OMB
APPROVAL
|
OMB Number: 3235-0070
|
Expires:
July 31,
2011
|
Estimated average burden
hours per response:...............………187.5
|
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark One)
|
|
X
|
|
QUARTERLY REPORT UNDER SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
For the quarter
period ended
September 30, 2009
|
|
|
|
TRANSITION REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period
from___________ to __________
|
|
Commission file number
000-52331
|
MOLECULAR
PHARMACOLOGY (USA) LIMITED
|
(Exact name of registrant
as specified in its charter)
|
NEVADA
|
|
71-0900799
|
(State or other
jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
Drug Discovery Centre
284 Oxford Street, Leederville 6007 Perth, Western Australia
|
(Address of principal
executive offices)
|
011-61-8-9443-3011
|
(Registrant's
telephone number including area code)
|
Not Applicable
|
(Former name, former
address and formal fiscal year, if changed since last report)
|
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
|
Yes
x
|
No
o
|
|
Indicate by check mark whether the registrant is
large accelerated filer, an accelerated filer, a non accelerated filer, or a
small reporting company. See the definitions of "large accelerated
filer" and "smaller reporting company" in Rule 12b-2 of the
Exchange Act (Check one):
|
Large Accelerated Filer
o
|
Accelerated Filer
|
Non-Accelerated Filer
o
|
Smaller Reporting Company
x
|
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act)
|
Yes
o
|
No
x
|
Indicate by check mark whether the registrant has
filed all documents and reports required to be filed by Section 12, 13 and
15(d) of the Securities Exchange Act of 1934 subsequent to the distribution
of securities under a plan confirmed by a court
|
|
Yes
x
|
No
o
|
State the number of
shares outstanding of each of the issuer's classes of common equity, as
of the latest practicable date.
|
111,553,740
common shares issued and outstanding as of October 30, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
i
MOLECULAR
PHARMACOLOGY (USA) LIMITED
Form 10-Q
September 30, 2009
Table of Contents
PART I -
FINANCIAL INFORMATION
|
|
Item 1.
|
Financial Statements
|
1
|
Item 2.
|
Management Discussion and Analysis of Financial Condition and Results
of Operation
|
19
|
Item 3.
|
Quantitative and Quantitative Disclosures About Market Risk
|
29
|
Item 4.
|
Controls and Procedures
|
29
|
|
|
|
PART II - OTHER INFORMATION
|
|
|
|
|
Item 1.
|
Legal Proceedings
|
30
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
30
|
Item 3.
|
Defaults Upon Senior Securities
|
30
|
Item 4.
|
Submission of Matters to a Vote of Security Holders
|
30
|
Item 5.
|
Other Information
|
30
|
Item 6.
|
Exhibits and Reports on Form 10-Q
|
31
|
|
|
|
SIGNATURES
|
31
|
ii
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
The
information in this report for the three months ended September 30, 2009, is
unaudited but includes all adjustments (consisting only of normal recurring
accruals, unless otherwise indicated) which Molecular Pharmacology (USA)
Limited ("
Molecular USA
" or the "
Company
") considers necessary for a fair presentation
of the financial position, results of operations, changes in stockholders'
equity and cash flows for those periods.
The
financial statements should be read in conjunction with Molecular USA's
financial statements and the notes thereto contained in Molecular USA's Audited
Financial Statements for the year ended June 30, 2009, in the Form 10K filed
with the SEC on October 2, 2009.
Interim
results are not necessarily indicative of results for the full fiscal year.
The
unaudited financial statements start on the next page.
1
Molecular Pharmacology (USA)
Limited
(A Development Stage Company)
Interim Consolidated
Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30 September 2009
2
Molecular Pharmacology (
USA
) Limited
(A Development Stage
Company)
Interim Consolidated Balance Sheets
(Expressed in U.S. Dollars)
(Unaudited)
|
|
As at
30
September
2009
|
|
As at
30 June
2009
(Audited)
|
|
|
$
|
|
$
|
Assets
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
Cash and cash equivalents
|
|
10,766
|
|
7,543
|
Amounts receivable
|
|
5,264
|
|
2,917
|
|
|
|
|
|
|
|
16,030
|
|
10,460
|
|
|
|
|
|
Equipment
(Note 3)
|
|
2,744
|
|
2,920
|
|
|
|
|
|
|
|
18,774
|
|
13,380
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
Accounts payable and accrued liabilities (Note 4)
|
|
28,402
|
|
30,829
|
|
|
|
|
|
Due to related parties
(Note 5)
|
|
1,424,678
|
|
1,273,680
|
|
|
|
|
|
|
|
1,453,080
|
|
1,304,509
|
|
|
|
|
|
Stockholders' deficiency
|
|
|
|
|
Capital stock
(Note 6)
|
|
|
|
|
Authorized
|
|
|
|
|
300,000,000 of common shares, par value $0.001
|
|
|
|
|
Issued and outstanding
|
|
|
|
|
30 September 2009 - 111,553,740 common shares, par value $0.001
|
|
|
|
|
30 June 2009 -
111,553,740 common shares, par value $0.001
|
|
111,554
|
|
111,554
|
Additional paid-in capital
|
|
106,707
|
|
106,707
|
Cumulative translation adjustment
|
|
(184,514)
|
|
(75,804)
|
Deficit, accumulated during the development
stage
|
|
(1,468,053)
|
|
(1,433,586)
|
|
|
|
|
|
|
|
(1,434,306)
|
|
(1,291,129)
|
|
|
|
|
|
|
|
18,774
|
|
13,380
|
Nature and Continuance of Operations
(Note 1),
Commitment
(Note 8),
Contingency
(Note 11) and
Subsequent
Event
(Note 12)
On behalf of the Board:
/s/ Jeffery Edwards
Director
Jeffrey Edwards
The accompanying notes are an integral part of these interim consolidated
financial statements
3
Molecular Pharmacology (USA)
Limited
(A Development Stage
Company)
Interim Consolidated Statements of Operations
(Expressed in U.S. Dollars)
(Unaudited)
|
|
|
For the
period from
the date of
inception on
14 July 2004
to
30 September
2009
|
For the
three month
period
ended
30 September
2009
|
For the
three month
period
ended
30 September
2008
|
|
|
|
|
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
Advertising and promotion
|
|
|
|
|
|
23,739
|
|
-
|
|
-
|
Amortization (Note
3)
|
|
|
|
|
|
5,106
|
|
176
|
|
268
|
Analysis
|
|
|
|
|
|
33,947
|
|
-
|
|
-
|
Consulting (Note
5)
|
|
|
|
|
|
1,110,261
|
|
15,354
|
|
8,332
|
Office and
miscellaneous (Note 5)
|
|
|
|
|
|
156,454
|
|
10,443
|
|
9,270
|
Professional fees
|
|
|
|
|
|
231,502
|
|
7,434
|
|
8,572
|
Public relations
|
|
|
|
|
|
3,656
|
|
-
|
|
-
|
Rent (Note 5)
|
|
|
|
|
|
27,759
|
|
-
|
|
-
|
Salaries and
benefits
|
|
|
|
|
|
44,464
|
|
-
|
|
-
|
Transfer agent and
filing fees
|
|
|
|
|
|
11,887
|
|
1,060
|
|
104
|
Travel
|
|
|
|
|
|
104,249
|
|
-
|
|
2,006
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss before other items
|
|
|
|
|
|
(1,753,024)
|
|
(34,467)
|
|
(28,552)
|
|
|
|
|
|
|
|
|
|
|
|
Other
items
|
|
|
|
|
|
|
|
|
|
|
Export market development grants
|
|
|
|
|
|
69,629
|
|
-
|
|
-
|
Interest income
|
|
|
|
|
|
2,322
|
|
-
|
|
-
|
Research and development tax refund
|
|
|
|
|
|
213,020
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period
|
|
|
|
|
|
(1,468,053)
|
|
(34,467)
|
|
(28,552)
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per common share
|
|
|
|
(0.013)
|
|
(0.001)
|
|
(0.001)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares used in per share calculations
|
|
|
|
|
|
111,553,740
|
|
111,553,740
|
|
111,553,740
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income (loss)
|
|
|
|
|
|
|
|
|
|
|
Net loss for the
period
|
|
|
|
|
|
(1,468,053)
|
|
(34,467)
|
|
(28,552)
|
Foreign currency
translation adjustment
|
|
|
|
|
|
(184,514)
|
|
(108,710)
|
|
205,739
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income (loss) for the period
|
|
|
|
(1,652,567)
|
|
(143,177)
|
|
177,187
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income (loss) per common share
|
|
|
|
(0.015)
|
|
(0.001)
|
|
0.002
|
|
|
|
|
|
|
|
|
|
|
|
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
