OMB
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|
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|
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark One)
|
|
X
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
|
|
|
For the quarter
period ended
September 30, 2010
|
|
|
|
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period
from___________ to __________
|
|
Commission file number
000-52331
|
MOLECULAR
PHARMACOLOGY (USA) LIMITED
|
(Exact name of registrant
as specified in its charter)
|
NEVADA
|
|
71-0900799
|
(State or other
jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
Drug Discovery Centre
284 Oxford Street, Leederville 6007 Perth, Western Australia
|
(Address of principal
executive offices)
|
011-61-8-9443-3011
|
(Registrant's
telephone number including area code)
|
Not Applicable
|
(Former name, former
address and formal fiscal year, if changed since last report)
|
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act OF 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
|
Yes
x
|
No
o
|
Indicate by check mark whether the registrant has submitted electronically
and posted on its Web site, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant has required to submit and post such files)
|
Yes
o
|
No
o
|
Not Applicable
|
Indicate by check mark whether the registrant is large accelerated filer, an
accelerated filer, a non accelerated filer, or a small reporting company. See
the definitions of "large accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act (Check one):
|
Large Accelerated Filer
o
|
Accelerated Filer
|
Non-Accelerated Filer
o
|
Smaller Reporting Company
x
|
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act)
|
Yes
o
|
No
x
|
|
|
|
|
|
|
|
|
|
|
|
|
i
Indicate by check mark whether the registrant has
filed all documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the distribution
of securities under a plan confirmed by a court
|
|
Yes
x
|
No
o
|
Indicate the number of
shares outstanding of each of the issuer's classes of common stock, as
of the latest practicable date.
|
111,553,740
common shares issued and outstanding as of November 10, 2010.
|
ii
MOLECULAR
PHARMACOLOGY (USA) LIMITED
Form 10-Q
September 30, 2010
Table of Contents
PART I - FINANCIAL INFORMATION
|
|
|
|
|
Item 1.
|
Interim Consolidated Financial Statements
|
1
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and
Results of Operation
|
19
|
Item 3.
|
Quantitative and Quantitative Disclosures About Market Risk
|
28
|
Item 4.
|
Controls and Procedures
|
28
|
Item 4 T.
m
|
Controls and Procedures
|
28
|
|
|
|
|
|
|
PART II - OTHER INFORMATION
|
|
|
|
|
|
|
|
Item 1.
|
Legal Proceedings
|
30
|
Item 1A.
|
Risk Factors
|
30
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
30
|
Item 3.
|
Defaults Upon Senior Securities
|
30
|
Item 4.
|
(Removed and Reserved).
|
30
|
Item 5.
|
Other Information
|
30
|
Item 6.
|
Exhibits
|
31
|
|
|
|
|
|
SIGNATURES
|
31
|
iii
PART 1 - FINANCIAL INFORMATION
Item 1. Interim Consolidated Financial
Statements
The
information in this report for the three months ended September 30, 2010 is
unaudited but includes all adjustments (consisting only of normal recurring
accruals, unless otherwise indicated) which Molecular Pharmacology (USA)
Limited ("
Molecular USA
" or the "
Company
") considers necessary for a fair presentation
of the financial position, results of operations, changes in stockholders'
equity and cash flows for those periods.
The interim
consolidated financial statements should be read in conjunction with Molecular
USA's interim consolidated financial statements and the notes thereto
contained in Molecular USA's Audited Financial Statements for the year ended June
30, 2010, in the Form 10K filed with the SEC on September 24, 2010.
Interim
results are not necessarily indicative of results for the full fiscal year.
The
unaudited interim consolidated financial statements start on the next page.
1
Molecular Pharmacology (USA)
Limited
(A Development Stage Company)
Interim Consolidated
Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30 September 2010
2
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Interim Consolidated Balance Sheets
(Expressed in U.S. Dollars)
(Unaudited)
|
|
As at
30 September
2010
|
|
As at
30 June
2010
(Audited)
|
|
|
$
|
|
$
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
Cash and cash
equivalents
|
|
8,650
|
|
7,975
|
Amounts receivable
|
|
3,044
|
|
1,480
|
|
|
|
|
|
|
|
11,694
|
|
9,455
|
|
|
|
|
|
Equipment
(Note 3)
|
|
2,062
|
|
2,197
|
|
|
|
|
|
|
|
13,756
|
|
11,652
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
Accounts payable and
accrued liabilities (Note 4)
|
|
12,252
|
|
20,811
|
|
|
|
|
|
|
|
|
|
|
Due to
related parties
(Note 5)
|
|
1,706,576
|
|
1,477,711
|
|
|
|
|
|
|
|
1,718,828
|
|
1,498,522
|
|
|
|
|
|
Stockholders'
deficiency
|
|
|
|
|
Capital
stock
(Note 6)
|
|
|
|
|
Authorized
|
|
|
|
|
300,000,000 common shares, par value
$0.001
|
|
|
|
|
Issued and outstanding
|
|
|
|
|
30 September
2010 - 111,553,740 common shares, par value $0.001
|
|
|
|
|
30 June 2010 - 111,553,740 common shares,
par value $0.001
|
|
111,554
|
|
111,554
|
Additional
paid-in capital
|
|
106,707
|
|
106,707
|
Cumulative
translation adjustment
|
|
(350,701)
|
|
(154,325)
|
Deficit,
accumulated during the development stage
|
|
(1,572,632)
|
|
(1,550,806)
|
|
|
|
|
|
|
|
(1,705,072)
|
|
(1,486,870)
|
|
|
|
|
|
|
|
13,756
|
|
11,652
|
Nature
and Continuance of Operations
(Note 1),
Commitment
(Note 8),
Contingency
(Note 11) and
Subsequent Event
(Note 13)
On behalf of the Board:
/s/ Jeffrey Edwards
Director
Jeffrey Edwards
The accompanying notes are an integral part of
these interim consolidated financial statements.
3
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Interim Consolidated Statements of Operations
(Expressed in U.S. Dollars)
(Unaudited)
|
|
|
For the
period
from
the
date of inception
on
14 July
2004
to 30
September
2010
|
For the
three
month
period
ended
30
September
2010
|
For the
three
month
period
ended
30
September
2009
|
|
|
|
|
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
Advertising and promotion
|
|
|
|
|
|
23,739
|
|
-
|
|
-
|
Amortization (Note 3)
|
|
|
|
|
|
5,788
|
|
135
|
|
176
|
Analysis
|
|
|
|
|
|
33,947
|
|
-
|
|
-
|
Consulting (Note 5)
|
|
|
|
|
|
1,146,199
|
|
9,372
|
|
15,354
|
Office and miscellaneous (Note 5)
|
|
|
|
|
|
179,065
|
|
7,910
|
|
10,443
|
Professional fees
|
|
|
|
|
|
273,243
|
|
4,409
|
|
7,434
|
Public relations
|
|
|
|
|
|
3,656
|
|
-
|
|
-
|
Rent (Note 5)
|
|
|
|
|
|
27,759
|
|
-
|
|
-
|
Salaries and benefits
|
|
|
|
|
|
44,464
|
|
-
|
|
-
|
Transfer agent and filing fees
|
|
|
|
|
|
15,494
|
|
-
|
|
1,060
|
Travel
|
|
|
|
|
|
104,249
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before other items
|
|
|
|
|
|
(1,857,603)
|
|
(21,826)
|
|
(34,467)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other items
|
|
|
|
|
|
|
|
|
|
|
Export market development grants
|
|
|
|
|
|
69,629
|
|
-
|
|
-
|
Interest income
|
|
|
|
|
|
2,322
|
|
-
|
|
-
|
Research and development tax refund
|
|
|
|
|
213,020
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
|
|
|
|
(1,572,632)
|
|
(21,826)
|
|
(34,467)
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per common share
|
|
|
|
|
(0.001)
|
|
(0.001)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares used in
per share calculations
|
|
111,553,740
|
|
111,553,740
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
|
|
|
|
(1,572,632)
|
|
(21,826)
|
|
(34,467)
|
Foreign currency translation adjustment
|
|
|
|
(350,701)
|
|
(196,376)
|
|
(108,710)
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss for the period
|
|
|
|
(1,923,333)
|
|
(218,202)
|
|
(143,177)
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss per common share
|
|
|
|
|
|
(0.002)
|
|
(0.001)
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of
these interim consolidated financial statements.
