The
information in this report for the three months ended September 30, 2012, 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' deficiency and cash flows for those periods.
The interim
consolidated financial statements should be read in conjunction with Molecular
USA's consolidated financial statements and the notes thereto contained in
Molecular USA's Audited Financial Statements for the year ended June 30, 2012,
in the Form 10K filed with the SEC on August 22, 2012.
Interim
results are not necessarily indicative of results for the full fiscal year.
The unaudited
interim consolidated financial statements start on the next page.
(Expressed in U.S. Dollars)
Nature and Continuance of
Operations
(Note 1)
On behalf of
the Board:
/s/
Jeffery Edwards
Director 9;
Jeffery
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
September 30
2012
|
|
For the
three month
period
ended
30 September
2012
|
|
For the
three month
period
ended
30 September
2011
|
|
$
|
|
$
|
|
$
|
Expenses
|
|
|
|
|
|
Advertising and promotion
|
23,739
|
|
-
|
|
-
|
Amortization (Note 4)
|
6,777
|
|
86
|
|
113
|
Analysis
|
33,947
|
|
-
|
|
-
|
Consulting (Note 6)
|
1,323,621
|
|
33,480
|
|
18,464
|
Office and miscellaneous (Note 6)
|
227,527
|
|
8,994
|
|
4,445
|
Professional fees
|
368,760
|
|
9,177
|
|
4,250
|
Public relations
|
3,656
|
|
-
|
|
-
|
Rent (Note 6)
|
27,759
|
|
-
|
|
-
|
Salaries and benefits
|
44,464
|
|
-
|
|
-
|
Transfer agent and filing fees
|
17,172
|
|
-
|
|
-
|
Travel
|
111,693
|
|
359
|
|
-
|
|
|
|
|
|
|
Net loss
before other items
|
(2,189,115)
|
|
(52,096)
|
|
(27,272)
|
|
|
|
|
|
|
Other items
|
|
|
|
|
|
Export market development grants
|
69,629
|
|
-
|
|
-
|
Interest income
|
2,322
|
|
-
|
|
-
|
Research and development tax
refund
|
213,020
|
|
-
|
|
-
|
|
|
|
|
|
|
Net loss for
the period
|
(1,904,144)
|
|
(52,096)
|
|
(27,272)
|
|
|
|
|
|
|
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
|
(1,904,144)
|
|
(52,096)
|
|
(27,272)
|
Foreign currency translation
adjustment
|
(477,006)
|
|
(30,934)
|
|
158,568
|
|
|
|
|
|
|
Total
comprehensive loss for the period
|
(2,381,150)
|
|
(83,030)
|
|
131,296
|
|
|
|
|
|
|
Basic and
diluted comprehensive loss per common share
|
|
|
(0.001)
|
|
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
2012
|
|
For the
three month
period
ended
30 September
2012
|
|
For the
three month
period
ended
30 September
2011
|
|
$
|
|
$
|
|
$
|
Cash flows used in operating
activities
|
|
|
|
|
|
Net loss for the period
|
(1,904,144)
|
|
(52,096)
|
|
(27,272)
|
Adjustments to reconcile loss
to net cash
used by operating activities
|
|
|
|
|
|
Amortization
|
6,777
|
|
86
|
|
113
|
Write-down of intangible assets
|
1,278
|
|
-
|
|
-
|
Changes in operating assets and
liabilities
|
|
|
|
|
|
Increase in amounts receivable
|
(4,622)
|
|
(1,738)
|
|
(636)
|
Decrease in accounts payable and
accrued liabilities
|
(29,117)
|
|
(952)
|
|
(2,943)
|
|
|
|
|
|
|
|
(1,929,828)
|
|
(54,700)
|
|
(30,738)
|
|
|
|
|
|
|
Cash flows
from investing activities
|
|
|
|
|
|
Purchase of equipment
|
(7,850)
|
|
-
|
|
-
|
Purchase of intangible assets
|
(1,278)
|
|
-
|
|
-
|
Cash acquired on the purchase of
Molecular Pharmacology (USA) Limited
|
37,163
|
|
-
|
|
-
|
|
|
|
|
|
|
|
28,035
|
|
-
|
|
-
|
|
|
|
|
|
|
Cash flows
from (used in) financing activities
|
|
|
|
|
|
Common shares issued for cash
|
234,497
|
|
-
|
|
-
|
Increase (decrease) in due to
related parties
|
2,155,745
|
|
94,505
|
|
(125,486)
|
|
|
|
|
|
|
|
2,390,242
|
|
94,505
|
|
(125,486)
|
|
|
|
|
|
|
Effect of
exchange rate changes on cash
|
(477,006)
|
|
(30,934)
|
|
158,568
|
|
|
|
|
|
|
Increase in
cash and cash equivalents
|
11,443
|
|
8,871
|
|
2,344
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