2009
|
For the
three
month
period
ended
30 September
2009
|
For the
three
month
period
ended
30
September
2008
|
|
|
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
Cash
flows used in operating activities
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
|
|
(1,468,053)
|
|
(34,467)
|
|
(28,552)
|
Adjustments
to reconcile loss to net cash used by operating activities
|
|
|
|
|
|
|
|
|
Amortization
(Note 3)
|
|
|
|
|
|
5,106
|
|
176
|
|
268
|
Write-down
of intangible assets
|
|
|
|
|
|
1,278
|
|
-
|
|
-
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
(Increase)
decrease in amounts receivable
|
|
|
|
(3,038)
|
|
(2,347)
|
|
6,737
|
Decrease in accounts payable and accrued liabilities
(Note 4)
|
|
|
(19,015)
|
|
(2,427)
|
|
(6,764)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,483,722)
|
|
(39,065)
|
|
(28,311)
|
|
|
|
|
|
|
|
|
|
Cash flows from (used in) investing activities
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment (Note 3)
|
|
|
|
(7,850)
|
|
-
|
|
(167)
|
Purchase of intangible assets
|
|
|
|
(1,278)
|
|
-
|
|
-
|
Cash acquired on the purchase of Molecular
Pharmacology
(USA) Limited
(Note 1)
|
|
|
|
37,163
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,035
|
|
-
|
|
(167)
|
|
|
|
|
|
|
|
|
|
Cash flows from (used in) financing activities
|
|
|
|
|
|
|
|
|
Common shares issued for cash (Note 6)
|
|
|
|
234,497
|
|
-
|
|
-
|
Increase (decrease) in due to related parties (Note
5)
|
|
|
|
1,416,470
|
|
150,998
|
|
(190,209)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,650,967
|
|
150,998
|
|
(190,209)
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
|
(184,514)
|
|
(108,710)
|
|
205,739
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
|
10,766
|
|
3,223
|
|
(12,948)
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
-
|
|
7,543
|
|
21,490
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
|
|
10,766
|
|
10,766
|
|
8,542
|
Supplemental
Disclosures with Respect to Cash Flows
(Note
9)
The accompanying notes are an integral part of these interim consolidated
financial statements
5
Molecular Pharmacology (USA)
Limited
(A Development Stage
Company)
Interim
Consolidated Statements of Changes in Stockholders' Deficiency
(Expressed in U.S. Dollars)
(Unaudited)
|
Number
of
common
shares
issued
|
Capital stock
|
Additional
paid-in
capital
|
Deficit,
accumulated
during the
development
stage
|
Cumulative
translation
adjustment
|
Stockholders'
deficiency
|
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
Balance at 14 July 2004 (inception)
|
|
294
|
|
-
|
|
1
|
|
-
|
|
-
|
|
1
|
Net loss for the
period
|
|
-
|
|
-
|
|
-
|
|
(128,488)
|
|
-
|
|
(128,488)
|
Cumulative
translation adjustment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(6,536)
|
|
(6,536)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 October 2004
|
|
294
|
|
-
|
|
1
|
|
(128,488)
|
|
(6,536)
|
|
(135,023)
|
Common shares
issued for cash - January 2005
|
|
87,999,706
|
|
88,000
|
|
146,496
|
|
-
|
|
-
|
|
234,496
|
Net loss for the
year
|
|
-
|
|
-
|
|
-
|
|
(387,667)
|
|
-
|
|
(387,667)
|
Cumulative
translation adjustment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(161)
|
|
(161)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 October 2005
|
|
88,000,000
|
|
88,000
|
|
146,497
|
|
(516,155)
|
|
(6,697)
|
|
(288,355)
|
Acquisition of Molecular
Pharmacology (USA)
Limited - Recapitalization May 2006
|
|
43,553,740
|
|
43,554
|
|
(59,790)
|
|
-
|
|
-
|
|
(16,236)
|
Cancellation of common
shares - July 2006
|
|
(20,000,000)
|
|
(20,000)
|
|
20,000
|
|
-
|
|
-
|
|
-
|
Net loss for the year
|
|
-
|
|
-
|
|
-
|
|
(508,260)
|
|
-
|
|
(508,260)
|
Cumulative translation adjustment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(16,222)
|
|
(16,222)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 October 2006
|
|
111,553,740
|
|
111,554
|
|
106,707
|
|
(1,024,415)
|
|
(22,919)
|
|
(829,073)
|
Net loss for the period
|
|
-
|
|
-
|
|
-
|
|
(377,131)
|
|
-
|
|
(377,131)
|
Cumulative translation
adjustment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(105,436)
|
|
(105,436)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2007
|
|
111,553,740
|
|
111,554
|
|
106,707
|
|
(1,401,546)
|
|
(128,355)
|
|
(1,311,640)
|
Net income for the year
|
|
-
|
|
-
|
|
-
|
|
62,296
|
|
-
|
|
62,296
|
Cumulative translation
adjustment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(166,483)
|
|
(166,483)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2008
|
|
111,553,740
|
|
111,554
|
|
106,707
|
|
(1,339,250)
|
|
(294,838)
|
|
(1,415,827)
|
Net loss for the
year
|
|
-
|
|
-
|
|
-
|
|
(94,336)
|
|
-
|
|
(94,336)
|
Cumulative
translation
adjustment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
219,034
|
|
219,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2009
|
|
111,553,740
|
|
111,554
|
|
106,707
|
|
(1,433,586)
|
|
(75,804)
|
|
(1,291,129)
|
Net
loss for the period
|
|
-
|
|
-
|
|
-
|
|
(34,467)
|
|
-
|
|
(34,467)
|
Cumulative
translation
adjustment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(108,710)
|
|
(108,710)
|
Balance at 30 September 2009
|
111,553,740
|
|
111,554
|
|
106,707
|
|
(1,468,053)
|
|
(184,514)
|
|
(1,434,306)
|
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 2009
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.
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 8).
Since signing the Distribution Agreement with MPLA, the Company has
engaged in organizational and start up activities, including developing a new
business plan, recruiting new directors, scientific advisors and key
scientists, making arrangements for laboratory facilities and office space and
raising additional capital. The
Company has generated no revenue from product sales. The Company does not have any
pharmaceutical products currently available for sale, and none are expected to
be commercially available for some time, if at all. The Licensed Products must first undergo
pre-clinical and human clinical testing in the United States before they may be
sold commercially.
The Company completed a share purchase agreement on 8 May 2006 with
PharmaNet. Under the terms of the
agreement the Company acquired 100% of the issued and outstanding shares of
MPLA (the "Purchase Agreement").
The Company, in exchange for 100%
of the issued and outstanding shares of MPLA, issued PharmaNet an aggregate
total of 88,000,000 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 interim consolidated
financial statements are the historical financial statements of MPLA.
7
Molecular Pharmacology
(USA) Limited
(A Development Stage
Company)
Notes
to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30 September
2009
On 15 March 2007, the Board of Directors approved a change in the
Company's financial year end from 31 October to 30 June. The decision to
change the fiscal year end was intended to assist the financial community in
its analysis of the business and in comparing the Company's financial
results to others in the industry, and to synchronize the Company's
fiscal reporting with MPLA.
The Company's interim consolidated
financial statements as at 30 September 2009 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 $34,467 for the three month period ended 30 September
2009 (three month period ended 30 September 2008 - net loss of $28,552)
and has a working capital deficit of $12,372 at 30 September 2009 (30 June 2009
- $20,369).
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 2010.
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 2009, 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 generally accepted accounting principles in the United States
of America ("U.S. GAAP") applicable for a developmental stage company
for financial information and are expressed in U.S. dollars.
