MLPH Molecular Pharmacology Limited (PK)

REASON FOR AMENDMENT

This Amended Form 10-KSB is being filed to: (1)  revise management's conclusions regarding the effectiveness of our disclosure controls and procedures; (2)  to include a separate conclusion on the effectiveness of our disclosure controls and procedures over  financial reporting; and provide new Exhibit 31.1 and 31.2 certificates. 

Other than the foregoing changes the Form 10-KSB/A as dated June 8, 2009 remains the same in its entirety and does not reflect events occurring after the original filing of the Form 10-K with the SEC on October 10, 2008.
 

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 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.

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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:

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.

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Employees

In the year ended June 30, 2008, Molecular USA did not have any employees and do not intend to hire any employees in the upcoming year.  We rely heavily on outside contractors to conduct our business.

Immediate Business Plans

Over the next 12 to 24 months, Molecular USA, 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 continue to 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.

Reports to Securities Holders

We are required to file annual reports on Form 10-KSB and quarterly reports on Form 10-QSB with the Securities Exchange Commission on a regular basis, and will be required to timely disclose certain material events (e.g., changes in corporate control; acquisitions or dispositions of a significant amount of assets other than in the ordinary course of business; and bankruptcy) in a current report on Form 8-K.

Although our Internet site www.mpl-usa.com does not contain our reports, you may read and copy any materials we file with the Securities and Exchange Commission at their Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

Item 2. Description of Property

Molecular USA's office space is located at Drug Discovery Centre, 28 Oxford Street, Leederville 6007 Perth, Western Australia.  This office space was provided free of charge during the year ended June 30, 3008, from a company controlled by an officer of PharmaNet.

Item 3. 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 4. Submissions of Matters to a Vote of Security Holders

No matters were submitted to our stockholders during this period.

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PART II

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

Our common shares are quoted on the PinkSheets under the symbol " MLPH ". The following quotations reflect the high and low bids for our common stock based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. The high and low bid prices for our common shares (obtained from www.otcbb.com) for each full financial quarter for the two most recent full fiscal years were as follows:

Holders of Common Stock

As of September 29, 2008, there were 16 registered shareholders of Molecular USA's common stock.

Dividends

Molecular USA has never declared nor paid any cash dividends on its capital stock and does not anticipate paying cash dividends in the foreseeable future. Molecular USA's current policy is to retain any earnings in order to finance the expansion of its operations. Molecular USA's board of directors will determine future declaration and payment of dividends, if any, in light of the then-current conditions they deem relevant and in accordance with the Nevada Revised Statutes .

Recent Sales of Unregistered Securities

Not Applicable

Item 6. Management Discussion and Analysis

THE FOLLOWING ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION OF THE COMPANY FOR THE YEAR ENDED JUNE 30, 2008, SHOULD BE READ IN CONJUNCTION WITH THE COMPANY 'S CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO CONTAINED ELSEWHERE IN THE FORM 10-KSB

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Our 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 1, 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 is a wholly owned subsidiary company of PharmaNet, an Australian company listed on the Australian Stock Exchange. Under the terms of the distribution and supply agreement, Molecular USA has 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).

Molecular USA entered into a share purchase agreement dated November 25, 2005, to acquire all of the shares of MPLA from PharmaNet (the " Purchase Agreement ").   The transaction between the parties closed in escrow with an effective closing date of May 8, 2006.  Molecular USA, in exchange for 100% of the issued and outstanding shares of MPLA, issued PharmaNet an aggregate total of 88,000,000 shares of its common stock of Molecular USA on closing of the transaction. PharmaNet now holds approximately 79% of Molecular USA's issued and outstanding common shares.  The business of MPLA is now the business of Molecular USA.

On March 29, 2007, we changed our year end from October 31 ^st of each calendar year to June 30 ^th of each calendar year.  This action was taken to harmonize our year end with PharmaNet which holds 79% of issued and outstanding shares.