-
|
|
2,572
|
|
8,675
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
11,443
|
|
11,443
|
|
11,019
|
Supplemental Disclosures with
Respect to Cash Flows
(Note 10)
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 year
|
-
|
|
-
|
|
-
|
|
(121,860)
|
|
-
|
|
(121,860)
|
Cumulative translation
adjustment
|
-
|
|
-
|
|
-
|
|
-
|
|
(357,962)
|
|
(357,962)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30
June 2011
|
111,553,740
|
|
111,554
|
|
106,707
|
|
(1,672,666)
|
|
(512,287)
|
|
(1,966,692)
|
Net loss for the year
|
-
|
|
-
|
|
-
|
|
(179,382)
|
|
-
|
|
(179,382)
|
Cumulative translation
adjustment
|
-
|
|
-
|
|
-
|
|
-
|
|
66,215
|
|
66,215
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30
June 2012
|
111,553,740
|
|
111,554
|
|
106,707
|
|
(1,852,048)
|
|
(446,072)
|
|
(2,079,859)
|
Net loss for the period
|
-
|
|
-
|
|
-
|
|
(52,096)
|
|
-
|
|
(52,096)
|
Cumulative translation
adjustment
|
-
|
|
-
|
|
-
|
|
-
|
|
(30,934)
|
|
(30,934)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30
September 2012
|
111,553,740
|
|
111,554
|
|
106,707
|
|
(1,904,144)
|
|
(477,006)
|
|
(2,162,889)
|
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 2012
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 authorized 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 acquired the exclusive distribution rights to
distribute, market, promote, detail, advertise and sell certain "Licensed
Products" through Molecular Pharmacology Pty. Ltd. (formerly Molecular
Pharmacology Limited) ("MPLA") (Note 9). MPLA was 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.
Since
then, 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 (the
"Purchase Agreement"). Under the terms of the Purchase Agreement the Company
acquired 100% of the issued and outstanding shares of MPLA. 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.
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.
7
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim
Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
30 September
2012
The
Company's interim consolidated financial statements as at 30 September 2012 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 $52,096 for the three month period ended 30 September 2012 (30
September 2011 - $27,272, cumulative - $1,904,144) and has a working capital deficit of $9 at 30
September 2012 (30 June 2012 -
$11,570).
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 2013. 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 2012, 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.
Basis of presentation
These
interim consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America ("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.
8
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30 September 2012
Segments of an enterprise and related information
ASC 280, "
Segment
Reporting
"
establishes guidance for the way that public
companies report information about operating segments in annual financial
statements and requires reporting of selected information about operating
segments in interim financial statements issued to the public. It also
establishes standards for disclosures regarding products and services,
geographic areas and major customers. ASC 280 defines operating segments as
components of a company about which separate financial information is available
that is evaluated regularly by the chief operating decision maker in deciding
how to allocate resources and in assessing performance.
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.
Equipment
Equipment is recorded at
cost and amortization is provided over its estimated economic life at the rate
of 15% declining balance.