Principle of consolidation
These interim consolidated financial statements include the accounts of
MPLA since its incorporation on 14 July 2004 and MPLA USA since the reverse
acquisition on 8 May 2006 (Note 1).
All intercompany balances and transactions have been eliminated.
8
Molecular Pharmacology
(USA) Limited
(A Development Stage
Company)
Notes
to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30
September 2009
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 interim 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 interim consolidated financial
statements, entered into derivative instruments to offset the impact of foreign
currency fluctuations.
Derivative financial instruments
The Company has not, to the date of these interim consolidated
financial statements, entered into derivative instruments to offset the impact
of foreign currency fluctuations.
Equipment
Equipment is recorded at cost and amortization is
provided over their estimated economic lives at the rate of 15% declining balance.
9
Molecular Pharmacology
(USA) Limited
(A Development Stage
Company)
Notes
to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30
September 2009
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.
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 loss
SFAS No. 130, "
Reporting
Comprehensive Income
",
establishes standards for the reporting and display of comprehensive loss and
its components in the financial statements. As at 30 September 2009, the Company has
items that represent a comprehensive loss and, therefore, has included a
schedule of comprehensive loss in the interim consolidated financial
statements.
Basic and diluted net loss per share
The Company computes net loss per share in accordance with SFAS
No. 128, "
Earnings per Share
". SFAS No. 128 requires presentation of
both basic and diluted earnings per share ("EPS") on the face of
the income statement. Basic EPS is
computed by dividing net loss available to common shareholders (numerator) by
the weighted average number of shares outstanding (denominator) during the
period. Diluted EPS gives effect to
all potentially dilutive common shares outstanding during the period using the
treasury stock method and convertible preferred stock using the if-converted
method. In computing diluted EPS,
the average stock price for the period is used in determining the number of
shares assumed to be purchased from the exercise of stock options or
warrants. Diluted EPS excludes all
potentially dilutive shares if their effect is anti-dilutive.
10
Molecular Pharmacology
(USA) Limited
(A Development Stage
Company)
Notes
to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30
September 2009
Stock-based compensation
Effective 1 January 2006, the Company 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 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 1 January 2006, the Company 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
". The
Company adopted FAS 123(R) 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, 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. Adoption of SFAS No. 123(R) does
not change the way the Company accounts for share-based payments to
non-employees, with guidance provided by SFAS 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
".
Recent accounting pronouncements
In June 2009, the FASB issued SFAS No. 167,
"Amendments to FASB Interpretation No. 46(R)"
. SFAS No. 167 is intended to establish
general standards of financial reporting for companies with variable interest
entities. It requires timely and
useful disclosure of information related to the Company's involvement with
variable interest entities. This disclosure should alert all users to the
effects on specific provisions of FASB Interpretation No. 46 (revised December
2003), "
Consolidation of Variable Interest Entities",
related to the
changes to the special-purpose entity proposal in FASB Statement No. 166, "
Accounting for Transfers of
Financial Assets",
and the treatment of specific provisions of
Interpretation 46(R). SFAS No. 167
is effective for financial statements issued for fiscal years and interim
periods beginning after 15 November 2009.
The Company has determined that the adoption of SFAS No. 167 will have
no impact will have on its interim consolidated financial statements.
In June 2009, the FASB issued SFAS No. 166,
"Accounting for Transfers of Financial
Assets-an amendment of FASB Statement"
. SFAS
No. 166 is intended to establish standards of financial reporting for the
transfer of assets and transferred assets to improve the relevance,
representational faithfulness, and comparability. SFAS No. 166 was
established to clarify derecognition of assets under FASB Statement No. 140, "
Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities".
SFAS No. 166 is effective for
financial statements issued for fiscal years and interim periods beginning
after 15 November 2009. The Company
has determined that the adoption of SFAS No. 166 will have no impact on its interim
consolidated financial statements.
11
Molecular Pharmacology
(USA) Limited
(A Development Stage
Company)
Notes
to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30
September 2009
Changes
in accounting policies
In July 2009, the
Financial Accounting Standards Board (the "FASB") issued SFAS No.
168,
"The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles"
. SFAS No. 168 will become the single
source of authoritative nongovernmental U.S. GAAP, superseding existing FASB,
American Institute of Certified Public Accountants (AICPA), Emerging Issues
Task Force (EIFT) and related accounting literature. SFAS No. 168 reorganizes the thousands
of GAAP pronouncements into roughly 90 accounting topics and displays them
using a consistent structure. Also
included is relevant Securities and Exchange Commission guidance organized
using the same topical structure in separate sections. SFAS No. 168 will be effective for
financial statements issued for reporting periods that end after 15 September
2009. The adoption of SFAS No. 168
did not have a material impact on the Company's interim consolidated
financial statements
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 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"
. 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 SFAS No. 161 did not have a material
impact on the Company's interim consolidated financial statements.
In
December 2007,
the FASB issued SFAS No. 141 (revised 2007),
"Business
Combinations
". 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 years beginning after 15 December 2008. The adoption of SFAS No. 141(R) is not
expected to have a material impact on the Company's interim consolidated
financial statements.
In
September 2006, the FASB issued SFAS No. 157, "
Fair Value Measurements
". The
statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles, and expands disclosures about fair
value measurements. In February
2008, the FASB issued Staff Position No. FAS 157-2 which proposed a one year
deferral for the implementation of SFAS No. 157 for non-financial assets and
liabilities that are recognized or disclosed at fair value on a nonrecurring
basis (less frequent than annually).
On 1 July 2008, the Company elected to implement SFAS No. 157 with the
one-year deferral. Given the nature
of the Company's current financial instruments, the adoption of SFAS No. 157 did not have a material impact on the Company's
financial position, results of operations or cash flows. Beginning 1 July 2009, the Company
adopted the provisions for nonfinancial assets and nonfinancial liabilities
that are not required or permitted to be measured at fair value on a recurring
basis. The adoption of SFAS No. 157
is expected to have a material impact on the Company's interim
consolidated financial statements.
12
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
30 September 2009
In December 2007, the FASB issued SFAS No.
160,
"Non-controlling Interests in Consolidated
Financial Statements - an amendment of Accounting Research Bulletin No.
51
". 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 non-controlling interest, changes in a
parent's ownership interest, and the valuation of retained
non-controlling 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 non-controlling owners. SFAS No. 160 is effective for fiscal
years beginning after 15 December 2008.
The adoption of SFAS No. 160 did not have a material impact on the
Company's interim consolidated financial statements.
3.
Equipment
|
|
|
|
|
Net Book Value
|
|
|
|
|
|
As at
|
|
As at
|
|
|
|
Accumulated
|
|
30 September
|
|
30 June
|
|
|
Cost
|
amortization
|
|
2009
|
|
2009
|
|
|
$
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
Office equipment
|
|
7,840
|
|
5,096
|
|
2,744
|
|
2,920
|
During the
three month period ended 30 September 2009 the total additions to equipment
were $Nil (30 June 2009 - $114).
4.
Accounts Payable and Accrued Liabilities
Accounts
payable and accrued liabilities are non-interest bearing, unsecured and have
settlement dates within one year.
5.
Due
to Related Parties and Related Party Transactions
As at 30 September 2009, the amount due
to related parties includes $1,000 payable to a director of the Company (30
June 2009
-
$1,000). This
balance is non-interest bearing, unsecured and has no fixed terms of repayment.
As at 30 September 2009, the amount due
to related parties includes $45,366 payable to a company owned by a director of
the Company or an officer of PharmaNet (30 June 2009
-
$25,498). This
balance is non-interest bearing, unsecured and has no fixed terms of repayment.
As at 30 September 2009, the amount due
to related parties includes $4,967 payable to a company owned by a director of
the Company or an officer of PharmaNet (30 June 2009
-
$1,124). This
balance is non-interest bearing, unsecured and has no fixed terms of repayment.
As at 30 September 2009, the amount due
to related parties includes $1,373,345 payable to PharmaNet (30 June 2009
-
$1,246,058). This balance is non-interest bearing,
unsecured and has no fixed terms of repayment.