2008 Activities and Developments  

For the year ended June 30, 2008, our net income was $62,296 ($0.001 per share). The earnings per share was based on a weighted average of 111,553,740 common shares outstanding. For the eight month period ended June 30, 2007, our net loss was $377,131 ($0.003 per share) based on a weighted average of 131,553,740 common shares outstanding.  For the year ended October 31, 2006, our net loss was $509,018 ($0.005 per share) based on a weighted average of 99,357,420 common shares outstanding. For the period from inception on July 14, 2004 to June 30, 2008 Molecular USA has an accumulated net loss of $1,339,250.  Molecular has working capital of $4,620 at June 30, 2008 (June 30, 2007 - working capital deficit of $23,913).  As a result our auditors have qualified their opinion as having substantial doubt about our ability to continue as a going concern unless we are able to generate sufficient cash flows to meet our obligations and sustain our operations. 

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 new majority shareholder PharmaNet and, if available on satisfactory terms, debt financing.

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.

Results of Operation

For the year ended June 30, 2008, eight month period ended June 30, 2007 and the period from July 14, 2004 (inception) to June 30, 2008 :

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REVENUES

REVENUE - Molecular USA has net income of $62,296 for the year ended June 30, 2008 (eight month period ended  June 30, 2007 - loss of $377,131; year ended October 31, 2006 - loss $509,018) and a loss of $1,339,250 for the period from inception to June 30, 2008 . To date, we have generated limited revenues from our business operations.

LOANS - As of June 30, 2008, PharmaNet has loaned Molecular USA a total of $1,411,131 for working capital (eight month period ended June 30, 2007 - $1,138,943; year ended October 31, 2006 - $725,817). The advance does not carry an interest rate, is unsecured and has no fixed terms of repayment.  

COMMON STOCK - Net cash provided by financing activities during the year ended June 30, 2008 was $0.00 (eight month period ended June 30, 2007 - $0.00; year ended October 31, 2006 - $0.00).

EXPENSES

SUMMARY - Total expenses were $198,311 for the year ended June 30, 2008.  Expenses have decreased in the year ended June 30, 2008 by $178,820 from $377,131 in the previous eight month period ended June 30, 2007 .  A total of $1,600,615 in expenses has been incurred by Molecular USA since inception on July 14, 2004 through to June 30, 2008.  The decrease in costs over the past year has occurred as the result of Molecular USA's wholly owned subsidiary reducing its involvement in research projects resulting in a decrease in consulting fees and expenses.  The costs can be subdivided into the following categories.

1. Office Expenses : $33,079  in office expenses (includes rent and administrative costs) were incurred for the year ended June 30, 2008 as compared to $43,120 for the eight month period ended June 30, 2008 and $37,329 for the year ended October 31, 2006, while a total of $151,412 was incurred in the period from inception on July 14, 2004 to June 30, 200 8. All contributed expenses are reported as contributed costs with a corresponding credit to additional paid-in capital.
2. Consulting and Analysis Costs : Molecular USA relies on consultants and other third parties to conduct the majority of its research.  For the year ended June 30, 2008, $88,322 in consulting and analysis expenses were incurred as compared to $227,844 for the eight month period ended June 30, 2007 and $361,696 for the year ended October 31, 2006.   We have incurred a total of $1,059,693 in the period from inception on July 14, 2004 to June 30, 2008 .
3. Advertising, Public Relations and Promotion Fees : Molecular USA has spent a nominal amount in this area.  During the year ended June 30, 2008 and eight month period ended June 30, 2007 we spent $0.00 on advertising and public relations while for the year ended October 31, 2006 we spent $3,381 in this area. We have incurred a total of $27,739 in the period from inception on July 14, 2004 to June 30, 2008.
4. Professional Fees : Molecular USA incurred $64,236 in professional fees for the year ended on June 30, 2008 as compared to $55,989 for the eight month period ended June 30, 2007 and $51,457 for the year ended October 31, 2006. From inception to June 30, 2008 , we have incurred a total of $171,682 in professional fees mainly spent on legal and accounting matters.
5. Travel Costs : Molecular USA incurred $8,968 in travel costs for the year ended on June 30, 2008 as compared to $31,615 for the eight month period ended June 30, 2007 and $45,204 for the year ended October 31, 2006 .  This decrease can largely be attributed to our attendance at a limited number of pharmacology trade shows and restricting the expense of visiting various research facilities.
6. Salaries and Benefit Costs : Molecular USA and its subsidiary relies primarily on outside consultants and not salaried employees.  As a result, Molecular USA incurred $0.00 in salaries and benefits for the year ended June 30, 2008 and $16,008 was incurred for the eight month period ended June 30, 2007 and $2,652 for the year ended October 31, 2006 . For the period July 14, 2004 (inception) through June 30, 2008 , 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 June 30, 2008.  There are no current or deferred tax expenses for the year ended June 30, 2008, due to our loss position.  We have

