former Chief Executive Officer and
      Chairman, in order to facilitate the transition of certain product knowledge
      and
      relationships to the Company’s new management team. The agreement had no term
      and services rendered by Mr. Sanpietro were billed to the Company at an hourly
      rate. The Company ceased using Mr. Sanpietro’s services in May 2003. A total of
      $20,816 was paid to Mr. Sanpietro pursuant to this agreement.




Assignment
      of Elite Safety Syringe Patents .
      On
      April 30, 2003, the Company’s founder and former Chief Executive Officer and
      Chairman, Joseph A. Sanpietro, assigned to the Company certain intellectual
      property owned by Mr. Sanpietro related to the Company’s Elite Safety Syringe.
      In exchange for nominal consideration, Mr. Sanpietro assigned to the Company
      patent number 5,562,626 and patent application number 09/488807.




F-29
 **Table
          of Contents**




Shared
      Services Agreement with Century Capital .
      On May
      1, 2004, the Company relocated its principal offices to 215 Morris Avenue,
      Spring Lake, New Jersey 07762 in order to reduce its monthly operating expenses
      and to more appropriately accommodate its current operations. The Company and
      Century Capital entered into a Shared Services Agreement whereby the Company
      rented three fully furnished, business equipped offices approximating 340 square
      feet inside Century Capital’s existing offices. This agreement commenced on May
      1, 2004 and has a month to month term that requires sixty day written notice
      to
      terminate. The monthly rental is $2,500. Century Capital is owned by David
      R.
      LaVance and Thomas S. Gifford, Medi-Hut’s executive management
      team.




Termination
      of Monmouth/Atlantic Lease .
      On May
      6, 2004, in connection with the relocation of its principal offices, the Company
      and Monmouth/Atlantic Realty Associates, L.L.C. reached an agreement to
      terminate the remaining term of the existing lease (44 months resulting in
      a
      lease obligation of approximately $454,000 plus an additional $154,000 for
      common area charges) for a one-time payment by the Company of $100,000 plus
      the
      forfeiture of the $33,338 security deposit.




Formation
      of Scivanta Corporation .
      On
      October 17, 2003, the Company formed Scivanta Corporation (“Scivanta”), a
      wholly-owned subsidiary of the Company. Scivanta, a New Jersey corporation,
      was
      formed to be an operating subsidiary of the Company but is currently
      inactive.




Private
      Placement of Convertible Debentures .
      On May
      26, 2005, the Company closed on a private placement of Debentures. The gross
      proceeds received in connection with this private placement were $300,000.
      The
      Debentures have a 5 year term maturing on April 30, 2007 and bear interest
      at a
      rate of 8% per annum. Up to 50% of the aggregate principal amount of the
      Debentures are immediately convertible at the option of the holders at a
      conversion price of $0.10 per share. The remaining 50% of the aggregate
      principal amount of the Debentures are convertible at the option of the holders
      at any time after May 1, 2006 at a conversion price of $0.20 per share. The
      market price of the Common Stock on the date of closing the transaction was
      $.06
      per share.




Private
      Placement of Common Stock .
      On
      August 25, 2005, the Company closed on a private placement of 4,000,000 shares
      of common stock. The gross proceeds received in connection with this private
      placement were $200,000 ($.05 per share). 3,000,000 shares of common stock
      were
      purchased by Richard Rimer, a private investor, for $150,000. 1,000,000 shares
      of common stock were purchased by John A. Moore, a director of the Company,
      for
      $50,000. The market price of the common stock on the date of closing the
      transaction was $.04 per share.







F-30
 **Table
          of Contents**


**INDEX
      OF EXHIBITS**


Exhibit No.
              Description of
                Exhibit
 
 2.1
              Agreement
                  and Plan of Reorganization between Medi-Hut Co., Inc. (“Medi-Hut”) and
                  Indwest, Inc. dated January 28, 1998 (Incorporated by reference
                  to Exhibit
                  2 to Medi-Hut’s Registration Statement on Form 10-SB, File No. 0-27119,
                  filed with the Securities and Exchange Commission (the “SEC”) on August
                  23, 1999).


2.2
            Agreement
                and Plan of Reorganization between Medi-Hut and Vallar Consulting
                Corp.,
                dated January 10, 2000 (Incorporated by reference to Exhibit 2.1
                to
                Medi-Hut’s Current Report on Form 8-K, filed with the SEC on January 24,
                2000).


3.1
            Articles
                of Incorporation of Medi-Hut, filed in the office of the Secretary
                of
                State of Nevada on October 31, 2001 (Incorporated by reference to
                Exhibit
                3.1 to Medi-Hut’s Registration Statement on Form SB-2/A, Registration No.
                333-72504, filed with the SEC on November 27,
                2001).


3.2
            Bylaws
                of Medi-Hut (Incorporated by reference to Exhibit 3.4 to Medi-Hut’s
                Registration Statement on Form 10-SB, File No. 0-27119, filed with
                the SEC
                on August 23, 1999).


4.1
            Specimen
                stock certificate representing Medi-Hut’s common
                stock.


4.2
            Convertible
                Debenture for $50,000, dated May 1, 2005, issued to Manor Oaks Capital
                Management.


4.3
            Convertible
                Debenture for $50,000, dated May 1, 2005, issued to Chartwell Partners,
                LLP.