13
Molecular Pharmacology
(USA) Limited
(A Development Stage
Company)
Notes
to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30
September 2009
During the three month period ended 30 September
2009, a director of the Company or an officer of PharmaNet, and their
controlled entities were paid or accrued consulting fees and office and
miscellaneous expenses of $15,354 (three month period ended 30 September 2008
- $8,332, cumulative - $745,928) and $7,605 (three month period
ended 30 September 2008 - $7,001, cumulative - $70,721) respectively by the
Company.
During the three month period ended 30 September
2009, a director of the Company or an officer of PharmaNet, and their
controlled entities were paid or accrued rental fees of $Nil by the Company
(three month period ended 30 September 2008 - $Nil, cumulative -
$12,987).
Transactions comprising the amount due
to PharmaNet are as follows:
|
|
For the
three
month
period
ended
30 September
2009
|
|
For the
year
ended
30 June
2009
(Audited)
|
|
|
$
|
|
$
|
|
|
|
|
|
Opening balance, beginning of period
|
|
1,246,058
|
|
1,411,131
|
Funds
transferred to the Company by PharmaNet
|
|
21,822
|
|
57,948
|
Expenses paid by PharmaNet on behalf of the
Company
|
|
26
|
|
520
|
Foreign
currency translation adjustment
|
|
105,439
|
|
(223,541)
|
|
|
|
|
|
Balance as at 30 September 2009 and 30 June 2009
|
|
1,373,345
|
|
1,246,058
|
The average amount due to PharmaNet for
the three month period ended 30 September 2009 was $1,231,772 (year ended 30
June 2009
-
$1,270,929).
6.
Capital Stock
Authorized
The
total authorized capital is 300,000,000 common shares with a par value of
$0.001 per common share.
Issued
and outstanding
The
total issued and outstanding capital stock is 111,553,740 common shares with a
par value of $0.001 per common share.
14
Molecular Pharmacology
(USA) Limited
(A Development Stage
Company)
Notes
to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30
September 2009
7.
Income Taxes
Income tax expense differs from the amount that would result from
applying the federal income tax rate to earnings before income taxes. These differences result from the
following items:
|
|
|
|
For the
three
month period
ended
30
September
2009
|
|
For the
year
ended
30 June
2009
(Audited)
|
|
|
|
|
$
|
|
$
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
|
(34,467)
|
|
(94,336)
|
|
|
|
|
|
|
|
Federal income tax rates
|
|
|
|
34.0%
|
|
34.0%
|
|
|
|
|
|
|
|
Income
tax recovery based on the above rates
|
|
|
|
(11,719)
|
|
(32,074)
|
|
|
|
|
|
|
|
Increase
(decrease) due to:
|
|
|
|
|
|
|
Difference
between US and foreign tax rates
|
|
|
|
1,038
|
|
1,458
|
Change in
valuation allowance
|
|
|
|
32,969
|
|
(16,114)
|
Research and
development tax refund not subject to tax
|
|
|
|
-
|
|
(5,145)
|
Foreign
exchange and other
|
|
|
|
(22,288)
|
|
51,875
|
|
|
|
|
|
|
|
Income tax recovery
|
|
|
|
-
|
|
-
|
The composition of the Company's deferred tax assets as at 30
September 2009 and 30 June 2009 are as follows:
|
|
As at
30
September
2009
|
|
At at
30 June
2009
(Audited)
|
|
|
$
|
|
$
|
|
|
|
|
|
Net income tax operating loss
carryforward
|
|
1,588,660
|
|
1,479,897
|
|
|
|
|
|
Deferred
tax assets
|
|
501,609
|
|
468,640
|
Less:
Valuation allowance
|
|
(501,609)
|
|
(468,640)
|
|
|
|
|
|
Net
deferred tax asset
|
|
-
|
|
-
|
15
Molecular Pharmacology
(USA) Limited
(A Development Stage
Company)
Notes
to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30
September 2009
The Company has non-capital loss carry-forwards of approximately
$1,588,660 that may be available for tax purposes. The loss carry-forwards are all in
respect of US and Australian operations and expire as follows:
2022
|
20,402
|
2023
|
46,992
|
2024
|
27,717
|
2025
|
14,187
|
2026
|
261,311
|
2027
|
111,155
|
2028
|
77,128
|
2029
|
57,881
|
2030
|
8,514
|
No expiry
|
963,373
|
|
|
|
1,588,660
|
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.
8.
Commitment
On 13 October 2005, t
he Company entered into a distribution and
supply agreement with MPLA (the "Distribution Agreement") (Note 1).
The basic terms of the
Distribution Agreement are as follows:
i.
MPLA has granted exclusive distribution rights to the Company to
distribute, market, promote, detail, advertise and sell certain "Licensed
Products", as defined in the Distribution Agreement, with metallo-polypeptide analgesic as an active ingredient, in the United States
(excluding its territories and possessions);
ii.
The Company paid MPLA $1,000 upon the date of execution of the
Distribution Agreement and is required to pay $100,000 six months from the date
of execution of the Distribution Agreement or the date that any Licensed
Product is available and ready for distribution and sale in commercial
quantities in the United States under the terms of the Distribution Agreement
(the "Commencement Date"), whichever occurs first;
iii.
The Company is also required to pay MPLA a royalty of 5% as set out in
the Distribution Agreement;
iv.
MPLA will supply all Licensed Products to the Company under the
Distribution Agreement;
16
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated
Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
30 September 2009
v.
MPLA is responsible for obtaining all necessary regulatory approvals
for the licensed product in the United States; and
vi.
The Distribution Agreement is for a one year term from the
"Commencement Date" and may be automatically extended by successive
one-year periods, unless at least three months prior to the renewal date, as
defined in the Distribution Agreement, either party advises the other party that
it elects not to permit the extension of the term.
The $100,000 payment to MPLA according to the
terms of the Distribution Agreement has not yet been made and the Company is
currently renegotiating the terms of the Distribution Agreement (Note 11).
9.
Supplemental Disclosures with Respect to Cash Flows
|
|
For the
period from
the date of inception on
14 July 2004
to 30
September
2009
|
For the
three month
period
ended
30 September
2009
|
For the
year
ended
30 June
2009
(Audited)
|
|
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
Cash paid during the
year for interest
|
|
|
-
|
|
-
|
|
-
|
Cash paid during the
year for income taxes
|
|
|
-
|
|
-
|
|
-
|
Common shares issued
on acquisition of MPLA
|
|
|
16,236
|
|
-
|
|
-
|
Amounts receivable
acquired on recapitalization of the Company
|
|
|
2,226
|
|
-
|
|
-
|
Accounts payable
assumed on recapitalization of the Company
|
|
|
54,624
|
|
-
|
|
-
|
Due to related party
assumed on recapitalization of the Company
|
|
|
1,000
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
17
Molecular Pharmacology
(USA) Limited
(A Development Stage
Company)
Notes
to Interim Consolidated Financial Statements
(Expressed
in U.S. Dollars)
(Unaudited)
30
September 2009
10.
Segmented Information
Details
on a geographic basis as at 30 September 2009 are as follows:
|
|
Australia
|
|
U.S.A.
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
Assets
|
|
366,632
|
|
(347,858)
|
|
18,774
|
Loss for the period
|
|
(25,953)
|
|
(8,514)
|
|
(34,467)
|
Details
on a geographic basis as at 30 June 2009 are as follows:
|
|
Australia
|
|
U.S.A.
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
Assets
|
|
348,654
|
|
(335,274)
|
|
13,380
|
Loss for the year
|
|
(36,455)
|
|
(57,881)
|
|
(94,336)
|
11.
Contingency
The $100,000
payment to MPLA according to the terms of the Distribution Agreement has not
yet been made and the Company is currently renegotiating the terms of the
Distribution Agreement (Note 8).
12.
Subsequent Event
There are no subsequent
events from the date of the three month period ended 30 September 2009 to the
date the interim consolidated financial statements were available to be issued
on 23 October 2009.
18
Item 2. Management's
Discussion and Analysis
of Financial
Condition and Results of
Operations.
THE FOLLOWING ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION OF MOLECULAR USA FOR THE FIRST QUARTER PERIOD ENDED SEPTEMBER
30, 2009 AND SHOULD BE READ IN CONJUNCTION WITH MOLECULAR USA'S FINANCIAL
STATEMENTS, INCLUDING THE NOTES THERETO CONTAINED ELSEWHERE IN THE FORM 10-Q.