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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. 

Off-Balance Sheet Arrangement

As of June 30, 2008, we have had no off-balance sheet arrangements.

Research and Development

Since the acquisition of MPLA, Molecular USA has adopted 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. 

On April 19, 2006, Molecular USA, announced the filing of a new patent, Tissue Disruption Treatment and Composition for Use (US Patent number 11218382).  The patent describes a proprietary process for the manufacture of topical biological secondary injury mediators (B-SIMs) that should have local, rather than systemic, effects and may be significantly less expensive to manufacture than conventional B-SIMs.  MPLA is developing its B-SIMs to stop the tissue disruption that occurs after injury by suppressing the body's reactions, such as inflammation and damage/death of otherwise uninjured cells that are triggered in response to primary injury.

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 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 year ended June 30, 2008 amounted to $0.00 ($0.00 for the eight month period ended June 30, 2007 and $0.00 for the year ended October 31, 2006). Molecular USA does not anticipate any significant purchase or sale of equipment over the next 12 months.

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Strategic Acquisitions

On November 25, 2005, Molecular USA entered into a share purchase agreement dated November 25, 2005 with PharmaNet to acquire 100% of the issued and outstanding shares of MPLA.  Molecular USA issued a total of 88,000,000 shares of its common stock to PharmaNet the parent company of MPLA.  Accordingly, PharmaNet controls approximately 79% of Molecular USA's issued and outstanding shares of common stock.

Recent Accounting Pronouncements

In May 2008, the Financial Accounting Standards Board (the "FASB") issued Statements of Financial Accounting Standards ("SFAS") No. 163, Accounting for Financial Guarantee Insurance Contracts - an interpretation of FASB Statement No. 60 ("SFAS No. 163").  SFAS No. 163 provides enhanced guidance on the recognition and measurement to be used to account for premium revenue and claim liabilities and related disclosures and is limited to financial guarantee insurance (and reinsurance) contracts, issued by enterprises included within the scope of FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises.  SFAS No. 163 also requires that an insurance enterprise recognize a claim liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured financial obligation.  SFAS No. 163 is effective for financial statements issued for fiscal years and interim periods beginning after 15 December 2008, with early application not permitted.  Molecular USA does not expect SFAS No. 163 to have an impact on its consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles ("SFAS No. 162").  SFAS No. 162 is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. Generally Accepted Accounting Principles ("GAAP") for nongovernmental entities.  Prior to the issuance of SFAS No. 162, GAAP hierarchy was defined in the American Institute of Certified Public Accountants ("AICPA") Statement on Auditing Standards No. 69, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles ("SAS No. 69").  SAS No. 69 has been criticized because it is directed to the auditor rather than the entity.  SFAS No. 162 addresses these issues by establishing that the GAAP hierarchy should be directed to entities because it is the entity, not its auditor, that is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP.  SFAS No. 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles.  Molecular USA does not expect SFAS No. 162 to have a material effect on its consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133 ("SFAS No. 161").  SFAS No. 161 is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entity's derivative instruments and hedging activities and their effects on the entity's financial position, financial performance, and cash flows.  SFAS No. 161 applies to all derivate instruments within the scope of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS No. 133").  It also applies to non-derivative hedging instruments and all hedged items designated and qualifying as hedges under SFAS No. 133.  SFAS No. 161 is effective prospectively for financial statements issued for fiscal years beginning after 15 November 2008, with early application encouraged.  Molecular USA is currently evaluating the new disclosure requirements of SFAS No. 161 and the potential impact on Molecular USA's consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations ("SFAS No. 141(R)"). SFAS No. 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS No. 141(R) also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS No. 141(R) is effective for fiscal