4
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Interim Consolidated
Statements of Cash Flows
(Expressed in U.S. Dollars)
(Unaudited)
|
|
|
For the
period
from
the
date of inception on
14 July
2004
to
30
September
2010
|
For the
three
month
period
ended
30
September
2010
|
For the
three month
period
ended
30
September
2009
|
|
|
|
|
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows used in operating activities
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
|
|
|
|
(1,572,632)
|
|
(21,826)
|
|
(34,467)
|
Adjustments
to reconcile loss to net cash used by operating activities
|
|
|
|
|
|
|
|
|
|
|
Amortization
(Note 3)
|
|
|
|
|
|
5,788
|
|
135
|
|
176
|
Write-down
of intangible assets
|
|
|
|
|
|
1,278
|
|
-
|
|
-
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
Increase
in amounts receivable
|
|
|
|
|
(818)
|
|
(1,564)
|
|
(2,347)
|
Decrease in accounts payable and accrued liabilities
(Note 4)
|
|
|
|
|
(35,165)
|
|
(8,559)
|
|
(2,427)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,601,549)
|
|
(31,814)
|
|
(39,065)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment (Note 3)
|
|
|
|
(7,850)
|
|
-
|
|
-
|
Purchase of intangible assets
|
|
|
|
|
|
(1,278)
|
|
-
|
|
-
|
Cash acquired on the purchase of Molecular
Pharmacology (USA)
Limited (Note 1)
|
|
|
|
37,163
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,035
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
Common shares issued for cash (Note 6)
|
|
|
|
|
|
234,497
|
|
-
|
|
-
|
Increase in due to related parties (Note 5)
|
|
|
|
1,698,368
|
|
228,865
|
|
150,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,932,865
|
|
228,865
|
|
150,998
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
|
|
|
(350,701)
|
|
(196,376)
|
|
(108,710)
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash and cash equivalents
|
|
|
|
8,650
|
|
675
|
|
3,223
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
-
|
|
7,975
|
|
7,543
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
|
|
|
|
8,650
|
|
8,650
|
|
10,766
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosures with Respect to Cash Flows
(Note
9)
The accompanying notes are an integral part of
these interim consolidated financial statements.
5
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Interim
Consolidated Statements of Changes in Stockholders' Deficiency
(Expressed in U.S. Dollars)
(Unaudited)
|
Number
of common shares issued
|
Capital stock
|
Additional paid-in capital
|
Deficit, accumulated during the
development stage
|
Cumulative translation adjustment
|
Stockholders' deficiency
|
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
Balance at 14 July 2004 (inception)
|
|
294
|
|
-
|
|
1
|
|
-
|
|
-
|
|
1
|
Net loss for the
period
|
|
-
|
|
-
|
|
-
|
|
(128,488)
|
|
-
|
|
(128,488)
|
Cumulative
translation adjustment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(6,536)
|
|
(6,536)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 October 2004
|
|
294
|
|
-
|
|
1
|
|
(128,488)
|
|
(6,536)
|
|
(135,023)
|
Common shares
issued for cash - January 2005
|
|
87,999,706
|
|
88,000
|
|
146,496
|
|
-
|
|
-
|
|
234,496
|
Net loss for the
year
|
|
-
|
|
-
|
|
-
|
|
(387,667)
|
|
-
|
|
(387,667)
|
Cumulative
translation adjustment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(161)
|
|
(161)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 October 2005
|
|
88,000,000
|
|
88,000
|
|
146,497
|
|
(516,155)
|
|
(6,697)
|
|
(288,355)
|
Acquisition of Molecular
Pharmacology (USA)
Limited - Recapitalization May 2006
|
|
43,553,740
|
|
43,554
|
|
(59,790)
|
|
-
|
|
-
|
|
(16,236)
|
Cancellation of common
shares - July 2006
|
|
(20,000,000)
|
|
(20,000)
|
|
20,000
|
|
-
|
|
-
|
|
-
|
Net loss for the year
|
|
-
|
|
-
|
|
-
|
|
(508,260)
|
|
-
|
|
(508,260)
|
Cumulative translation adjustment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(16,222)
|
|
(16,222)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 October 2006
|
|
111,553,740
|
|
111,554
|
|
106,707
|
|
(1,024,415)
|
|
(22,919)
|
|
(829,073)
|
Net loss for the period
|
|
-
|
|
-
|
|
-
|
|
(377,131)
|
|
-
|
|
(377,131)
|
Cumulative translation
adjustment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(105,436)
|
|
(105,436)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2007
|
|
111,553,740
|
|
111,554
|
|
106,707
|
|
(1,401,546)
|
|
(128,355)
|
|
(1,311,640)
|
Net income for the year
|
|
-
|
|
-
|
|
-
|
|
62,296
|
|
-
|
|
62,296
|
Cumulative translation
adjustment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(166,483)
|
|
(166,483)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2008
|
|
111,553,740
|
|
111,554
|
|
106,707
|
|
(1,339,250)
|
|
(294,838)
|
|
(1,415,827)
|
Net loss for the
year
|
|
-
|
|
-
|
|
-
|
|
(94,336)
|
|
-
|
|
(94,336)
|
Cumulative
translation
adjustment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
219,034
|
|
219,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2009
|
|
111,553,740
|
|
111,554
|
|
106,707
|
|
(1,433,586)
|
|
(75,804)
|
|
(1,291,129)
|
Net
loss for the year
|
|
-
|
|
-
|
|
-
|
|
(117,220)
|
|
-
|
|
(117,220)
|
Cumulative
translation
adjustment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(78,521)
|
|
(78,521)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2010
|
111,553,740
|
|
111,554
|
|
106,707
|
|
(1,550,806)
|
|
(154,325)
|
|
(1,486,870)
|
Net
loss for the period
|
-
|
|
-
|
|
-
|
|
(21,826)
|
|
-
|
|
(21,826)
|
Cumulative
translation
adjustment
|
-
|
|
-
|
|
-
|
|
-
|
|
(196,376)
|
|
(196,376)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 September 2010
|
111,553,740
|
|
111,554
|
|
106,707
|
|
(1,572,632)
|
|
(350,701)
|
|
(1,705,072)
|
The
accompanying notes are an integral part of these interim consolidated financial
statements.
6
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim
Consolidated Financial Statements
(Expressed in U.S.
Dollars)
(Unaudited)
30 September 2010
1.
Nature and Continuance of Operations
Molecular Pharmacology (USA) Limited (the "Company") was
incorporated in the state of Nevada on 1 May 2002 under the name Blue Hawk
Ventures, Inc. The Company changed
its name to Molecular Pharmacology (USA) Limited on 29 August 2005. At the same time, the Company completed
a four for one forward split of its issued and outstanding share capital and
altered its share capital to 300,000,000 shares of common stock with a par
value of $0.001 per share.
The Company is a development stage enterprise, as defined in
Accounting Standards
Codification
(the
"Codification" or "ASC") 915-10, "
Development Stage Entities
". The Company is devoting
all of its present efforts to securing and establishing a new business and its
current planned principle operations have not commenced. Accordingly, no revenue has been derived
during the organization period.
Up until the fall of 2005, the Company was in the business of mineral
exploration and development of a mineral property. The Company allowed the option on its
mineral claim to lapse in the fall of 2005.
On 13 October 2005, the Company entered into a distribution and supply
agreement (the "Distribution Agreement") with Molecular Pharmacology Pty Ltd
(formerly Molecular Pharmacology Limited) ("MPLA"). MPLA is
incorporated under the laws of Australia and converted to a proprietary company
on 29 October 2009. MPLA is a
wholly owned subsidiary company of PharmaNet Group Limited ("PharmaNet"), an Australian
company listed on the Australian Stock Exchange. Under the terms of the Distribution Agreement,
the Company has the exclusive distribution rights to distribute, market,
promote, detail, advertise and sell certain "Licensed Products", as
defined in the agreement (Note 8).
Since signing the Distribution Agreement with MPLA, the Company has
engaged in organizational and start up activities, including developing a new
business plan, recruiting new directors, scientific advisors and key
scientists, making arrangements for laboratory facilities and office space and
raising additional capital. The
Company has generated no revenue from product sales. The Company does not have any
pharmaceutical products currently available for sale, and none are expected to
be commercially available for some time, if at all. The Licensed Products must first undergo
pre-clinical and human clinical testing in the United States before they may be
sold commercially.
The Company completed a share purchase agreement on 8 May 2006 with
PharmaNet. Under the terms of the
agreement the Company acquired 100% of the issued and outstanding shares of
MPLA (the "Purchase Agreement"). The Company, in exchange for 100% of the
issued and outstanding shares of MPLA, issued PharmaNet an aggregate total of
88,000,000 common shares of the Company on the closing of the transaction. The issuance of 88,000,000 common shares
of the Company constituted an acquisition of control of the Company by
PharmaNet. The transaction has been
accounted for as a recapitalization of the Company (Note 2).
MPLA was incorporated on 14 July 2004 under the laws of Australia. The accompanying interim consolidated
financial statements are the historical financial statements of MPLA.
7
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim
Consolidated Financial Statements
(Expressed in U.S.