Income taxes
Deferred
income taxes are reported for timing differences between items of income or
expense reported in the interim consolidated 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
losses 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 disclosure of
comprehensive income (loss) and its components in the financial statements. As
at 30 September 2012, the Company has items that represent a comprehensive loss
and, therefore, has included a schedule of comprehensive loss in the interim
consolidated financial statements.
9
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30 September 2012
Basic and diluted net income
(loss) per share
The
Company computes net income (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 income (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
".
Comparative figures
Certain
comparative figures have been adjusted to conform to the current period's
presentation.
3.
Changes in
Accounting Policies
In
December 2011, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") No. 2011-12,
"Comprehensive Income"
. This ASU
effectively defers the changes in ASU No. 2011-05,
"Presentation of Comprehensive Income"
that relate to the presentation of reclassification adjustments out of
accumulated other comprehensive income. ASU No. 2011-12 should be applied
retrospectively and is effective for fiscal years, and interim periods within
those years, beginning after 15 December 2011. As ASU No. 2011-12 relates only
to the presentation of comprehensive income, the adoption of this update did not
have a material effect on the Company's interim consolidated financial
statements.
10
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30 September 2012
In June
2011, the FASB issued ASU No. 2011-05,
"Presentation of Comprehensive Income"
. This ASU presents an entity
with the option to present the total of comprehensive income, the components of
net income, and the component of other comprehensive income either in a single
continuous statement of comprehensive income or in two separate but consecutive
statements. In both choices, an entity is required to present each component of
other comprehensive income along with a total for other comprehensive income,
and a total amount for comprehensive income. This update eliminates the option
to present the components of other comprehensive income as part of the statement
of changes in stockholders' equity (deficiency). The amendments in this update
do not change the items that must be reported in other comprehensive income or
when an item of other comprehensive income must be reclassified to net income. ASU No. 2011-05 should be applied retrospectively and is effective for fiscal
years, and interim periods within those years, beginning after 15 December
2011. As ASU No. 2011-05 relates only to the presentation of comprehensive
income, the adoption of this update did not have a material effect on the
Company's interim consolidated financial statements.
In May
2011, the FASB issued ASU No. 2011-04,
"Fair
Value Measurement"
to amend the accounting and disclosure
requirements on fair value measurements. This ASU limits the
highest-and-best-use measure to nonfinancial assets, permits certain financial
assets and liabilities with offsetting positions in market or counterparty
credit risks to be measured at a net basis, and provides guidance on the
applicability of premiums and discounts. Additionally, this update expands the
disclosure on Level 3 inputs by requiring quantitative disclosure of the
unobservable inputs and assumptions, as well as description of the valuation
processes and the sensitivity of the fair value to changes in unobservable
inputs. ASU No. 2011-04 is to be applied prospectively and is effective during
interim and annual periods beginning after 15 December 2011. The adoption of
this update did not have a material effect on the Company's interim consolidated
financial statements.
4
.
Equipment
|
|
|
Accumulated amortization
|
|
Net Book Value
|
|
|
Cost
|
|
As at
30 September
2012
|
|
As at
30 June
2012
(Audited)
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
Office equipment
|
|
7,850
|
|
6,777
|
|
1,073
|
|
1,159
|
During the
three month period ended 30 September 2012, the total additions to equipment
were $Nil (30 September 2011 - $Nil).
5.
Accounts Payable and
Accrued Liabilities
Accounts
payable and accrued liabilities are non-interest bearing, unsecured and have
settlement dates within one year.
11
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30 September 2012
6.
Due to
Related Parties and Related Party Transactions
As at 30 September 2012, the
amount due to related parties includes $1,000 payable to a director of the
Company (30 June 2012
-
$1,000). This balance is non-interest bearing, unsecured and has no fixed terms
of repayment.
As at 30 September 2012, the
amount due to related parties includes $34,429 payable to a company owned by a
director of the Company or an officer of PharmaNet (30 June 2012
-
$22,846). This balance is non-interest bearing, unsecured and has no fixed
terms of repayment.