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 01,
2002. Up until the fall of 2005, Molecular USA was in the business of mineral
exploration and development of a mineral property.
On October 13, 2005,
Molecular USA entered into a distribution and supply agreement with Molecular
Pharmacology Limited ("
MPLA
").
MPLA is incorporated under the laws of Australia and at the time was a wholly
owned subsidiary company of PharmaNet Group Limited, an Australian company
listed on the Australian Stock Exchange. Under the terms of the
distribution and supply agreement, Molecular USA received the exclusive
distribution rights to distribute, market, promote, detail, advertise and sell
certain "
Licensed Products
", as
defined in the agreement, with metallo-polypeptide analgesic as an active
ingredient, in the United States (excluding its territories and
possessions).
On May 9, 2006, Molecular USA announced that it has
acquired 100% of the issued and outstanding share capital of MPLA. The transaction was originally announced
by Molecular USA in a press release dated November 29, 2005 and was
subsequently approved by a majority of the stockholders of the Company at a
stockholders meeting held on April 21, 2006. As a result of the transaction,
PharmaNet Group Limited ("
PharmaNet
"),
the former parent company of MPLA, now controls approximately 79% of Molecular
USA's issued and outstanding share capital. The transaction between the parties
closed in escrow with an effective closing date of May 8, 2006. The business of
MPLA is now the business of Molecular USA.
Our Current Business
Molecular USA through its wholly owned subsidiary MPLA
is in the business of developing and commercializing a new analgesic and
anti-inflammatory molecule known as Tripeptofen. Tripeptofen is likely to
appear in a new group of products suitable for the treatment of common
every-day pain. As an analgesic and anti-inflammatory drug, Tripeptofen is
unusual due to its rapid speed of action and its topical or rub-on
application.
The majority of over-the-counter anti-pain and
anti-inflammatory products sold for the treatment of acute localised pain are
based on non-steroidal anti-inflammatory drugs or NSAIDs. The majority of such
products are slow acting and provide only mild pain relief.
The NSAID group has come under additional pressure and
increasing medical alarm, as many drugs in this class have been found to
set-back the recovery of certain conditions and treatments for which they were
marketed. Moreover, NSAIDs are associated with severe gastro-intestinal
side-effects. This has left a niche in an industry under-served by new products
and ingredients.
MPLA's business strategy is to exploit the fast and locally
acting, low side effects, and recovery-enhancing properties of its new drug
group and to market this as a new ingredient, enabling pharmaceutical companies
to develop and market effective and safer products suited to a broad range of
common everyday pain.
19
Licensed Products
Molecular USA has exclusive distribution rights to
distribute, market, promote, advertise and sell certain "Licensed
Products", with metallo-polypeptide analgesic and anti-inflammatory
activity as an active ingredient, in the United States (excluding its
territories and possessions) from its wholly owned subsidiary company MPLA.
The Licensed Products include all products in all dosage
forms, formulations, line extensions and package configurations using or
otherwise incorporating any aspect or production method of metallo-polypeptide
analgesic and anti-inflammatory activity as an active ingredient marketed by
MPLA or its affiliates under the tradename Tripeptofen or any other trade names
or trademarks used by MPLA relating to the product and any improvements to such
formulations or dosages as may hereafter be distributed by MPLA or its
affiliates in the territory during the term of the distribution and supply
agreement between Molecular USA and MPLA for the topical application for human
use only, and specifically excludes:
• dermatological
or cosmetic use, or tissue repair or tissue regeneration effect;
• any
use or application of the Licensed Product in non-human groups or species; and
• Thermalife
cream, presently owned by PharmaNet, the parent company of MPLA.
All Licensed Products must first obtain regulatory
clearance in the United States before they may be marketed and sold by
Molecular USA in that territory. Regulatory approval, commencement of the
Master Drug File (MDF) and market approval are the focus of an ongoing program
expected to continue over the next 18 to 24 months.
MPLA has an exclusive license from Cambridge Scientific
Pty Ltd of Australia. This license is restricted to a "field of use"
defined in the license documentation. Cambridge Scientific may grant other
licenses to third parties outside the "field of use" the subject of
the licenses granted to MPLA.
Patents &
Trademarks
Molecular USA and its subsidiary MPLA, regard their
intellectual property rights, such as copyrights, trademarks, trade secrets,
practices and tools, as important to the success of their company. To protect
their intellectual property rights, Molecular USA relies on a combination of
patent, trademark and copyright law, trade secret protection, confidentiality
agreements and other contractual arrangements with their employees, affiliates,
clients, strategic partners, acquisition targets and others. Effective patent,
trademark, copyright and trade secret protection may not be available in every
country in which the combined company intends to offer its products. The steps
taken by Molecular USA and MPLA to protect their intellectual property rights
may not be adequate. Third parties may infringe or misappropriate the combined
company's intellectual property rights or the combined company may not be able
to detect unauthorized use and take appropriate steps to enforce its rights. In
addition, other parties may assert infringement claims against the combined
company. Such claims, regardless of merit, could result in the expenditure of
significant financial and managerial resources. Further, an increasing number
of patents are being issued to third parties regarding these processes. Future
patents may limit the combined company's ability to use processes covered by
such patents or expose the combined company to claims of patent infringement or
otherwise require the combined company to seek to obtain related licenses. Such
licenses may not be available on acceptable terms. The failure to obtain such
licenses on acceptable terms could have a negative effect on the combined
company's business.
To protect their intellectual property rights, MPLA relies on a
combination of license and patent applications held by Cambridge Scientific Pty
Ltd
which includes
"Analgesic and
Anti-Inflammatory Composition" comprising USA patent application in
completion plus PCT Provisional Specification having the same name designated
as Serial No. 11/059580
, Cytokine Mediation Composition
PCT/AU2007/000554, Tissue
Disruption Treatment And Composition For Use Thereof United States Of America
Patent Application No. 11/218382 and International Patent Application No.
PCT/AU2006/001288 and COX 2
Inhibitor Application Number WO/2006902207.
20
Marketing
Molecular USA plans to market its Licensed Products,
when approved, through existing pharmaceutical distributors and by
collaborative dealings with major companies active in the United States and
Europe.
In addition, Molecular USA plans to explore
opportunities for direct sales, out-licensing and the integration of the
company's proprietary anti-inflammatory and analgesic components in
products already distributed through various international markets.
Molecular USA expects that these activities may even
help fund the development costs of the Licensed Products in the United States.
Manufacturing &
Supply
Molecular USA and MPLA have no manufacturing facilities.
MPLA is required to supply Molecular USA with all Licensed Products under the
distribution and supply agreement entered into by the parties in October 2005.
It is likely MPLA will enter into arrangements with various certified
formulation and manufacturers (GMP) of the Licensed Products for clinical trial
and sales purposes. These formulations and the manufacturing facilities must
comply with regulations and current good laboratory practices or cGLPs, and
current good manufacturing practices or cGMPs, enforced by the Food and Drug
Administration ("FDA").
Molecular USA has not entered into any supply agreements.
Competition
Molecular USA and MPLA compete in the segment of the
pharmaceutical market that treats pain and inflammation, which is highly
competitive. We face significant competition from most pharmaceutical companies
as well as biotechnology companies that are also researching and selling
products designed to treat pain and inflammation. Many of our competitors have
significantly greater financial, manufacturing, marketing and product
development resources than we do. Large pharmaceutical companies in particular
have extensive experience in clinical testing and in obtaining regulatory
approvals for drugs. These companies also have significantly greater research
capabilities than we do. In addition, many universities and private and public
research institutes are active in neurological research, some in direct
competition with us. These companies, as well as academic institutions,
governmental agencies and other public and private organizations conducting
research, also compete with Molecular USA and MPLA in recruiting and retaining
highly qualified scientific personnel and consultants and may establish
collaborative arrangements with competitors of Molecular USA.
Molecular USA's
competition will be determined in part by the potential indications for which
the MPLA's products are developed and ultimately approved by regulatory
authorities.