Dollars)
(Unaudited)
30 September 2010
On 15 March 2007, the Board of Directors approved a change in the
Company's financial year end from 31 October to 30 June. The decision to
change the fiscal year end was intended to assist the financial community in
its analysis of the business and in comparing the Company's financial
results to others in the industry, and to synchronize the Company's
fiscal reporting with MPLA.
The Company's interim
consolidated financial statements as at 30 September 2010 and for the three
month period then ended have been prepared on a going concern basis, which
contemplates the realization of assets and settlement of liabilities and
commitments in the normal course of business. The Company has a net loss of $21,826
for the three month period ended 30 September 2010 (30 September 2009 -
$34,467) and has a working capital deficit of $558 at 30 September 2010 (30
June 2010 - $11,356).
Management cannot provide assurance that the Company will ultimately
achieve profitable operations or become cash flow positive, or raise additional
debt and/or equity capital.
Management believes that the Company's capital resources should be
adequate to continue operating and maintaining its business strategy during the
fiscal year ending 30 June 2011.
However, if the Company is unable to raise additional capital in the
near future, due to the Company's liquidity problems, management expects
that the Company will need to curtail operations, liquidate assets, seek
additional capital on less favorable terms and/or pursue other remedial
measures. These interim
consolidated financial statements do not include any adjustments related to the
recoverability and classification of assets or the amounts and classification
of liabilities that might be necessary should the Company be unable to continue
as a going concern.
At 30 September 2010, the Company has suffered losses from development
stage activities to date. Although
management is currently attempting to implement its business plan, and is
seeking additional sources of equity or debt financing, there is no assurance
these activities will be successful.
These factors raise substantial doubt about the ability of the Company
to continue as a going concern. The
interim consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
2.
Significant Accounting Policies
The following is a summary of significant
accounting policies used in the preparation of these interim consolidated financial
statements.
The Accounting Standards
Codification
In June 2009, the Financial Accounting Standard
Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 168,
"The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles - a replacement of FASB Statement No. 162"
. The Codification reorganized existing
U.S. accounting and reporting standards issued by the FASB and other related
private sector standard setters into a single source of authoritative
accounting principles arranged by topic.
The Codification supersedes all existing U.S. accounting standards; all
other accounting literature not included in the Codification (other than
Securities and Exchange Commission guidance for publicly-traded companies) is
considered non-authoritative. The
Codification was effective on a prospective basis for any annual reporting
periods ending after 15 September 2009.
The adoption of the Codification changed the Company's references
to United Stated generally accepted accounting principle ("U.S. GAAP") accounting standards, but did not impact the Company's
results of operations, financial position or liquidity.
8
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated
Financial Statements
(Expressed in U.S.
Dollars)
(Unaudited)
30 September 2010
Basis of presentation
These interim consolidated financial statements have been prepared in
accordance with U.S. GAAP applicable for a development stage company for
financial information and are expressed in U.S. dollars.
Principles of consolidation
These interim consolidated financial statements include the accounts of
MPLA since its incorporation on 14 July 2004 and the Company since the reverse
acquisition on 8 May 2006 (Note 1).
All intercompany balances and transactions have been eliminated.
Cash and cash equivalents
Cash and cash equivalents include highly liquid
investments with original maturities of three months or less.
Foreign currency translation
The Company's
functional and reporting currency is U.S. dollars.
The
interim consolidated financial statements of the Company are translated to U.S.
dollars in
accordance with ASC 830, "
Foreign Currency Matters
". Assets and liabilities
denominated in foreign currencies are translated using the exchange rate
prevailing at the balance sheet date.
Revenue and expenses are translated at average rates of exchange
prevailing during the year. Translation adjustments resulting from this process
are charged or credited to Other Comprehensive Income
.
The
Company has not, to the date of these interim consolidated financial
statements, entered into derivative instruments to offset the impact of foreign
currency fluctuations.
Derivative financial instruments
The Company has not, to the date of these interim consolidated
financial statements, entered into derivative instruments to offset the impact
of foreign currency fluctuations.
Equipment
Equipment is recorded at cost and amortization is
provided over their estimated economic lives at the rate of 15% declining balance.
9
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim
Consolidated Financial Statements
(Expressed in U.S.
Dollars)
(Unaudited)
30 September 2010
Income taxes
Deferred income taxes are reported for timing differences between items
of income or expense reported in the financial statements and those reported
for income tax purposes in accordance with
ASC 740, "
Income Taxes
", which requires the use of the asset/liability method of accounting for
income taxes. Deferred income taxes
and tax benefits are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases, and for tax loss and credit
carry forwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The Company provides for deferred taxes
for the estimated future tax effects attributable to temporary differences and
carry-forwards when realization is more likely than not.
Comprehensive income (loss)
ASC 220, "
Comprehensive Income
",
establishes standards for the reporting and display of comprehensive income
(loss) and its components in the financial statements. As at 30 September 2010, the Company has
items that represent a comprehensive loss and, therefore, has included a
schedule of comprehensive income (loss) in the interim consolidated financial
statements.
Basic and diluted net loss per share
The Company computes net loss per share in accordance with ASC
260 "
Earnings per Share
". ASC 260 requires presentation of both
basic and diluted earnings per share ("EPS") on the face of the
income statement. Basic EPS is
computed by dividing net loss available to common shareholders (numerator) by
the weighted average number of shares outstanding (denominator) during the
period. Diluted EPS gives effect to
all potentially dilutive common shares outstanding during the period using the
treasury stock method and convertible preferred stock using the if-converted
method. In computing diluted EPS,
the average stock price for the period is used in determining the number of
shares assumed to be purchased from the exercise of stock options or
warrants. Diluted EPS excludes all
potentially dilutive shares if their effect is anti-dilutive.
Stock-based compensation
Effective 1 January 2006, the Company adopted the provisions of ASC
718, "
Compensation - Stock Compensation
",
which establishes accounting for equity instruments exchanged for employee
services. Under the provisions of ASC 718, stock-based compensation cost is
measured at the grant date, based on the calculated fair value of the award,
and is recognized as an expense over the employees' requisite service
period (generally the vesting period of the equity grant). The Company adopted ASC 718 using the modified prospective method, which requires the Company to
record compensation expense over the vesting period for all awards granted
after the date of adoption, and for the unvested portion of previously granted
awards that remain outstanding at the date of adoption. Accordingly, the
financial statements for the periods prior to 1 January 2006 have not been
restated to reflect the fair value method of expensing share-based
compensation. The adoption of ASC 718 does not change the way the Company
accounts for share-based payments to non-employees, with guidance provided by
ASC 505-50, "
Equity-Based Payments to
Non-Employees
".
10
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes
to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30
September 2010
Recent accounting pronouncements
In January 2010, the FASB issued ASU 2010-06,
"Improving Disclosures about Fair Value Measurements."
This update
requires additional disclosure within the roll forward of activity for assets
and liabilities measured at fair value on a recurring basis, including
transfers of assets and liabilities between Level 1 and Level 2 of the fair
value hierarchy and the separate presentation of purchases, sales, issuances
and settlements of assets and liabilities within Level 3 of the fair value
hierarchy. In addition, the update requires enhanced disclosures of the
valuation techniques and inputs used in the fair value measurements within
Levels 2 and 3. The new disclosure requirements are effective for interim and
annual periods beginning after 15 December 2009, except for the disclosure of
purchases, sales, issuances and settlements of Level 3 measurements. Those
disclosures are effective for fiscal years beginning after 15 December 2010. As
ASU 2010-06 only requires enhanced disclosures, the Company does not expect
that the adoption of this update will have a material effect on its interim
consolidated financial statements.
In February 2010, the FASB issued ASU No. 2010-09,
"Amendments to Certain Recognition and Disclosure Requirements"
, which eliminates the requirement for
Securities and Exchange Commission filers to disclose the date through which an
entity has evaluated subsequent events. ASU No. 2010-09 is effective for
fiscal quarters beginning after 15 December 2010. The adoption of ASU No.
2010-06 is not expected to have a material impact on the Company's
interim consolidated financial statements.
3.
Equipment
|
|
|
Accumulated amortization
|
|
Net Book Value
|
|
|
Cost
|
|
As at
30 September
2010
|
|
As at
30 June
2010 (Audited)
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
Office equipment
|
|
7,840
|
|
5,778
|
|
2,062
|
|
2,197
|
During the
three month period ended 30 September 2010 the total additions to equipment
were $Nil (30 September 2009 - $Nil).
4.
Accounts Payable and Accrued Liabilities
Accounts
payable and accrued liabilities are non-interest bearing, unsecured and have
settlement dates within one year.
5.
Due
to Related Parties and Related Party Transactions
As at 30 September 2010, the amount due
to related parties includes $1,000 payable to a director of the Company (30
June 2010
-
$1,000). This
balance is non-interest bearing, unsecured and has no fixed terms of repayment.