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years beginning after 15 December 2008.  Molecular USA is currently evaluating the potential impact, if any, of the adoption of SFAS No. 141(R) on its consolidated results of operation and financial condition.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements - an amendment of Accounting Research Bulletin No. 51 ("SFAS No. 160").  SFAS No. 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable and to the noncontrolling interest, changes in a parent's ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated.  SFAS No. 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners.  SFAS No. 160 is effective for fiscal years beginning after 15 December 2008.  Molecular USA is currently evaluating the potential impact, if any, of the adoption of SFAS No. 160 on its consolidated results of operation and financial condition.  

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS No. 159").  SFAS 159 allows a company to choose to measure many financial assets and financial liabilities at fair value.  Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings.  SFAS 159 is effective for fiscal years beginning after November 15, 2007.  Molecular USA is currently evaluating the requirements of SFAS No. 159 and the potential impact on Molecular USA's consolidated financial statements.

In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106 and 132(R)" ("SFAS 158"). SFAS 158 requires an employer that sponsors one or more single-employer defined benefit plans to (a) recognize the overfunded or underfunded status of a benefit plan in its statement of financial position, (b) recognize as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost pursuant to SFAS 87, "Employers' Accounting for Pensions", or SFAS 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions", (c) measure defined benefit plan assets and obligations as of the date of the employer's fiscal year-end, and (d) disclose in the notes to financial statements additional information about certain effects on net periodic benefit cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset or obligation. SFAS 158 is effective for Molecular USA's fiscal year ending  June 30, 2008.  The adoption of SFAS No. 158 is not expected to have a material impact on Molecular USA's financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurement" ("SFAS No. 157"). The Statement provides guidance for using fair value to measure assets and liabilities. The Statement also expands disclosures about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurement on earnings. This Statement applies under other accounting pronouncements that require or permit fair value measurements. This Statement does not expand the use of fair value measurements in any new circumstances. Under this Statement, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the entity transacts. SFAS No. 157 is effective for Molecular USA for fair value measurements and disclosures made by Molecular USA in its fiscal year beginning on July 1, 2008. Molecular USA is currently reviewing the impact of this statement.

Critical Accounting Policies and Estimates

Our audited 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 consolidated financial statements is critical to an understanding of our financials.

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Stock-based compensation

On February 1, 2006, we adopted the provisions of SFAS No. 123(R), " Share-Based Payment ", which establishes accounting for equity instruments exchanged for employee services.  Under the provisions of SFAS No. 123(R), 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).  Before February 1, 2006, we accounted for stock-based compensation to employees in accordance with Accounting Principles Board Opinion No. 25, " Accounting for Stock Issued to Employees ", and complied with the disclosure requirements of SFAS No. 123, " Accounting for Stock-Based Compensation ".  We adopted SFAS No. 123(R) 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, financial statements for the periods prior to February 1, 2006 have not been restated to reflect the fair value method of expensing share-based compensation.  Adoption of SFAS No. 123(R) does not change the way we account for share-based payments to non-employees, with guidance provided by SFAS No. 123 (as originally issued) and Emerging Issues Task Force Issue No. 96-18, " Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services ".

Item 7. Financial Statements

Auditors' Report dated August 20, 2008

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statement of Changes in Stockholders' Deficiency

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

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Molecular Pharmacology (USA) Limited
(A Development Stage Company)
 

Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2008

Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Consolidated Balance Sheets
(Expressed in U.S. Dollars)

Nature and Continuance of Operations (Note 1) and Commitments (Note 9)

/s/ Jeffrey Edwards

_____________________________________ Director
Jeffrey Edwards

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

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Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Consolidated Statements of Operations
(Expressed in U.S. Dollars)

Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)

Supplemental Disclosures with Respect to Cash Flows (Note 10)

Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Consolidated Statements of Changes in Stockholders' Deficiency
(Expressed in U.S. Dollars)

Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2008

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 Statements of Financial Accounting Standards ("SFAS") No. 7, " Accounting and Reporting by Development Stage Enterprises ". 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 Limited ("MPLA"). MPLA is incorporated under the laws of Australia and 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 and supply 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 9).