Molecular USA knows of
other companies and institutions dedicated to the development of anti-pain and
anti-inflammatory pharmaceuticals similar to those being developed by MPLA and
licensed to Molecular USA. Many of Molecular USA's competitors, existing or
potential, have substantially greater financial and technical resources and
therefore may be in a better position to develop, manufacture and market pharmaceutical
products. Many of these competitors are also more experienced with regard to
preclinical testing, human clinical trials and obtaining regulatory approvals.
The current or future existence of competitive products may also adversely
affect the marketability of Molecular USA's products.
21
Governmental
Regulation
FDA Regulation
. Pharmaceutical products are subject to
extensive pre- and post-marketing regulation by the Food and Drug Administration ("FDA"),
including regulations that govern the testing, manufacturing, safety, efficacy,
labeling, storage, record-keeping, advertising and promotion of the products
under the Federal Food, Drug and Cosmetic Act and the Public Health Services
Act, and by comparable agencies in most foreign countries. The process required
by the FDA before a new drug may be marketed in the U.S. generally involves the
following: completion of pre-clinical laboratory and animal testing; submission
of an investigational new drug application, or IND, which must become effective
before clinical trials may begin; performance of adequate and well controlled
human clinical trials to establish the safety and efficacy of the proposed
drug's intended use; and approval by the FDA of a New Drug Application,
or NDA.
The activities required before a pharmaceutical agent
may be marketed in the United States begin with pre-clinical testing. Pre-clinical tests include laboratory
evaluation of potential products and animal studies to assess the potential
safety and efficacy of the product and its formulations. The results of these
studies and other information must be submitted to the FDA as part of an IND
application, which must be reviewed and approved by the FDA before proposed
clinical testing can begin. Clinical trials involve the administration of the
investigational new drug to healthy volunteers or to patients under the
supervision of a qualified principal investigator. Clinical trials are
conducted in accordance with Good Clinical Practices under protocols that
detail the objectives of the study, the parameters to be used to monitor safety
and the efficacy criteria to be evaluated. Each protocol must be submitted to
the FDA as part of the IND application. Further, each clinical study must be
conducted under the auspices of an independent institutional review board. The
institutional review board will consider, among other things, ethical factors
and the safety of human subjects.
Typically, human clinical trials are conducted in three
phases that may overlap. In Phase 1, clinical trials are conducted with a small
number of subjects to determine the early safety profile and pharmacology of
the new therapy. In Phase 2, clinical trials are conducted with groups of
patients afflicted with a specific disease in order to determine preliminary
efficacy, optimal dosages and expanded evidence of safety. In Phase 3, large
scale, multicenter, comparative clinical trials are conducted with patients
afflicted with a target disease in order to provide enough data for the
statistical proof of efficacy and safety required by the FDA and others.
The results of the pre-clinical and clinical testing,
together with chemistry and manufacturing information, are submitted to the FDA
in the form of an NDA for a pharmaceutical product in order to obtain approval
to commence commercial sales. In responding to an NDA, the FDA may grant
marketing approvals, request additional information or further research, or
deny the application if it determines that the application does not satisfy its
regulatory approval criteria. Patient-specific therapies may be subject to
additional risk with respect to the regulatory review process. FDA approval for
a pharmaceutical product may not be granted on a timely basis, if at all, or if
granted may not cover all the clinical indications for which approval is sought
or may contain significant limitations in the form of warnings, precautions or
contraindications with respect to conditions of use.
Satisfaction of FDA premarket approval requirements for
new drugs typically takes several years, and the actual time required may vary
substantially based upon the type, complexity and novelty of the product or
targeted disease. Government regulation may delay or prevent marketing of
potential products for a considerable period of time and impose costly
procedures upon our activities. Success in early stage clinical trials or with
prior versions of products does not assure success in later stage clinical
trials. Data obtained from clinical activities are not always conclusive and
may be susceptible to varying interpretations that could delay, limit or
prevent regulatory approval.
Once approved, the FDA may withdraw the product approval
if compliance with pre- and post-marketing regulatory standards is not
maintained or if problems occur after the product reaches the marketplace. In
addition, the FDA may require post-marketing studies, referred to as Phase 4
studies, to monitor the effect of an approved 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.
22
Facilities used to manufacture drugs are subject to
periodic inspection by the FDA, Drug Enforcement Agency and other authorities
where applicable, and must comply with the FDA's Current Good
Manufacturing regulations. Failure to comply with the statutory and regulatory
requirements subjects the manufacturer to possible legal or regulatory action,
such as suspension of manufacturing, seizure of product or voluntary recall of
a product. Adverse experiences with the product must be reported to the FDA and
could result in the imposition of market restriction through labeling changes
or in product removal. Product approvals may be withdrawn if compliance with
regulatory requirements is not maintained or if problems concerning safety or
efficacy of the product occur following approval.
With respect to post-market product advertising and
promotion, the FDA imposes a number of complex regulations on entities that
advertise and promote pharmaceuticals, which include, among other things,
standards and regulations relating to direct-to-consumer advertising, off-label
promotion, industry sponsored scientific and educational activities, and
promotional activities involving the Internet. The FDA has very broad
enforcement authority under the Federal Food, Drug and Cosmetic Act, and
failure to abide by these regulations can result in penalties including the
issuance of a warning letter directing the entity to correct deviations from
FDA standards, a requirement that future advertising and promotional materials
be pre-cleared by the FDA, and state and federal civil and criminal
investigations and prosecutions.
Research facilities are subject to various laws and
regulations regarding laboratory practices, the experimental use of animals,
and the use and disposal of hazardous or potentially hazardous substances in
connection with the research in question.
In each of these areas, as above, the government has broad regulatory
and enforcement powers, including the ability to levy fines and civil
penalties, suspend or delay issuance of approvals, seize or recall products,
and withdraw approvals, any one or more of which could have a material adverse
effect upon us.
Other Government Regulations
. In
addition to laws and regulations enforced by the FDA, research of Molecular
USA's products in the United States are subject to regulation under
National Institutes of Health guidelines, as well as under the Controlled
Substances Act, the Occupational Safety and Health Act, the Environmental
Protection Act, the Toxic Substances Control Act, the Resource Conservation and
Recovery Act and other present and potential future federal, state or local
laws and regulations, as research and development of its products involves the
controlled use of hazardous materials, chemicals, viruses and various
radioactive compounds.
In addition to regulations in the United States,
Molecular USA's products are subject to a variety of foreign regulations
governing clinical trials and commercial sales and distribution of its Licensed
Products. Whether or not Molecular USA obtains FDA approval for a product,
Molecular USA or its subsidiaries must obtain approval of a product by the
comparable regulatory authorities of foreign countries before it can commence
clinical trials or marketing of the product in those countries. The approval process
varies from country to country, and the time may be longer or shorter than that
required for FDA approval. The requirements governing the conduct of clinical
trials, product licensing, pricing and reimbursement vary greatly from country
to country.
Sarbanes-Oxley Act of 2002
. On July 30, 2002, President Bush signed into
law the Sarbanes-Oxley Act of 2002, or the SOA. SOA imposes a wide variety of
new requirements on both U.S. and non-U.S. companies, that file or are required
to file periodic reports with the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934. Many of these new
requirements will affect Molecular USA and its board of directors. For
instance, under SOA Molecular USA is required to:
·
form an audit committees in compliance with SOA;
·
have Molecular USA's chief executive office
and chief financial officer are required to certify its financial statements;
·
ensure Molecular USA's directors and senior
officers are required to forfeit all bonuses or other incentive-based
compensation and profits received from the sale of Molecular USA's
securities in the twelve month period following initial publication of any of
Molecular USA's financial statements that later require restatement;
·
disclose any off-balance sheet transactions as
required by SOA;
·
prohibit all personal loans to directors and
officers;
23
·
insure directors, officers and 10% holders file
their Forms 4's within two days of a transaction;
·
adopt a code of ethics and file a Form 8-K when
ever there is a change or waiver of this code; and
·
insure Molecular USA's auditor is
independent as defined by SOA.
SOA has required us to review our current procedures and
policies to determine whether they comply with the SOA and the new regulations
promulgated thereunder. We will continue to monitor our compliance with all
future regulations that are adopted under the SOA and will take whatever
actions are necessary to ensure that we are in compliance.