As at 30 September 2012, the
amount due to related parties includes $1,723 payable to a company owned by a
director of the Company or an officer of PharmaNet (30 June 2012
-
$1,101). This balance is non-interest bearing, unsecured and has no fixed terms
of repayment.
As at 30 September 2012, the
amount due to related parties includes $7,856 payable to a company owned by a
director of the Company or an officer of Pharmanet (30 June 2012 - $7,741).
This balance is non-interest bearing, unsecured and has no fixed terms of
repayment.
As at 30 September 2012, the
amount due to related parties includes $2,118,945 payable to PharmaNet (30 June
2012
-
$2,036,760).
This balance is non-interest bearing, unsecured and has no fixed terms of
repayment.
During the three month period
ended 30 September 2012, a director of the Company or an officer of PharmaNet,
and their controlled entities were paid or accrued consulting fees of $10,226 (
30
September 2011
- $18,464,
cumulative - $872,822).
During the three month period
ended 30 September 2012, a director of the Company or an officer of PharmaNet,
and their controlled entities were paid or accrued consulting and/or
administrative fees of $7,540 (
30 September 2011
-
$Nil, cumulative - $50,886) by the Company.
During the three month period
ended 30 September 2012, a director of the Company or an officer of PharmaNet,
and their controlled entities were paid or accrued consulting fees of $21,435
(30 September 2011 - $Nil, cumulative - $42,720) by the Company.
During the three month period
ended 30 September 2012, a director of the Company or an officer of PharmaNet,
and their controlled entities were paid or accrued office and miscellaneous
expenses of $Nil (30 September 2011 - $3,936, cumulative - $4,481) by the
Company.
During the three month period
ended 30 September 2012, a director of the Company or an officer of PharmaNet,
and their controlled entities were paid or accrued consulting fees of $Nil (30
September 2011 - $Nil; cumulative - $41,928) by the Company.
During the three month period
ended 30 September 2012, a director of the Company or an officer of PharmaNet,
and their controlled entities were paid or accrued office and miscellaneous
expenses of $Nil (
30 September 2011
-
$Nil; cumulative
-
$80,468) by the Company.
12
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30 September 2012
During the three month period
ended 30 September 2012, a director of the Company or an officer of PharmaNet,
and their controlled entities were paid or accrued rental fees of $Nil (
30
September 2011
- $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
2012
|
|
For the
year
ended
30 June
2012
(Audited)
|
|
|
$
|
|
$
|
|
|
|
|
|
Opening balance, beginning of period
|
|
2,036,760
|
|
1,896,625
|
Funds transferred to the Company by PharmaNet
|
|
51,940
|
|
170,790
|
Expenses paid by PharmaNet on behalf of the Company
|
|
-
|
|
33,852
|
Foreign currency translation adjustment
|
|
30,245
|
|
(64,507)
|
|
|
|
|
|
Balances, end of period
|
|
2,118,945
|
|
2,036,760
|
The average amount due to
PharmaNet for the three month period ended 30 September 2012 was $1,929,149 (30
June 2012 - $1,816,134).
7.
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.
13
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30 September 2012
8
.