   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 shares of its 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 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.

The Company's consolidated financial statements as at 30 June 2008 and for the year 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 net income of $62,296 for the year ended 30 June 2008 (eight month period ended 30 June 2007 - loss of $377,131, year ended 31 October 2006 - loss of $508,260) and has working capital of $4,620 at 30 June 2008 (30 June 2007 - working capital deficit of $23,913).

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 2009. 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 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 June 2008, 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 consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Cash and cash equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

Financial instruments

The carrying value of cash and cash equivalents, amounts receivable, accounts payable and accrued liabilities and due to related parties approximates their fair value because of the short maturity of these instruments. The Company's operations are in Australia and virtually all of its assets and liabilities give rise to significant exposure to market risks from changes in foreign currency rates. The Company's financial risk is the risk that arises from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.

Foreign currency translation

The consolidated financial statements of the Company are translated to U.S. dollars in accordance with SFAS No. 52, " Foreign Currency Translation ". 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 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 consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Property, plant and equipment

Property, plant and equipment are recorded at cost and depreciation is provided over their estimated economic lives at the following rates:

Office equipment

15% declining balance

 

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 SFAS No. 109, " Accounting for 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.

Recent accounting pronouncements

In May 2008, the Financial Accounting Standards Board (the "FASB") issued SFAS No. 163, " Accounting for Financial Guarantee Insurance Contracts - an interpretation of FASB Statement No. 60 ) ("SFAS No. 163"). SFAS No. 163 provides enhanced guidance on the recognition and measurement to be used to account for premium revenue and claim liabilities and related disclosures and is limited to financial guarantee insurance (and reinsurance) contracts, issued by enterprises included within the scope of FASB Statement No. 60, " Accounting and Reporting by Insurance Enterprises." SFAS No. 163 also requires that an insurance enterprise recognize a claim liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured financial obligation. SFAS No. 163 is effective for financial statements issued for fiscal years and interim periods beginning after 15 December 2008, with early application not permitted. The Company does not expect SFAS No. 163 to have an impact on its consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162, " The Hierarchy of Generally Accepted Accounting Principles " ("SFAS No. 162"). SFAS No. 162 is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. GAAP for nongovernmental entities. Prior to the issuance of SFAS No. 162, U.S. GAAP hierarchy was defined in the American Institute of Certified Public Accountants ("AICPA") Statement on Auditing Standards No. 69, " The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles " ("SAS No. 69"). SAS No. 69 has been criticized because it is directed to the auditor rather than the entity. SFAS No. 162 addresses these issues by establishing that the U.S. GAAP hierarchy should be directed to entities because it is the entity, not its auditor, that is responsible for selecting accounting principles for financial statements that are presented in conformity with U.S. GAAP. SFAS No. 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The Company does not expect SFAS No. 162 to have a material effect on its consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, " Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133 " ("SFAS No. 161"). SFAS No. 161 is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entity's derivative instruments and hedging activities and their effects on the entity's financial position, financial performance, and cash flows. SFAS No. 161 applies to all derivate instruments within the scope of SFAS No. 133, " Accounting for Derivative Instruments and Hedging Activities " ("SFAS No. 133"). It also applies to non-derivative hedging instruments and all hedged items designated and qualifying as hedges under SFAS No. 133. SFAS No. 161 is effective prospectively for financial statements issued for fiscal years beginning after 15 November 2008, with early application encouraged. The Company is currently evaluating the new disclosure requirements of SFAS No. 161 and the potential impact on the Company's consolidated financial statements.

3. Cash and Cash Equivalents

   The Company's cash and cash equivalents does not include $140,000 held in trust for PharmaNet.
    

4. Property, Plant and Equipment

   			Accumulated  depreciation			Net Book Value
   		Cost				As at 30 June 2008		As at 30 June 2007
   		$		$		$		$
   Office equipment		7,726		4,014		3,712		5,169

   During the year ended 30 June 2008 the total additions to property, plant and equipment were $Nil (eight month period ended 30 June 2007 - $900).
    