11
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes
to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30
September 2010
As at 30 September 2010, the amount due
to related parties includes $23,567 payable to a company owned by a director of
the Company or an officer of PharmaNet (30 June 2010
-
$11,030). This
balance is non-interest bearing, unsecured and has no fixed terms of repayment.
As at 30 September 2010, the amount due
to related parties includes $3,496 payable to a company owned by a director of
the Company or an officer of PharmaNet (30 June 2010
-
$679). This
balance is non-interest bearing, unsecured and has no fixed terms of repayment.
As at 30 September 2010, the amount due
to related parties includes $1,678,513 payable to PharmaNet (30 June 2010
-
$1,465,002). This balance is non-interest bearing,
unsecured and has no fixed terms of repayment.
During the three month period ended 30
September 2010, a director of the Company or an officer of PharmaNet, and their
controlled entities were paid or accrued consulting fees of $9,372 (30
September 2009 - $15,354, cumulative - $781,866) by the Company.
During the three month period ended 30
September 2010, a director of the Company or an officer of PharmaNet, and their
controlled entities were paid or accrued office and miscellaneous expenses of
$2,916 (30 September 2009
-
$7,605, cumulative
-
$87,865) by the Company.
During the three month period ended 30
September 2010, a director of the Company or an officer of PharmaNet, and their
controlled entities were paid or accrued rental fees of $Nil (30 September 2009
- $Nil, cumulative - $12,987) by the Company.
Transactions comprising the amount due
to PharmaNet are as follows:
|
|
For the
three
month
period
ended
30
September
2010
|
|
For the
year
ended
30 June
2010
(Audited)
|
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
|
Opening balance, beginning of period
|
|
1,465,002
|
|
1,246,058
|
Funds
transferred to the Company by PharmaNet
|
|
19,402
|
|
144,667
|
Expenses paid by PharmaNet on behalf of the
Company
|
|
187
|
|
1,557
|
Foreign
currency translation adjustment
|
|
193,922
|
|
72,720
|
|
|
|
|
|
Balances as at 30 September 2010 and 30 June 2010
|
|
1,678,513
|
|
1,465,002
|
The average amount due to PharmaNet for
the three month period ended 30 September 2010 was $1,547,922 (30 June 2010
-
$1,540,053).
12
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes
to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30
September 2010
6.
Capital Stock
Authorized
The
total authorized capital is 300,000,000 common shares with a par value of
$0.001 per common share.
Issued
and outstanding
The
total issued and outstanding capital stock is 111,553,740 common shares with a
par value of $0.001 per common share.
7.
Income Taxes
Income tax expense differs from the amount that would result from
applying the federal income tax rate to earnings before income taxes. These differences result from the
following items:
|
|
|
For the
three
month
period
ended
30
September
2010
|
|
For the
three
month
period
ended
30
September
2009
|
|
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(21,826)
|
|
(34,467)
|
|
|
|
|
|
|
Federal income tax rates
|
|
|
34.0%
|
|
34.0%
|
|
|
|
|
|
|
Income
tax recovery based on the above rates
|
|
|
(7,421)
|
|
(11,719)
|
|
|
|
|
|
|
Increase
(decrease) due to:
|
|
|
|
|
|
Difference
between US and foreign tax rates
|
|
|
697
|
|
1,038
|
Change in
valuation allowance
|
|
|
45,673
|
|
32,969
|
Foreign
exchange and other
|
|
|
(38,949)
|
|
(22,288)
|
|
|
|
|
|
|
Income tax expense
|
|
|
-
|
|
-
|
13
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes
to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30
September 2010
The composition of the Company's deferred tax assets as at 30
September 2010 and 30 June 2010 are as follows:
|
|
As at
30
September
2010
|
|
As at
30 June
2010
(Audited)
|
|
|
$
|
|
$
|
|
|
|
|
|
Net income tax operating loss
carryforward
|
|
1,804,364
|
|
1,650,819
|
|
|
|
|
|
Deferred
tax assets
|
|
567,541
|
|
521,868
|
Less: Valuation allowance
|
|
(567,541)
|
|
(521,868)
|
|
|
|
|
|
Net
deferred tax asset
|
|
-
|
|
-
|
The Company has non-capital loss carry-forwards of approximately
$1,804,364 that may be available for tax purposes. The loss carry-forwards are all in
respect to US and Australian operations and expire as follows:
2022
|
20,402
|
2023
|
46,992
|
2024
|
27,717
|
2025
|
14,187
|
2026
|
261,311
|
2027
|
111,155
|
2028
|
77,128
|
2029
|
57,882
|
2030
|
48,766
|
2031
|
4,409
|
No expiry
|
1,134,415
|
|
|
|
1,804,364
|
A full valuation allowance has been recorded
against the potential deferred tax assets associated with all the loss
carry-forwards as their utilization is not considered more likely than not at
this time.
14
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes
to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30
September 2010
8.
Commitment
On 13
October 2005, the Company entered into the Distribution
Agreement with MPLA (Note 1).
The basic terms of the Distribution Agreement are as follows:
i.
MPLA has granted exclusive distribution rights to the Company to
distribute, market, promote, detail, advertise and sell certain "Licensed
Products", as defined in the Distribution Agreement, with metallo-polypeptide
analgesic as an active ingredient, in the United States (excluding its
territories and possessions);
ii.
The Company paid MPLA $1,000 upon the date of execution of the
Distribution Agreement and is required to pay $100,000 six months from the date
of execution of the Distribution Agreement or the date that any Licensed
Product is available and ready for distribution and sale in commercial
quantities in the United States under the terms of the Distribution Agreement
(the "Commencement Date"), whichever occurs first;
iii.
The Company is also required to pay MPLA a royalty of 5% as set out in
the Distribution Agreement;
iv.
MPLA will supply all Licensed Products to the Company under the
Distribution Agreement;
v.
MPLA is responsible for obtaining all necessary regulatory approvals
for the licensed product in the United States; and
vi.
The Distribution Agreement is for a one year term from the Commencement
Date and may be automatically extended by successive one-year periods, unless
at least three months prior to the renewal date, as defined in the Distribution
Agreement, either party advises the other party that it elects not to permit
the extension of the term.
The
$100,000 payment to MPLA according to the terms of the Distribution Agreement
has not yet been made and the Company is currently renegotiating the terms of
the Distribution Agreement (Note 11).
15
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes
to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30
September 2010
9.
Supplemental Disclosures with Respect to Cash Flows
|
For the
period from
the date of
inception on
14 July 2004
to
30 September
2010
|
For the
three
month
period
ended
30 September
2010
|
For the
three
month
period
ended
30 September
2009
|
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
Cash paid during the year for interest
|
|
-
|
|
-
|
|
-
|
Cash paid during the year for income taxes
|
|
-
|
|
-
|
|
-
|
Common shares issued on acquisition of MPLA
|
|
16,236
|
|
-
|
|
-
|
Amounts receivable acquired on recapitalization of the Company
|
|
2,226
|
|
-
|
|
-
|
Accounts payable assumed on recapitalization of the Company
|
|
54,624
|
|
-
|
|
-
|
Due to related party assumed on recapitalization of the Company
|
|
1,000
|
|
-
|
|
-
|
10.
Segmented Information
Details
on a geographic basis as at 30 September 2010 are as follows:
|
|
Australia
|
|
U.S.A.
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
Assets
|
|
420,158
|
|
(406,402)
|
|
13,756
|
Loss for the period
|
|
(17,417)
|
|
(4,409)
|
|
(21,826)
|
Details
on a geographic basis as at 30 June 2010 are as follows:
|
|
Australia
(Audited)
|
|
U.S.A.
(Audited)
|
|
Total
(Audited)
|
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
Assets
|
|
405,152
|
|
(393,500)
|
|
11,652
|
Loss for the year
|
|
(68,454)
|
|
(48,766)
|
|
(117,220)
|
16
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes
to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30
September 2010
Details
on a geographic basis as at 30 September 2009 are as follows:
|
|
Australia
|
|
U.S.A.
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
Assets
|
|
366,632
|
|
(347,858)
|
|
18,774
|
Loss for the period
|
|
(25,953)
|
|
(8,514)
|
|
(34,467)
|
11.
Contingency
The
$100,000 payment to MPLA according to the terms of the Distribution Agreement
has not yet been made and the Company is currently renegotiating the terms of
the Distribution Agreement (Note 8).
12.