Environmental Compliance
The nature of Molecular USA's and MPLA's business
does not require special environmental or local government approval. Molecular USA and MPLA are compliant
with all environmental laws. The cost of such compliance is minimal for the
company.
Employees
Molecular USA currently has no employees and instead
relies on outside contractors.
Immediate Business
Plans
The Company, through its subsidiary MPLA, plans to
continue to pursue the various levels of the international regulatory approval
processes. Applications and product opportunities for Tripeptofen are believed
to be broad and cover a range of commercial fields, each with distinct
pre-market requirements. The international drug development team, global
resources and local know-how will allow MPLA to seek the most time and cost
effective regulatory pathways for each product and market sector.
On commercial development, MPLA will focus on
consolidating the regulatory pathway work in order to prioritize the path to
market. Jeff Edwards will work to set-out the strategies designed to maximize the
multi-jurisdictional capabilities of MPLA's development teams.
Results of Operation
For the Quarter ended September 30, 2009.
Rev
enues
REVENUE
- Molecular USA has not generated any revenues for the
quarter ended September 30, 2009, or since inception.
COMMON STOCK
- Molecular USA has not issued any shares during the most recent quarter. As
of the date October 30, 2009, Molecular USA has 111,553,740 common shares
issued and outstanding.
Expenses
SUMMARY
-
Total expenses were $34,457 for the three month period ended September 30, 2009. Expenses had increased during this past quarter
as compared to three month period ended September 30, 2008 - $28,552. A
total of $1,753,024 in expenses has been incurred by Molecular USA since
inception on July 14, 2004 through to September
30, 2009. The increase in costs
over this quarter has occurred as the result of Molecular USA's wholly
owned subsidiary increasing its consulting fees. The costs can be subdivided into the
following categories.
-
Office Expenses and Rent
: $10,443 in office expenses (for
administrative costs) were incurred for the three month period ended September 30, 2009 as compared to $9,270
for the three month period ended September 30, 2008; while a total of $184,213
was incurred in the period from inception on July
14, 2004
to September 30, 2009. All contributed expenses are
reported as contributed costs with a corresponding credit to additional paid-in
capital.
24
-
Consulting and Analysis
Costs
: Molecular USA relies on consultants and other third parties to
conduct the majority of its research.
For the three month period ended September 30, 2009, $15,354 in
consulting and analysis expenses were incurred as compared to $8,332
during the three month period ended
September 30, 2008.
We have incurred a total of $1,144,208 in consulting and analyst
fees since our inception on
July
14, 2004
to
September 30, 2009
.
-
Advertising and Promotion
Fees
: Molecular USA has spent no money in this area this year. During the three month period ended
September 30, 2009
we spent $0 on
advertising and public relations and $0 for three month period ended September
30, 2008. A total of $23,739 has
been incurred in this area during the period from inception on
July 14, 2004
to
September 30, 2009
.
-
Professional Fees
: Molecular USA
incurred $7,434 in professional fees for the three month period ended on
September 30, 2009
as compared to $8,572
for the three month period ended September 30, 2008. From inception to
September 30, 2009
, we have incurred
a total of $231,502 professional fees mainly spent on legal and accounting
matters.
-
Travel Costs
: Molecular USA
incurred $0 in travel costs for the three month period ended September 30,
2009 as compared to $2,006 for the three month period ended September 30
, 2008 and
$104,249 has been incurred in the period
from inception on
July 14, 2004
to
September
30, 2009
. This decrease reflects
limited travel expense this quarter to our North American legal counsel in
visiting our research facilities in Australia.
-
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 in salaries and benefits for the three month period ended September 30,
2009 and $0 in salaries and benefits during the three month period ended September
30
, 2008
. For the period
July
14, 2004
(inception) through
September 30, 2009
, Molecular USA
has spent a total of $44,464 on salaries and benefits.
Molecular USA continues to carefully control its expenses and overall
costs as it moves forward with the development of its new business plan.
Molecular USA does not have any employees and engages personnel through outside
consulting
contracts
or agreements or other such arrangements
Income Tax Provision
: We have losses carried forward for income tax purpose to September 30,
2009. There are no current or
deferred tax expenses for the period ended September 30, 2009 due to our loss
position. We have fully reserved
for any benefits of these losses.
The deferred tax consequences of temporary differences in reporting
items for financial statement and income tax purposes are recognized as
appropriate.
Liquidity and Capital
Resources
During the three month period ended September 30, 2009, Molecular USA satisfied
its working capital needs by borrowing cash from its parent company PharmaNet. As of September 30, 2009, the Company had
cash and cash equivalents on hand in the amount of $10,766 ($7,543 - June
30, 2009) and current payable and accrued liabilities of $28,402 ($30,829
- June 30, 2009). As of September
30, 2009, Molecular USA currently owes its parent company PharmaNet, $1,373,345,
an additional $51,333 to other related parties, and $28,402 to non-related
parties. Given the proposed
business activities of Molecular USA and its subsidiary, management does not
expect that the current level of cash on hand will be sufficient to fund its
operation for the next twelve month period.
To achieve our goals and objectives for the next 12
months, we plan to raise additional capital through private placements of our
equity securities, proceeds received from the exercise of outstanding options,
future financing from our majority shareholder PharmaNet.
We plan to use any additional funds that we might be
successful in raising for development, as well as for strategic acquisition of
existing businesses that complement our market niche, and general working
capital purposes.
25
If we are unsuccessful in obtaining new capital, our
ability to seek and consummate strategic acquisitions to build our company internationally
and to expand of our business development and marketing programs could be
adversely affected.
Off-Balance Sheet
Arrangement
As of September
30, 2009, Molecular USA did not have any
off-balance
sheet arrangements.
Research and Development
Since the acquisition of MPLA, Molecular USA has maintained
MPLA's research and development program to:
-
Refine and prove-up its proprietary active
ingredients and to commence the processes that will lead to the issue of a
Master Drug File registration of its products;
-
Define the mode of action and potential of
Tripeptofen in both in vitro, animal and human studies;
-
Gain Australian regulatory and marketing
approval;
-
Gain European regulatory approval; and
-
Commence application for American regulatory
approval.
MPLA is in the business of developing and
commercializing a new analgesic and anti-inflammatory molecule known as
Tripeptofen. Tripeptofen is likely to appear in a new group of products
suitable for the treatment of common every-day pain. As an analgesic and
anti-inflammatory drug, Tripeptofen is unusual due to its rapid speed of action
and its topical or rub-on application.
During the period Molecular USA, continued to support MPLA
and Cambridge Scientific Pty Ltd in the process of expanding the intellectual
property portfolio. Further details on the scope of these activities is
presented in the section.
Patents & Trademarks.
The first conditions targeted by MPLA will be the
musculoskeletal injuries. The use
of a B-SIM in these markets represents a new approach to one of the
world's largest over the counter drug markets and includes indications
such as joint inflammation, musculoskeletal pain, overuse and strain injuries,
burns and even surgical and cosmetic procedures. MPLA's proprietary, industrially
scalable peptide-ligand bond exchange (PLBE) B-SIM manufacturing process
involves the disassociation of proteins, rather than the far more costly
process of assembling B-SIMs one sequence at a time. The patent was lodged in
the name of Cambridge Scientific Pty Ltd; however, Molecular USA holds the
worldwide exclusive license to manufacture, commercialize, market and
distribute topical anti-inflammatory and analgesic products based on the
proprietary MPL-TL compound.
Molecular
USA is still working on the projections regarding the necessary expenditure and
time frame involved in pursuing this research and development program. Any such program will also be subject to
Molecular USA raising the necessary funds to advance such a program.
Capital Expenditure
Commitments
Capital expenditures for the three month period ended September
30, 2009, amounted to $0. Molecular USA does not anticipate any significant
purchase or sale of equipment over the next 12 months.