5. Accounts Payable and Accrued Liabilities

   Accounts payable and accrued liabilities are non-interest bearing, unsecured and have settlement dates within one year.

6. Due to Related Parties and Related Party Transactions

   As at 30 June 2008, the amount due to related parties includes $1,000 payable to a director of the Company (30 June 2007 - $1,000). This balance is non-interest bearing, unsecured and has no fixed terms of repayment.

   As at 30 June 2008, the amount due to related parties includes $10,751 payable to a company owned by a director of the Company or an officer of PharmaNet (30 June 2007 - $152,953). This balance is non-interest bearing, unsecured and has no fixed terms of repayment.

   As at 30 June 2008, the amount due to related parties includes $1,277 payable to a company owned by a director of the Company or an officer of PharmaNet (30 June 2007 - $Nil). This balance is non-interest bearing, unsecured and has no fixed terms of repayment.

The average amount due to PharmaNet for the year ended 30 June 2008 was $1,285,705 (eight month period ended 30 June 2007 - $895,415, year ended 31 October 2006 - $498,650).

7. Capital Stock

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 year ended 30 June 2008		For the eight  month period  ended 30 June  2007		For the year ended 31 October 2006
   		$		$		$
   Earnings (loss) before income taxes		62,296		(377,131)		(508,260)
   Federal income tax rates		34.0%		34.0%		34.0%
   Income tax recovery based on the above rates		21,180		(128,224)		(172,808)
   Increase (decrease) due to:
   Non-deductible expenses		364		-		-
   Difference between US and foreign tax rates		(5,553)		10,579		16,208
   Change in valuation allowance		50,918		122,389		156,600
   Research and development tax refund not subject to tax		(58,761)		-		-
   Foreign exchange and other		(8,148)		(4,744)		-
   Income tax expense (recovery)		-		-		-

The composition of the Company's deferred tax assets as at 30 June 2008 and 2007 are as follows:

		As at 30 June 2008		As at 30 June 2007
		$		$
Net income tax operating loss carryforward		1,541,549		1,401,546
Deferred tax assets		484,754		433,836
Less: Valuation allowance		(484,754)		(433,836)
Net deferred tax asset		-		-

The Company has non-capital loss carry-forwards of approximately $1,541,549 that may be available for tax purposes. The loss carry-forwards are all in respect of US and Australian operations and expire as follows:

9. Commitments

10. Supplemental Disclosures with Respect to Cash Flows
     

    	For the period from the date of  inception on 14 July 2004 to 30 June 2008 (Unaudited)		For the year ended 30 June 2008		For the eight month period ended 30 June 2007		For the year ended 31 October 2006
    	$		$		$		$
    Cash paid during the year for interest	-		-		-		-
    Cash paid during the year for income taxes	-		-		-		-
    Common shares issued on acquisition of MPLA	16,236		-		-		16,236
    Amounts receivable acquired on recapitalization of the Company	2,226		-		-		2,226
    Accounts payable assumed on recapitalization of the Company	54,624		-		-		54,624
    Due to related party assumed on recapitalization of the Company	1,000		-		-		1,000

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Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2008

11. Segmented Information

    Details on a geographic basis as at 30 June 2008 are as follows:

    		Australia		U.S.A.		Total
    		$		$		$
    Assets		318,283		(283,685)		34,598
    Income (loss) for the year		138,829		(76,533)		62,296

    Details on a geographic basis as at 30 June 2007 are as follows:

    		Australia		U.S.A.		Total
    		$		$		$
    Assets		44,526		2,939		47,465
    Loss for the period		(264,483)		(112,648)		(377,131)

    Details on a geographic basis as at 31 October 2006 are as follows:

    		Australia		U.S.A.		Total
    		$		$		$
    Assets		27,458		9,967		37,425
    Loss for the year		(405,195)		(103,065)		(508,260)

12. Comparative Figures

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

Molecular USA had no disagreements on accounting or financial disclosure matters with its independent accountants to report under this Item 8.