Financial Instruments
The
carrying value of financial assets and liabilities as at 30 September 2010 and
30 June 2009 are as follows:
|
|
As at
30
September
2010
|
|
As at
30 June
2010
(Audited)
|
|
|
$
|
|
$
|
|
|
|
|
|
Financial Assets
|
|
|
|
|
Held-for-trading, measured at fair value
|
|
|
|
|
Cash and cash equivalents
|
|
8,650
|
|
7,975
|
Loans and receivables, measured at amortized cost
|
|
|
|
|
Amounts receivable
|
|
3,044
|
|
1,480
|
|
|
|
|
|
Financial Liabilities
|
|
|
|
|
Other liabilities, measured at amortized cost
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
12,252
|
|
20,811
|
Due to related parties
|
|
1,706,576
|
|
1,477,711
|
Cash
and cash equivalents would be Level 1 fair value.
Credit Risk
Financial instruments that
potentially subject the Company to credit risk consist of cash and cash
equivalents and amounts receivable. The Company deposits cash and cash
equivalents with high credit quality financial institutions as determined by
rating agencies and amounts receivable consist of GST receivable of
$3,044.
17
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes
to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30
September 2010
Currency Risk
The Company's
subsidiary is located in Australia. As a result, a significant portion of the
Company's assets, liabilities and expenses were denominated in the
Australian dollar and were therefore subject to fluctuation in exchange
rates.
If
the Australian dollar had weakened (strengthened) against the US dollar, with
all other variables held constant, by 100 basis points (1%) at period end, the impact
on net loss would have been $16,940 lower ($16,940 higher). Other comprehensive
loss would have remained unchanged.
Interest Rate Risk
The Company has cash
balances and no interest-bearing debt. It is management's opinion
that the Company is not exposed to significant interest risk arising from these
financial instruments.
Liquidity Risk
Liquidity risk is the risk
that an entity will encounter difficulty in meeting obligations associated with
its financial liabilities. The
Company is reliant upon PharmaNet as its sole source of cash. The Company has received financing from
PharmaNet in the past; however, there is no assurance that it will be able to
do so in the future.
13.
Subsequent Event
There are no
subsequent events for the period from the date of the three month period ended
30 September 2010 to the date the interim consolidated financial statements
were available to be issued on 3 November 2010.
18
Item 2. Management's
Discussion and Analysis
of Financial
Condition and Results of Operations.
THE FOLLOWING ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION OF MOLECULAR USA FOR THE FIRST QUARTER PERIOD ENDED SEPTEMBER
30, 2010 AND SHOULD BE READ IN CONJUNCTION WITH MOLECULAR USA'S INTERIM
CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO CONTAINED
ELSEWHERE IN THE FORM 10-Q.
Our interim consolidated financial statements are stated
in United States Dollars and are prepared in accordance with United States
Generally Accepted Accounting Principles.
Overview
We were incorporated in the state of Nevada on May 01,
2002. Up until the fall of 2005, Molecular USA was in the business of mineral
exploration and development of a mineral property.
On October 13, 2005,
Molecular USA entered into a distribution and supply agreement with Molecular
Pharmacology Limited ("
MPLA
").
MPLA is incorporated under the laws of Australia and at the time was a wholly
owned subsidiary company of PharmaNet Group Limited, an Australian company
listed on the Australian Stock Exchange. Under the terms of the
distribution and supply agreement, Molecular USA received the exclusive
distribution rights to distribute, market, promote, detail, advertise and sell
certain "
Licensed Products
", as
defined in the agreement, with metallo-polypeptide analgesic as an active
ingredient, in the United States (excluding its territories and
possessions).
On May 9, 2006, Molecular USA announced that it has
acquired 100% of the issued and outstanding share capital of MPLA. The transaction was originally announced
by Molecular USA in a press release dated November 29, 2005 and was
subsequently approved by a majority of the stockholders of the Company at a
stockholders meeting held on April 21, 2006. As a result of the transaction,
PharmaNet Group Limited ("
PharmaNet
"),
the former parent company of MPLA, now controls approximately 79% of Molecular
USA's issued and outstanding share capital. The transaction between the parties
closed in escrow with an effective closing date of May 8, 2006. The business of
MPLA is now the business of Molecular USA.
Our Current Business
Molecular USA through its wholly owned subsidiary MPLA
is in the business of developing and commercializing a new analgesic and
anti-inflammatory molecule known as Tripeptofen. Tripeptofen is likely to appear
in a new group of products suitable for the treatment of common every-day pain.
As an analgesic and anti-inflammatory drug, Tripeptofen is unusual due to its
rapid speed of action and its topical or rub-on application.
The majority of over-the-counter anti-pain and
anti-inflammatory products sold for the treatment of acute localised pain are
based on non-steroidal anti-inflammatory drugs or NSAIDs. The majority of such
products are slow acting and provide only mild pain relief.
The NSAID group has come under additional pressure and
increasing medical alarm, as many drugs in this class have been found to
set-back the recovery of certain conditions and treatments for which they were
marketed. Moreover, NSAIDs are associated with severe gastro-intestinal
side-effects. This has left a niche in an industry under-served by new products
and ingredients.
MPLA's business strategy is to exploit the fast and
locally acting, low side effects, and recovery-enhancing properties of its new
drug group and to market this as a new ingredient, enabling pharmaceutical
companies to develop and market effective and safer products suited to a broad
range of common everyday pain.
19
Licensed Products
Molecular USA has exclusive distribution rights to
distribute, market, promote, advertise and sell certain "Licensed
Products", with metallo-polypeptide analgesic and anti-inflammatory
activity as an active ingredient, in the United States (excluding its
territories and possessions) from its wholly owned subsidiary company MPLA.
The Licensed Products include all products in all dosage
forms, formulations, line extensions and package configurations using or
otherwise incorporating any aspect or production method of metallo-polypeptide
analgesic and anti-inflammatory activity as an active ingredient marketed by
MPLA or its affiliates under the trade name Tripeptofen or any other trade
names or trademarks used by MPLA relating to the product and any improvements
to such formulations or dosages as may hereafter be distributed by MPLA or its
affiliates in the territory during the term of the distribution and supply
agreement between Molecular USA and MPLA for the topical application for human
use only, and specifically excludes:
-
dermatological
or cosmetic use, or tissue repair or tissue regeneration effect;
-
any use or application of the Licensed Product in
non-human groups or species; and
-
Thermalife
cream, presently owned by PharmaNet, the parent company of MPLA.
All Licensed Products must first obtain regulatory
clearance in the United States before they may be marketed and sold by
Molecular USA in that territory. Regulatory approval, commencement of the
Master Drug File (MDF) and market approval are the focus of an ongoing program
expected to continue over the next 18 to 24 months.
MPLA has an exclusive license from Cambridge Scientific
Pty Ltd of Australia. This license is restricted to a "field of use"
defined in the license documentation. Cambridge Scientific may grant other
licenses to third parties outside the "field of use" the subject of
the licenses granted to MPLA.
Patents &
Trademarks
Molecular USA and its subsidiary MPLA, regard their
intellectual property rights, such as copyrights, trademarks, trade secrets,
practices and tools, as important to the success of their company. To protect
their intellectual property rights, Molecular USA relies on a combination of
patent, trademark and copyright law, trade secret protection, confidentiality
agreements and other contractual arrangements with their employees, affiliates,
clients, strategic partners, acquisition targets and others. Effective patent,
trademark, copyright and trade secret protection may not be available in every
country in which the combined company intends to offer its products. The steps
taken by Molecular USA and MPLA to protect their intellectual property rights
may not be adequate. Third parties may infringe or misappropriate the combined
company's intellectual property rights or the combined company may not be able
to detect unauthorized use and take appropriate steps to enforce its rights. In
addition, other parties may assert infringement claims against the combined
company. Such claims, regardless of merit, could result in the expenditure of
significant financial and managerial resources. Further, an increasing number
of patents are being issued to third parties regarding these processes. Future
patents may limit the combined company's ability to use processes covered by
such patents or expose the combined company to claims of patent infringement or
otherwise require the combined company to seek to obtain related licenses. Such
licenses may not be available on acceptable terms. The failure to obtain such
licenses on acceptable terms could have a negative effect on the combined
company's business.
To protect their intellectual property rights, MPLA relies on a
combination of license and patent applications held by Cambridge Scientific Pty
Ltd
which includes
"Analgesic and
Anti-Inflammatory Composition" comprising USA patent application in completion
plus PCT Provisional Specification having the same name designated as Serial
No. 11/059580
, Cytokine Mediation Composition
PCT/AU2007/000554, Tissue
Disruption Treatment And Composition For Use Thereof United States Of America
Patent Application No. 11/218382 and International
20
Patent Application No.
PCT/AU2006/001288 and
COX 2
Inhibitor Application Number WO/2006902207.
Marketing
Molecular USA plans to market its Licensed Products,
when approved, through existing pharmaceutical distributors and by
collaborative dealings with major companies active in the United States and
Europe.