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
2012
|
|
For the
three month
period ended
30 September
2011
|
|
|
|
|
$
|
|
$
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
|
(52,096)
|
|
(27,272)
|
|
|
|
|
|
|
|
Federal income tax rates
|
|
|
|
34.0%
|
|
34.0%
|
|
|
|
|
|
|
|
Income tax recovery based on the above rates
|
|
|
|
(17,713)
|
|
(9,272)
|
|
|
|
|
|
|
|
Increase (decrease) due to:
|
|
|
|
|
|
|
Difference between U.S. and foreign tax rates
|
|
|
|
1,681
|
|
921
|
Change in valuation allowance
|
|
|
|
22,018
|
|
(22,788)
|
Foreign exchange and other
|
|
|
|
(5,986)
|
|
31,139
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
|
-
|
|
-
|
The
composition of the Company's deferred tax assets as at 30 September 2012 and 30
June 2012 are as follows:
|
|
As at
30 September
2012
|
|
As at
30 June
2012
(Audited)
|
|
|
$
|
|
$
|
|
|
|
|
|
Net income tax operating loss
carryforward
|
|
2,173,649
|
|
2,101,601
|
|
|
|
|
|
Deferred tax assets
|
|
682,766
|
|
660,748
|
Less:
Valuation allowance
|
|
(682,766)
|
|
(660,748)
|
|
|
|
|
|
Net deferred tax asset
|
|
-
|
|
-
|
14
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30 September 2012
The
Company has non-capital loss carry-forwards of approximately $2,173,649 that may
be available for tax purposes. The loss carry-forwards are all in respect to
U.S. 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
|
75,463
|
2029
|
57,882
|
2030
|
48,765
|
2031
|
43,836
|
2032
|
49,005
|
2033
|
10,068
|
No expiry
|
1,406,866
|
|
|
|
2,173,649
|
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.
9.
Distribution
Agreement
The
Company has the exclusive distribution rights, through MPLA, to distribute,
market, promote, detail, advertise and sell certain Licensed Products, with
metallo-polypeptide analgesic as an active ingredient, in the United States
(excluding its territories and possessions) (Note 1). If, and when necessary,
the Company will obtain all necessary regulatory approvals for the Licensed
Products and incorporate the Licensed Products in the United States.
15
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30 September 2012
10.
Supplemental
Disclosures with Respect to Cash Flows
|
|
For the
period from
the date of inception on
14 July 2004
to
30 September
2012
|
For the
three
month
period
ended
30 September
2012
|
For the
three
month
period
ended
30 September
2011
|
|
|
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
Cash paid during the
period for interest
|
|
|
|
-
|
|
-
|
|
-
|
Cash paid during the
period 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
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
11.
Segmented
Information
Details on
a geographic basis as at and for the three month period ended 30 September 2012
are as follows:
|
|
Australia
|
|
U.S.A.
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
Assets
|
|
19,364
|
|
-
|
|
19,364
|
|
|
|
|
|
|
|
Loss for the period
|
|
(42,028)
|
|
(10,068)
|
|
(52,096)
|
Details on
a geographic basis as at and for the year ended 30 June 2012 are as follows:
|
|
Australia
|
|
U.S.A.
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
Assets
|
|
8,841
|
|
-
|
|
8,841
|
|
|
|
|
|
|
|
Loss for the year
|
|
(130,377)
|
|
(49,005)
|
|
(179,382)
|
16
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30 September 2012
Details on
a geographic basis as at and for the three month period ended 30 September 2011
are as follows:
|
|
Australia
|
|
U.S.A.
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
Assets
|
|
19,756
|
|
-
|
|
19,756
|
|
|
|
|
|
|
|
Loss for the period
|
|
(23,022)
|
|
(4,250)
|
|
(27,272)
|
12.
Financial Instruments
The
carrying values of cash and cash equivalents and accounts payable approximate
fair value due to the short term maturity of these financial instruments.
Credit
Risk
Financial
instruments that potentially subject the Company to credit risk consists of cash
and cash equivalents. The Company deposits cash and cash equivalents with high
credit quality financial institutions as determined by rating agencies. As
a result, credit risk is considered insignificant.
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.
The Company's objective
in managing its foreign currency risk is to minimize its net exposures to
foreign currency cash flows by holding most of its cash and cash equivalents in
Australian dollars. The Company monitors and forecasts the values of net
foreign currency cash flow and balance sheet exposures and from time to time
could authorize the use of derivative financial instruments such as forward
foreign exchange contracts to economically hedge a portion of foreign currency
fluctuations.
If the
Australian dollar had weakened (strengthened) against the U.S. dollar, with all
other variables held constant, by 100 basis points (1%) at period end, the impact
on net loss and other comprehensive loss would have been $21,447 higher ($21,447
lower).
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.
Interest
Rate Risk
The
Company has non-interest paying 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.
17
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30 September 2012
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.
18