Item 8A.  Controls and Procedures

Our management carried out an evaluation (with the participation of our CEO and CFO), of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, the Company's CEO and CFO have concluded that the Company's disclosure controls and procedures were not effective as of October 31, 2008, due to management's failure to include its report on internal control over financial reporting in the Form 10-KSB as required by Item 308T(a)(3) of Regulation S-B.  This matter has now been corrected and added to our financial filing checklist.

(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:

 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 June 30, 2008.

Attestation report of the registered public accounting firm

This annual 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 annual 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 June 30, 2008, Jeff Edwards, our President and Chief Executive Officer, and Simon Watson, our Chief Financial Officer have concluded that there were no significant changes in our internal controls over financial 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.

Item 8A(T) - Controls and Procedures

See Item 8A - Controls and Procedures above.

Item 8B. Other Information

None

PART III

Item 9. Directors and Executive Officers of the Registrant

Identification of Directors and Executive Officers

The following table sets forth the names of all directors and executive officers of the Molecular USA as of September 29, 2008 and June 30, 2008. These persons will serve until the next annual meeting of the stockholders or until their successors are elected or appointed and qualified, or their prior resignation or termination.

Mr. Jeffrey D. Edwards .  Mr. Edwards has over twenty years of experience in managing new technological innovations in the medical device and pharmaceutical industry.  From 2002 to 2005, Mr. Edwards as president and shareholder of International Scientific Pty Ltd., managed a variety of medical and technology projects.  In 2002 and 2003, Mr. Edwards was actively involved with Colltech Australia Limited, a company involved in the production and sale of collagen.  Colltech is listed on the Australian Stock Exchange ("CAU").  From its inception in 1995 to 2001, Mr. Edwards was the executive director of Genesis Biomedical Limited, a pharmaceuticals & biotechnology listed on the Australian Stock Exchange ("GBL"). While at Genesis, Mr. Edwards was responsible for all medical and clinical activities of the company as well as all day to day management of staff and corporate activities.  Mr. Edwards currently serves as a director of: OBJ Limited, a drug delivery company listed on the Australian Stock Exchange ("OBJ") (2005) and Global Energy Medicine Pty Ltd., a private therapeutic device company (2005).  He also holds the office of Chief Operations Officer of Molecular Pharmacology Limited, a wholly owned subsidiary of Molecular USA.

Mr. Simon Watson .  Mr. Watson has been in private practice as a barrister and solicitor in Australia since 1971, specializing in the field of commercial law. He is a director of PharmaNet Group Limited which is listed on the Australian Stock Exchange ("PNO") (2005), a position he has held since 15 January 1987.  Mr. Watson has an LLB, B.Ec. from the University of Western Australia.

Family relationships

There is no family relationship among the above officers and directors.

Significant Employees

We have no employees who are not executive officers, but who are expected to make a significant contribution to the Company's business.

Involvement in Certain Legal Proceedings

During the past five years, none of our directors, or persons nominated to become a director, or executive officer, promoter or control person:

• was a general partner or executive officer of any business against which any bankruptcy petition was filed, either at the time of the bankruptcy or two years prior to that time;

• was convicted in a criminal proceeding or named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

• was subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

• as found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have

36

e.                    violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

Audit Committee Financial Expert

We do not have a member on our Board of Directors that has been designated as an audit committee "financial expert."  We do not believe that the addition of such an expert would add anything meaningful to the Company at this time.  It is also unlikely we would be able to attract an independent financial expert to serve on our Board of Directors at this stage of our development.  In order to entice such a director to join our Board of Directors we would probably need to acquire directors' errors and omission liability insurance and provide some form of meaningful compensation to such a director; two things we are unable to afford at this time.

Under the applicable SEC standards, an audit committee financial expert means a person who has the following attributes:

• understanding of generally accepted accounting principles and financial statements;
• ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves;
• experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the registrant's financial statements, or experience actively supervising one or more persons engaged in such activities;
• understanding of internal controls and procedures for financial reporting; and
• understanding of audit committee functions.