In addition, Molecular USA plans to explore
opportunities for direct sales, out-licensing and the integration of the
company's proprietary anti-inflammatory and analgesic components in
products already distributed through various international markets.
Molecular USA expects that these activities may even
help fund the development costs of the Licensed Products in the United States.
Manufacturing &
Supply
Molecular USA and MPLA have no manufacturing facilities.
MPLA is required to supply Molecular USA with all Licensed Products under the
distribution and supply agreement entered into by the parties in October 2005.
It is likely MPLA will enter into arrangements with various certified
formulation and manufacturers (GMP) of the Licensed Products for clinical trial
and sales purposes. These formulations and the manufacturing facilities must
comply with regulations and current good laboratory practices or cGLPs, and
current good manufacturing practices or GMPs, enforced by the Food and Drug
Administration ("FDA").
Molecular USA has not entered into any supply
agreements.
Competition
Molecular USA and MPLA compete in the segment of the
pharmaceutical market that treats pain and inflammation, which is highly
competitive. We face significant competition from most pharmaceutical companies
as well as biotechnology companies that are also researching and selling
products designed to treat pain and inflammation. Many of our competitors have
significantly greater financial, manufacturing, marketing and product
development resources than we do. Large pharmaceutical companies in particular
have extensive experience in clinical testing and in obtaining regulatory
approvals for drugs. These companies also have significantly greater research
capabilities than we do. In addition, many universities and private and public
research institutes are active in neurological research, some in direct
competition with us. These companies, as well as academic institutions,
governmental agencies and other public and private organizations conducting
research, also compete with Molecular USA and MPLA in recruiting and retaining
highly qualified scientific personnel and consultants and may establish collaborative
arrangements with competitors of Molecular USA.
Molecular USA's
competition will be determined in part by the potential indications for which
the MPLA's products are developed and ultimately approved by regulatory
authorities.
Molecular USA knows of
other companies and institutions dedicated to the development of anti-pain and
anti-inflammatory pharmaceuticals similar to those being developed by MPLA and
licensed to Molecular USA. Many of Molecular USA's competitors, existing or
potential, have substantially greater financial and technical resources and
therefore may be in a better position to develop, manufacture and market
pharmaceutical products. Many of these competitors are also more experienced
with regard to preclinical testing, human clinical trials and obtaining
regulatory approvals. The current or future existence of competitive products
may also adversely affect the marketability of Molecular USA's products.
21
Governmental
Regulation
FDA Regulation
. Pharmaceutical products are subject to
extensive pre- and post-marketing regulation by the Food and Drug Administration ("FDA"),
including regulations that govern the testing, manufacturing, safety, efficacy,
labeling, storage, record-keeping, advertising and promotion of the products under
the Federal Food, Drug and Cosmetic Act and the Public Health Services Act, and
by comparable agencies in most foreign countries. The process required by the
FDA before a new drug may be marketed in the U.S. generally involves the
following: completion of pre-clinical laboratory and animal testing; submission
of an investigational new drug application, or IND, which must become effective
before clinical trials may begin; performance of adequate and well controlled
human clinical trials to establish the safety and efficacy of the proposed
drug's intended use; and approval by the FDA of a New Drug Application,
or NDA.
The activities required before a pharmaceutical agent
may be marketed in the United States begin with pre-clinical testing. Pre-clinical tests include laboratory
evaluation of potential products and animal studies to assess the potential
safety and efficacy of the product and its formulations. The results of these
studies and other information must be submitted to the FDA as part of an IND
application, which must be reviewed and approved by the FDA before proposed
clinical testing can begin. Clinical trials involve the administration of the
investigational new drug to healthy volunteers or to patients under the
supervision of a qualified principal investigator. Clinical trials are
conducted in accordance with Good Clinical Practices under protocols that
detail the objectives of the study, the parameters to be used to monitor safety
and the efficacy criteria to be evaluated. Each protocol must be submitted to
the FDA as part of the IND application. Further, each clinical study must be
conducted under the auspices of an independent institutional review board. The
institutional review board will consider, among other things, ethical factors
and the safety of human subjects.
Typically, human clinical trials are conducted in three
phases that may overlap. In Phase 1, clinical trials are conducted with a small
number of subjects to determine the early safety profile and pharmacology of
the new therapy. In Phase 2, clinical trials are conducted with groups of
patients afflicted with a specific disease in order to determine preliminary
efficacy, optimal dosages and expanded evidence of safety. In Phase 3, large
scale, multicenter, comparative clinical trials are conducted with patients
afflicted with a target disease in order to provide enough data for the
statistical proof of efficacy and safety required by the FDA and others.
The results of the pre-clinical and clinical testing,
together with chemistry and manufacturing information, are submitted to the FDA
in the form of an NDA for a pharmaceutical product in order to obtain approval
to commence commercial sales. In responding to an NDA, the FDA may grant
marketing approvals, request additional information or further research, or
deny the application if it determines that the application does not satisfy its
regulatory approval criteria. Patient-specific therapies may be subject to
additional risk with respect to the regulatory review process. FDA approval for
a pharmaceutical product may not be granted on a timely basis, if at all, or if
granted may not cover all the clinical indications for which approval is sought
or may contain significant limitations in the form of warnings, precautions or
contraindications with respect to conditions of use.
Satisfaction of FDA premarket approval requirements for
new drugs typically takes several years, and the actual time required may vary
substantially based upon the type, complexity and novelty of the product or
targeted disease. Government regulation may delay or prevent marketing of
potential products for a considerable period of time and impose costly
procedures upon our activities. Success in early stage clinical trials or with
prior versions of products does not assure success in later stage clinical
trials. Data obtained from clinical activities are not always conclusive and
may be susceptible to varying interpretations that could delay, limit or
prevent regulatory approval.
Once approved, the FDA may withdraw the product approval
if compliance with pre- and post-marketing regulatory standards is not
maintained or if problems occur after the product reaches the marketplace. In
addition, the FDA may require post-marketing studies, referred to as Phase 4
studies, to monitor the effect of an approved
22
product, and may limit further marketing of the product
based on the results of these post-market studies. The FDA has broad
post-market regulatory and enforcement powers, including the ability to levy
fines and civil penalties, suspend or delay issuance of approvals, seize or
recall products, or withdraw approvals.
Facilities used to manufacture drugs are subject to
periodic inspection by the FDA, Drug Enforcement Agency and other authorities
where applicable, and must comply with the FDA's Current Good
Manufacturing regulations. Failure to comply with the statutory and regulatory
requirements subjects the manufacturer to possible legal or regulatory action,
such as suspension of manufacturing, seizure of product or voluntary recall of
a product. Adverse experiences with the product must be reported to the FDA and
could result in the imposition of market restriction through labeling changes
or in product removal. Product approvals may be withdrawn if compliance with
regulatory requirements is not maintained or if problems concerning safety or
efficacy of the product occur following approval.
With respect to post-market product advertising and
promotion, the FDA imposes a number of complex regulations on entities that
advertise and promote pharmaceuticals, which include, among other things,
standards and regulations relating to direct-to-consumer advertising, off-label
promotion, industry sponsored scientific and educational activities, and
promotional activities involving the Internet. The FDA has very broad
enforcement authority under the Federal Food, Drug and Cosmetic Act, and
failure to abide by these regulations can result in penalties including the
issuance of a warning letter directing the entity to correct deviations from
FDA standards, a requirement that future advertising and promotional materials
be pre-cleared by the FDA, and state and federal civil and criminal
investigations and prosecutions.
Research facilities are subject to various laws and regulations
regarding laboratory practices, the experimental use of animals, and the use
and disposal of hazardous or potentially hazardous substances in connection
with the research in question. In
each of these areas, as above, the government has broad regulatory and
enforcement powers, including the ability to levy fines and civil penalties,
suspend or delay issuance of approvals, seize or recall products, and withdraw
approvals, any one or more of which could have a material adverse effect upon
us.
Other Government Regulations
. In
addition to laws and regulations enforced by the FDA, research of Molecular
USA's products in the United States are subject to regulation under
National Institutes of Health guidelines, as well as under the Controlled
Substances Act, the Occupational Safety and Health Act, the Environmental
Protection Act, the Toxic Substances Control Act, the Resource Conservation and
Recovery Act and other present and potential future federal, state or local
laws and regulations, as research and development of its products involves the
controlled use of hazardous materials, chemicals, viruses and various
radioactive compounds.
In addition to regulations in the United States,
Molecular USA's products are subject to a variety of foreign regulations
governing clinical trials and commercial sales and distribution of its Licensed
Products. Whether or not Molecular USA obtains FDA approval for a product,
Molecular USA or its subsidiaries must obtain approval of a product by the
comparable regulatory authorities of foreign countries before it can commence
clinical trials or marketing of the product in those countries. The approval
process varies from country to country, and the time may be longer or shorter
than that required for FDA approval. The requirements governing the conduct of
clinical trials, product licensing, pricing and reimbursement vary greatly from
country to country.