4.4
            Convertible
                Debenture for $50,000, dated May 1, 2005, issued to Glenwood Partners,
                L.P.


4.5
            Convertible
                Debenture for $50,000, dated May 1, 2005, issued to Radiology for
                South
                Philadelphia Profit Sharing Plan.


4.6
            Convertible
                Debenture for $50,000, dated May 1, 2005, issued to Mark W.
                Cooper.


4.7
            Convertible
                Debenture for $50,000, dated May 1, 2005, issued to Richard
                Rimer.


10.1
            Joint
                Venture Agreement between Medi-Hut and COA International Industries,
                Inc.,
                dated November 16, 2000 (Incorporated by reference to Exhibit 10.8
                to
                Medi-Hut’s Registration Statement on Form SB-2, Registration No.
                333-72504, filed with the SEC on October 30, 2001).


10.2
            Distribution
                Agreement between Medi-Hut and Syntho Pharmaceuticals, Inc., dated
                November 20, 2001.


10.3
            Amendment,
                dated February 7, 2002, to the Distribution Agreement, dated November
                20,
                2001, between Medi-Hut and Syntho Pharmaceuticals,
                Inc.


10.4
            Amendment,
                dated April 3, 2002, to the Distribution Agreement, dated November
                20,
                2001, between Medi-Hut and Syntho Pharmaceuticals,
                Inc.


10.5
            Medi-Hut
                Co., Inc. 2002 Equity Incentive Plan, adopted and effective January
                1,
                2002 (Incorporated by reference to Exhibit B of Medi-Hut’s definitive
                proxy statement, filed with the SEC on June 10, 2002).


10.6*
            Consulting
                Services Agreement, dated as of February 1, 2003, between Medi-Hut
                and
                Century Capital Associates, LLC (Incorporated by reference to Exhibit
                10.1
                to Medi-Hut’s Current Report on Form 8-K filed with the SEC on March 3,
                2003).


10.7*
            Amended
                and Restated Consulting Services Agreement, dated as of February
                1, 2005,
                between Medi-Hut and Century Capital Associates,
                LLC.


10.8*
            Warrant
                to purchase 1,500,000 shares of Medi-Hut common stock, dated February
                1,
                2003, issued to Century Capital Associates, LLC (Incorporated by
                reference
                as Exhibit 4.1 to Medi-Hut’s Current Report on Form 8-K filed with the SEC
                on March 3, 2003).


10.9*
            Warrant
                to purchase 200,000 shares of common stock of Medi-Hut, dated July
                24,
                2003, issued to James G. Aaron.


10.10*
            Warrant
                to purchase 200,000 shares of common stock of Medi-Hut, dated July
                24,
                2003, issued to Richard E. Otto.


10.11*
            Warrant
                to purchase 200,000 shares of common stock of Medi-Hut, dated July
                24,
                2003, issued to John A. Moore.


10.12*
            Warrant
                to purchase 200,000 shares of common stock of Medi-Hut, dated July
                24,
                2003, issued to Salvatore J.
                Badalamenti.


10.13*
            Warrant
                to purchase 200,000 shares of common stock of Medi-Hut, dated May
                14,
                2004, issued to Richard E. Otto.


10.14*
            Warrant
                to purchase 200,000 shares of common stock of Medi-Hut, dated May
                14,
                2004, issued to John A. Moore.


10.15*
            Warrant
                to purchase 200,000 shares of common stock of Medi-Hut, dated May
                14,
                2004, issued to Salvatore J.
                Badalamenti.


10.16*
            Warrant
                to Purchase 700,000 shares of common stock of Medi-Hut, dated May
                14,
                2004, issued to Century Capital Associates,
                LLC.


10.17*
            Warrant
                to Purchase 500,000 shares of common stock of Medi-Hut, dated February
                25,
                2005, issued to Century Capital Associates,
                LLC.


10.18*
            Warrant
                to Purchase 200,000 shares of common stock of Medi-Hut, dated February
                25,
                2005, issued to John A. Moore.


10.19*
            Warrant
                to Purchase 200,000 shares of common stock of Medi-Hut, dated February
                25,
                2005, issued to Richard E. Otto.


10.20
            Loan
                Agreement between Medi-Hut and Medi-Hut International, dated June
                7,
                2002.


10.21
            Non-Exclusive
                License Agreement between Medi-Hut, COA International Industries,
                Inc.,
                Medi-Hut International and Young-Kil Shin, dated September 18,
                2003.


10.22
            Memorandum
                of Understanding between Medi-Hut and Medi-Hut International Co.,
                Ltd,
                dated September 18, 2003.


10.23
            Shared
                Services Agreement, dated May 1, 2004, between Medi-Hut and Century
                Capital Associates LLC.


14.1
            Chief
                Executive and Senior Financial Officer Code of
                Ethics.


21.1
            List
                of Subsidiaries of Medi-Hut.


31.1**
            Section
                302 Certification of Chief Executive
                Officer.


31.2**
            Section
                302 Certification of Chief Financial
                Officer.


32.1**
            Certification
                of Chief Executive Officer pursuant to 18 U.S.C. Section
                1350.


32.2**
              Certification
                  of Chief Financial Officer pursuant to 18 U.S.C. Section
                  1350.





*
            Constitutes
                a management contract under Section 601 of Regulation
                S-B.


**
            The
                text of this exhibit has been omitted. Please see the explanatory
                note
                under the corresponding exhibit number.






E-1