Audit Committee  

Molecular USA has a designated audit committee consisting of Messrs. Edwards and Watson.  Neither of these individuals meet the independent requirements for an audit committee member.  Molecular USA's audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee.  Molecular USA has adopted an audit committee charter.

Disclosure Committee and Charter

Molecular USA has a disclosure committee and disclosure committee charter.  Molecular USA's disclosure committee is comprised of all of its officers and directors.  The purpose of the committee is to provide assistance to the chief executive officer and the chief financial officer in fulfilling their responsibilities regarding the identification and disclosure of material information about Molecular USA and the accuracy, completeness and timeliness of Molecular USA's financial reports.

37

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that our executive officers and directors and persons who own more than 10% of a registered class of our equity securities file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file.

To the best of our knowledge, during the fiscal year ended June 30, 2008, all executive officers, directors and greater than 10% shareholders filed the required reports in a timely manner, except for the late filing of the Form 3 filings for Messrs. Ian Downs and Jeffery Edwards.

Code of Ethics

Molecular USA has adopted a code of ethics that applies to all its executive officers and employees, including its CEO and CFO.  A copy of Molecular USA's adopted code of ethics is attached to this annual report.  Molecular USA undertakes to provide any person with a copy of its code of ethics free of charge. Please contact Molecular USA at 011-61-8-9443-3011 to request a copy of Molecular USA's code of ethics. Management believes Molecular USA's code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code.

CONTINUED ON NEXT PAGE

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Item 10. Executive Compensation                                         

Summary of Compensation of Executive Officers

The following table summarizes the compensation paid to our President and Chief Executive Officer during the last three complete fiscal years.  No other officer or director received annual compensation in excess of $100,000 during the last three complete fiscal years.

As of the date of this annual report, we have no compensatory plan or arrangement with respect to any officer that results or will result in the payment of compensation in any form from the resignation, retirement or any other termination of employment of such officer's employment with

39

our company, from a change in control of our company or a change in such officer's responsibilities following a change in control.

Board of Directors Report on Executive Compensation

The Board of Directors of Molecular USA is responsible for reviewing and determining the annual salary and other compensation of the executive officers and key employees of Molecular USA. The goals of Molecular USA are to align compensation with business objectives and performance and to enable Molecular USA to attract, retain and reward executive officers and other key employees who contribute to the long-term success of Molecular USA. Molecular USA will provide base salaries to its executive officers and key employees sufficient to provide motivation to achieve certain operating goals. Although salaries are not specifically tied to performance, incentive bonuses are available to certain executive officers and key employees. In the future, executive compensation may include without limitation cash bonuses, stock option grants and stock reward grants. In addition, Molecular USA may set up a pension plan or similar retirement plans.

Molecular USA has no pension, health, annuity, insurance, profit sharing or similar benefit plans.   

Stock Options/SAR Grants

During the fiscal period ended June 30, 2008 and June 30, 2007, we did not grant any stock options or stock appreciation rights to any of our directors or officers. There were no stock options exercised during the fiscal period ended June 30, 2008 or June 30, 2007, and there were no stock options or stock appreciation rights outstanding on June 30, 2008 or June 30, 2007.

Long-Term Incentive Plans/ Equity Compensation Plan

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers, except that our directors and executive officers may receive stock options at the discretion of our board of directors.  We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of directors.

We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.

Compensation of Directors

No cash compensation was paid to any of our directors for the director's services as a director during the twelve month period ended June 30, 2008 or since our inception.  We have no standard arrangement pursuant to which our directors are compensated for their services in their capacity as directors except for the granting from time to time of incentive stock options.  The board of directors may award special remuneration to any director undertaking any special services on behalf of our company other than services ordinarily required of a director.  Other than indicated below, no director received and/or accrued any compensation for his services as a director, including committee participation and/or special assignments.

40

Stock Option Plans

Molecular USA has not adopted a stock option plan or long-term incentive plans at this time.

Item 11. Security Ownership of Certain Beneficial Owners and Management

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as at September 29, 2008, certain information with respect to the beneficial ownership of our common stock by each shareholder known by us to be the beneficial owner of more than five percent (5%) of our common stock, and by each of our current directors and executive officers. 

Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated.  Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.