Sarbanes-Oxley Act of 2002
. On July 30, 2002, President Bush signed into
law the Sarbanes-Oxley Act of 2002, or the SOA. SOA imposes a wide variety of
new requirements on both U.S. and non-U.S. companies, that file or are required
to file periodic reports with the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934. Many of these new
requirements will affect Molecular USA and its board of directors. For
instance, under SOA Molecular USA is required to:
23
-
have Molecular USA's chief executive office
and chief financial officer are required to certify its financial statements;
-
ensure Molecular USA's directors and senior
officers are required to forfeit all bonuses or other incentive-based
compensation and profits received from the sale of Molecular USA's
securities in the twelve month period following initial publication of any of
Molecular USA's financial statements that later require restatement;
-
disclose any off-balance sheet transactions as
required by SOA;
-
prohibit all personal loans to directors and
officers;
-
insure directors, officers and 10% holders file
their Forms 4's within two days of a transaction;
-
adopt a code of ethics and file a Form 8-K whenever
there is a change or waiver of this code; and
-
insure Molecular USA's auditor is
independent as defined by SOA.
SOA has required us to review our current procedures and
policies to determine whether they comply with the SOA and the new regulations
promulgated thereunder. We will continue to monitor our compliance with all
future regulations that are adopted under the SOA and will take whatever
actions are necessary to ensure that we are in compliance.
Environmental Compliance
The nature of Molecular USA's and MPLA's
business does not require special environmental or local government
approval. Molecular USA and MPLA
are compliant with all environmental laws. The cost of such compliance is
minimal for the company.
Employees
Molecular USA currently has no employees and instead
relies on outside contractors.
Immediate Business
Plans
The Company, through its subsidiary MPLA, plans to continue
to pursue the various levels of the international regulatory approval
processes. Applications and product opportunities for Tripeptofen are believed
to be broad and cover a range of commercial fields, each with distinct
pre-market requirements. The international drug development team, global
resources and local know-how will allow MPLA to seek the most time and cost
effective regulatory pathways for each product and market sector.
On commercial development, MPLA will focus on
consolidating the regulatory pathway work in order to prioritize the path to
market. Jeff Edwards will work to set-out the strategies designed to maximize
the multi-jurisdictional capabilities of MPLA's development teams.
Results of Operation
For the Quarter ended September 30, 2010.
Rev
enues
REVENUE
- Molecular USA has not generated any revenues for the
quarter ended September 30, 2010, or since inception.
COMMON STOCK
- Molecular USA has not issued any shares during the most recent quarter.
As of the date November 10, 2010, Molecular USA has 111,553,740 common shares
issued and outstanding.
24
Expenses
SUMMARY
-
Total expenses were $21,826 for the three month period ended September 30, 2010. Expenses had decreased during this past quarter
as compared to the three month period ended September 30, 2009 - $34,467.
A total of $1,857,603 in expenses has been incurred by Molecular USA since
inception on July 14, 2004 through to September
30, 2010. The decrease in costs
over this quarter has occurred as the result of Molecular USA's wholly
owned subsidiary decreasing its consulting fees and Molecular USA decreasing
its professional fees. The costs
can be subdivided into the following categories.
-
Office Expenses and Rent
: $7,910 in office expenses (for
administrative costs) were incurred for the three month period ended September 30, 2010, as compared to $10,443
for the three month period ended September 30, 2009; while a total of $206,824
was incurred in the period from inception on July
14, 2004 to September 30, 2010. All contributed expenses are reported as
contributed costs with a corresponding credit to additional paid-in
capital.
-
Consulting and Analysis
Costs
: Molecular USA relies on consultants and other third parties to
conduct the majority of its research.
For the three month period ended September 30, 2010, $9,372 in
consulting and analysis expenses were incurred as compared to $15,354
during the three month period ended September 30, 2009.
We have incurred a total of $1,180,146 in consulting and analyst
fees since our inception on July
14, 2004 to September 30, 2010.
-
Advertising and Promotion
Fees
: Molecular USA has spent no money in this area this year. During the three month period ended September 30, 2010, we spent $0 on
advertising and public relations and $0 for three month period ended September
30, 2010. A total of $23,739 has
been incurred in this area during the period from inception on July 14, 2004 to September 30, 2010.
-
Professional Fees
: Molecular USA incurred
$4,409 in professional fees for the three month period ended on September 30, 2010 as compared to $7,434
for the three month period ended September 30, 2009. From inception to September 30, 2010, we have incurred
a total of $273,243 professional fees mainly spent on legal and accounting
matters.
-
Travel Costs
: Molecular USA
incurred $0 in travel costs for the three month period ended September 30,
2010 as compared to $0 for the three month period ended September 30, 2009 and $104,249 has been incurred in the period
from inception on July 14, 2004 to September
30, 2010.
-
Salaries and Benefit
Costs
: Molecular USA and its subsidiary rely primarily on outside
consultants and not salaried employees. As a result, Molecular USA incurred
$0 in salaries and benefits for the three month period ended September 30,
2010 and $0 in salaries and benefits during the three month period ended September
30, 2009. For the period
July
14, 2004 (inception) through September 30, 2010, Molecular USA
has spent a total of $44,464 on salaries and benefits.
Molecular USA continues to carefully control its expenses and overall
costs as it moves forward with the development of its new business plan.
Molecular USA does not have any employees and engages personnel through outside
consulting
contracts
or agreements or other such arrangements
Income Tax Provision
: We have losses carried forward for income tax purpose to September 30, 2010. There are no current or deferred tax
expenses for the period ended September 30, 2010, due to our loss
position. We have fully reserved
for any benefits of these losses.
The deferred tax consequences of temporary differences in reporting
items for financial statement and income tax purposes are recognized as
appropriate.
25
Liquidity and Capital Resources
During the three month period ended September 30, 2010, Molecular USA satisfied
its working capital needs by borrowing cash from its parent company PharmaNet. As of September 30, 2010, the Company
had cash and cash equivalents on hand in the amount of $8,650 ($7,975 - June
30, 2010) and current payable and accrued liabilities of $12,252 ($20,811
- June 30, 2010). As of September
30, 2010, Molecular USA currently owes its parent company PharmaNet, $1,678,513,
an additional $28,063 to other related parties, and $12,252 to non-related
parties. Given the proposed
business activities of Molecular USA and its subsidiary, management does not
expect that the current level of cash on hand will be sufficient to fund its
operation for the next twelve month period.
To achieve our goals and objectives for the next 12
months, we plan to raise additional capital through private placements of our
equity securities, proceeds received from the exercise of outstanding options,
future financing from our majority shareholder PharmaNet.
We plan to use any additional funds that we might be
successful in raising for development, as well as for strategic acquisition of
existing businesses that complement our market niche, and general working
capital purposes.
If we are unsuccessful in obtaining new capital, our
ability to seek and consummate strategic acquisitions to build our company internationally
and to expand of our business development and marketing programs could be
adversely affected.
Off-Balance Sheet
Arrangement
As of September
30, 2010, Molecular USA did not have any
off-balance
sheet arrangements.
Research and Development
Since the acquisition of MPLA, Molecular USA has maintained
MPLA's research and development program to:
-
Refine and prove-up its proprietary active
ingredients and to commence the processes that will lead to the issue of a
Master Drug File registration of its products;
-
Define the mode of action and potential of
Tripeptofen in both in vitro, animal and human studies;
-
Gain Australian regulatory and marketing
approval;
-
Gain European regulatory approval; and
-
Commence application for American regulatory
approval.
MPLA is in the business of developing and
commercializing a new analgesic and anti-inflammatory molecule known as
Tripeptofen. Tripeptofen is likely to appear in a new group of products
suitable for the treatment of common every-day pain. As an analgesic and
anti-inflammatory drug, Tripeptofen is unusual due to its rapid speed of action
and its topical or rub-on application.
During the period Molecular USA, continued to
support MPLA and Cambridge Scientific Pty Ltd in the process of expanding the
intellectual property portfolio. Further details on the scope of these
activities is presented in the section.
Patents & Trademarks.
The first conditions targeted by MPLA will be the
musculoskeletal injuries. The use
of a B-SIM in these markets represents a new approach to one of the
world's largest over the counter drug markets and includes indications
such as joint inflammation, musculoskeletal pain, overuse and strain injuries,
burns and even surgical and
26
cosmetic procedures. MPLA's proprietary, industrially
scalable peptide-ligand bond exchange (PLBE) B-SIM manufacturing process
involves the disassociation of proteins, rather than the far more costly
process of assembling B-SIMs one sequence at a time. The patent was lodged in
the name of Cambridge Scientific Pty Ltd; however, Molecular USA holds the
worldwide exclusive license to manufacture, commercialize, market and
distribute topical anti-inflammatory and analgesic products based on the
proprietary MPL-TL compound.
Molecular
USA is still working on the projections regarding the necessary expenditure and
time frame involved in pursuing this research and development program. Any such program will also be subject to
Molecular USA raising the necessary funds to advance such a program.
Capital Expenditure
Commitments
Capital expenditures for the three month period ended September
30, 2010, amounted to $0. Molecular USA does not anticipate any significant
purchase or sale of equipment over the next 12 months.
Recent Accounting
Pronouncements
In January 2010, the FASB issued ASU
2010-06,
"Improving Disclosures about Fair
Value Measurements."
This update requires additional disclosure
within the roll forward of activity for assets and liabilities measured at fair
value on a recurring basis, including transfers of assets and liabilities
between Level 1 and Level 2 of the fair value hierarchy and the separate
presentation of purchases, sales, issuances and settlements of assets and
liabilities within Level 3 of the fair value hierarchy. In addition, the update
requires enhanced disclosures of the valuation techniques and inputs used in
the fair value measurements within Levels 2 and 3. The new disclosure
requirements are effective for interim and annual periods beginning after 15
December 2009, except for the disclosure of purchases, sales, issuances and
settlements of Level 3 measurements. Those disclosures are effective for fiscal
years beginning after 15 December 2010. As ASU 2010-06 only requires enhanced
disclosures, the Company does not expect that the adoption of this update will
have a material effect on its interim consolidated financial statements.
In February 2010,
the FASB issued ASU No. 2010-09,
"Amendments to Certain Recognition and
Disclosure Requirements"
, which
eliminates the requirement for Securities and Exchange Commission filers to
disclose the date through which an entity has evaluated subsequent
events. ASU No. 2010-09 is effective for fiscal quarters beginning after
15 December 2010. The adoption of ASU No. 2010-06 is not expected to have
a material impact on the Company's interim consolidated financial
statements.
The
Accounting Standards Codification
In July 2009, the Financial
Accounting Standards Board (the "FASB") issued SFAS No. 168,
"The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles"
. SFAS No. 168 will become the single
source of authoritative nongovernmental U.S. GAAP, superseding existing FASB,
American Institute of Certified Public Accountants (AICPA), Emerging Issues
Task Force (EIFT) and related accounting literature. SFAS No. 168 reorganizes the thousands
of GAAP pronouncements into roughly 90 accounting topics and displays them
using a consistent structure. Also
included is relevant Securities and Exchange Commission guidance organized
using the same topical structure in separate sections. SFAS No. 168 will be effective for
financial statements issued for reporting periods that end after 15 September
2009. The adoption of SFAS No. 168
did not have a material impact on the Company's interim consolidated
financial statements.
27
Critical Accounting Policies and Estimates
Our
quarterly interim consolidated financial statements and accompanying notes are
prepared in accordance with generally accepted accounting principles used in
the United States. Preparing
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenue, and expenses.
These estimates and assumptions are affected by management's application of
accounting policies. We believe
that understanding the basis and nature of the estimates and assumptions
involved with the following aspects of our interim consolidated financial
statements is critical to an understanding of our financials.
Stock-based compensation
Effective 1 January 2006, we adopted the provisions of
ASC 718,
"Compensation - Stock
Compensation"
, which establishes accounting for equity
instruments exchanged for employee services. Under the provisions of ASC 718,
stock-based compensation cost is measured at the grant date, based on the
calculated fair value of the award, and is recognized as an expense over the
employees' requisite service period (generally the vesting period of the
equity grant). We adopted ASC 718 using the modified prospective method, which
requires us to record compensation expense over the vesting period for all
awards granted after the date of adoption, and for the unvested portion of
previously granted awards that remain outstanding at the date of adoption. Accordingly, the financial statements
for the periods prior to 1 January 2006 have not been restated to reflect the
fair value method of expensing share-based compensation. The adoption of ASC 718 does not change
the way Molecular USA accounts for share-based payments to non-employees, with
guidance provided by ASC 505-50,
"Equity-Based
Payments to Non-Employees".
Item 3. Quantitative and
Qualitative Disclosures about Market Risk.
Interest Rate Risk
Due to
the short-term nature of our interest bearing assets, which consist primarily
of cash and cash equivalents and no restricted cash, we believe that our
exposure to interest rate market risk will not significantly affect our
operations.
Foreign Currency Risk
Our
head office and lab operations are based in Australia. Accordingly, we have
been subject to exposure from adverse movements in foreign currency exchange
rates. To date, the effect of changes in foreign currency exchange rates on
revenue and operating expenses has not been material as we have had no revenue
and limited operations. Operating expenses incurred by our foreign subsidiaries
were denominated in local currencies. We have not used financial instruments to
hedge these operating expenses.
Item 4. Controls and
Procedures.
Not Applicable
.
Item 4T. Controls and Procedures.
(a) Evaluation of Disclosure
Controls and Procedures
Disclosure controls are controls and
procedures that are designed to ensure that information required to be
disclosed in our reports filed under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SEC's rules
and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed by a Company in
28
the reports that it files or submits under the
Exchange Act is accumulated and communicated to the company's management,
including its principal executive and principal financial officers, or persons
performing similar functions, as appropriate to allow timely decisions
regarding required disclosure.
(b) Internal control over
financial reporting
Management's annual report on internal
control over financial reporting
Management is responsible for establishing and
maintaining adequate internal control over financial reporting as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over
financial reporting is intended to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with U.S. GAAP. Our internal control over
financial reporting should include those policies and procedures that:
· pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of our assets;
· provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
applicable GAAP, and that receipts and expenditures are being made only in
accordance with authorizations of management and the Board of Directors; and
· provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of our assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
As required by Rule 13a-15(c) promulgated under the Exchange Act, our
management, with the participation of our Chief Executive Officer
("CEO") and Chief Financial Officer ("CFO"), evaluated the
effectiveness of our internal control over financial reporting as of December
31, 2009. Management's assessment took into consideration the size and
complexity of the company and was based on criteria set forth by the Committee
of Sponsoring Organizations of the Treadway Commission in Internal Control over
Financial Reporting -Guidance for Smaller Public Companies. In performing the
assessment, management has concluded that our internal control over financial
reporting was effective as of September 30, 2010.
Attestation
report of the registered public accounting firm
This quarterly report does not include an attestation report of the
company's registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by the
company's registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the company to provide only
management's report in this quarterly report.
Changes
in internal control over financial reporting
There were no changes in our internal controls that occurred during the
quarter covered by this report that have materially affected, or are reasonably
likely to materially affect our internal controls.
Changes
in Internal Controls
Based on the evaluation as of September 30, 2010, Jeff Edwards, our
President, Chief Executive Officer, and Chief Financial Officer has concluded
that there were no significant changes in our internal controls over financial
29
reporting or in any other areas that could significantly affect our
internal controls subsequent to the date of his most recent evaluation,
including corrective actions with regard to significant deficiencies and
material weaknesses.
PART
II - OTHER INFORMATION
Item 1. Legal Proceedings.
We know of no material, active or pending legal
proceedings against our company, nor are we involved as a plaintiff in any
material proceeding or pending litigation. There are no proceedings in which
any of our directors, officers or affiliates, or any registered or beneficial
shareholder, is an adverse party or has a material interest adverse to our
interest.
Item 1A. Risk Factors.
Not Applicable.
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds.
Recent Sale of Unregistered Securities
Not Applicable.
Use of Proceeds from Unregistered Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4.
(Removed and Reserved).
Not Applicable.
Item 5. Other Information
No items to disclose.
30
Item 6. Exhibits
Exhibit
Number
|
Exhibit Title
|
3.1
|
Articles of Incorporation as Amended
(incorporated by reference to exhibit 3.1 to our Form 10-SB Registration
Statement filed on January 23, 2003).
|
3.2
|
Article of Amendment dated August 29, 2005
|
3.3
|
Bylaws as Amended (incorporated by reference to
exhibit 3.2 to to our Form 10-SB Registration Statement filed on January 23,
2003).
|
31.1
|
Certificate of CEO as Required by Rule
13a-14(a)/15d-14
|
31.2
|
Certificate of CFO as Required by Rule
13a-14(a)/15d-14
|
32.1
|
Certificate of CEO and CFO as Required by Rule
13a-14(b) and Rule 15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of
Chapter 63 of Title 18 of the United States Code
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
November 10, 2010.
|
MOLECULAR PHARMACOLOGY (USA) LIMITED
|
|
BY:
|
/s/ Jeffrey Edwards
|
|
|
Jeff Edwards, President, Chief Executive Officer, Chief Financial Officer and a Member
of the Board of Directors
|
|
|
|
|
31
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