26
Recent Accounting
Pronouncements
In June 2009, the FASB issued SFAS No. 167,
"Amendments to FASB Interpretation No. 46(R)"
. SFAS No. 167 is intended to establish general
standards of financial reporting for companies with variable interest
entities. It requires timely and
useful disclosure of information related to the Company's involvement with
variable interest entities. This disclosure should alert all users to the
effects on specific provisions of FASB Interpretation No. 46 (revised December
2003), "
Consolidation of Variable Interest Entities",
related to the
changes to the special-purpose entity proposal in FASB Statement No. 166, "
Accounting for Transfers of
Financial Assets",
and the treatment of specific provisions of
Interpretation 46(R). SFAS No. 167
is effective for financial statements issued for fiscal years and interim
periods beginning after 15 November 2009.
The Company has determined that the adoption of SFAS No. 167 will have
no impact on its interim consolidated financial statements.
In June 2009, the FASB issued SFAS No. 166,
"Accounting for Transfers of Financial
Assets-an amendment of FASB Statement"
. SFAS
No. 166 is intended to establish standards of financial reporting for the
transfer of assets and transferred assets to improve the relevance,
representational faithfulness, and comparability. SFAS No. 166 was
established to clarify derecognition of assets under FASB Statement No. 140, "
Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities".
SFAS No. 166 is effective for
financial statements issued for fiscal years and interim periods beginning
after 15 November 2009. The Company
has determined that the adoption of SFAS No. 166 will have no impact on its interim
consolidated financial statements.
Changes
in accounting policies
In July 2009, the Financial Accounting Standards Board (the
"FASB") issued SFAS No. 168,
"The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles"
. SFAS
No. 168 will become the single source of authoritative nongovernmental U.S.
GAAP, superseding existing FASB, American Institute of Certified Public
Accountants (AICPA), Emerging Issues Task Force (EIFT) and related accounting
literature. SFAS No. 168
reorganizes the thousands of GAAP pronouncements into roughly 90 accounting
topics and displays them using a consistent structure. Also included is relevant Securities and
Exchange Commission guidance organized using the same topical structure in
separate sections. SFAS No. 168
will be effective for financial statements issued for reporting periods that
end after 15 September 2009. The
adoption of SFAS No. 168 did not have a material impact on the Company's
interim consolidated financial statements
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 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"
. 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 SFAS No. 161 did not have a material
impact on the Company's interim consolidated financial statements.
In
December 2007,
the FASB
issued SFAS No. 141 (revised 2007),
"Business Combinations
". 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 years beginning after 15
December 2008. The adoption of SFAS
No. 141(R) is not expected to have a material impact on the Company's
interim consolidated financial statements.
27
In December 2007, the FASB issued SFAS No.
160,
"Non-controlling Interests in Consolidated
Financial Statements - an amendment of Accounting Research Bulletin No.
51
". 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 non-controlling interest, changes in a
parent's ownership interest, and the valuation of retained
non-controlling 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 non-controlling owners. SFAS No. 160 is effective for fiscal
years beginning after 15 December 2008.
The adoption of SFAS No. 160 did not have a material impact on the
Company's interim consolidated financial statements.
In
September 2006, the FASB issued SFAS No. 157, "
Fair Value Measurements
". The
statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles, and expands disclosures about fair
value measurements. In February
2008, the FASB issued Staff Position No. FAS 157-2 which proposed a one year
deferral for the implementation of SFAS No. 157 for non-financial assets and
liabilities that are recognized or disclosed at fair value on a nonrecurring
basis (less frequent than annually).
On 1 July 2008, the Company elected to implement SFAS No. 157 with the
one-year deferral. Given the nature
of the Company's current financial instruments, the adoption of SFAS No. 157 did not have a material impact on the Company's financial
position, results of operations or cash flows. Beginning 1 July 2009, the Company
adopted the provisions for nonfinancial assets and nonfinancial liabilities
that are not required or permitted to be measured at fair value on a recurring
basis. The adoption of SFAS No. 157
is expected to have a material impact on the Company's interim
consolidated financial statements.
Critical Accounting Policies and Estimates
Our
quarterly 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.
Stock-based
compensation
On January
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 January 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 January 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
".
28
Item 3. Quantitative and
Qualitative Disclosures about Market Risk.
Interest Rate Risk
Due to
the short-term nature of our interest bearing assets, which consist primarily
of cash, cash equivalents and restricted cash, we believe that our exposure to
interest rate market risk will not significantly affect our operations.
Foreign Currency Risk
Our
head office and lab operations are based in Australia. Accordingly, we have
been subject to exposure from adverse movements in foreign currency exchange
rates. To date, the effect of changes in foreign currency exchange rates on
revenue and operating expenses has not been material as we have had no revenue
and limited operations. Operating expenses incurred by our foreign subsidiaries
were denominated in local currencies. We have not used financial instruments to
hedge these operating expenses.
Item 4. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures
Based
on the evaluation of Jeff Edwards our President, Chief Executive Officer and
Chief Financial Officer we have concluded that as of September 30, 2009, our disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange of 1934 (the "
Exchange Act
")
are effective to provide reasonable assurance that the information required to
be disclosed in this quarterly report on Form 10-Q is recorded, processed,
summarized and reported within the time period specified in Securities and
Exchange Commission rules and forms, and that such information is accumulated
and communicated to the Company's management, including the Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow for timely
decisions regarding required disclosure.
(b) Internal control over financial reporting
Management's
annual report on internal control over financial reporting
Management
is responsible for establishing and maintaining adequate internal control over
financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act. Our internal control over financial reporting is intended to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with U.S. GAAP. Our internal control over financial reporting should include
those policies and procedures that:
-
pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of our assets;
-
provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial
statements in accordance with applicable GAAP, and that receipts and
expenditures are being made only in accordance with authorizations of management
and the Board of Directors; and
-
provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of our assets that could have a material effect on the financial statements.
Jeff
Edwards, our President, Chief Executive Officer and Chief Financial Officer, has
evaluated the effectiveness of our internal control over financial reporting
and preparation of our quarterly financial statements as of September 30, 2009
and believe they are effective.
29
Based
upon their evaluation of our controls, Jeff Edwards, our President, Chief
Executive Officer and Chief Financial Officer, has concluded that there were no
significant changes in our internal control over financial reporting or in
other factors during our last fiscal quarter that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting.
Attestation
report of the registered public accounting firm
This
quarterly report does not include an attestation report of the company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the company to provide only management's
report in this quarterly report.
Changes in internal control over financial reporting
There
were no changes in our internal controls that occurred during the quarter
covered by this report that have materially affected, or are reasonably likely
to materially affect our internal controls.
Changes in Internal Controls
Based on the evaluation as of September 30, 2009, Jeff
Edwards, our President, Chief Executive Officer and Chief Financial Officer has
concluded that there were no significant changes in our internal controls over
financial reporting or in any other areas that could significantly affect our
internal controls subsequent to the date of his most recent evaluation,
including corrective actions with regard to significant deficiencies and
material weaknesses.
PART II -
OTHER INFORMATION
Item 1. Legal Proceedings.
We know of no material, active or pending legal
proceedings against our company, nor are we involved as a plaintiff in any
material proceeding or pending litigation. There are no proceedings in which
any of our directors, officers or affiliates, or any registered or beneficial
shareholder, is an adverse party or has a material interest adverse to our
interest.
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds.
Recent Sale of Unregistered Securities
Not Applicable.
Use of Proceeds from Unregistered Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of
Matters to a Vote of Security Holders
No matters were submitted to the security holders of Molecular
USA during this quarter.
30
Item 5. Other Information
No items to disclose.
Item 6. Exhibits
|
Exhibit
Number
|
Exhibit Title
|
|
3.1
|
Articles of Incorporation as Amended
(incorporated by reference to exhibit 3.1 to our Form 10-SB Registration Statement
filed on January 23, 2003).
|
|
3.2
|
Article of Amendment dated August 29, 2005
|
|
3.3
|
Bylaws as Amended (incorporated by reference to
exhibit 3.2 to to our Form 10-SB Registration Statement filed on January 23,
2003).
|
|
31.1
|
Certificate of CEO as Required by Rule
13a-14(a)/15d-14
|
|
31.2
|
Certificate of CFO as Required by Rule
13a-14(a)/15d-14
|
|
32.1
|
Certificate of CEO and CFO as Required by Rule
Rule 13a-14(b) and Rule 15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of
Chapter 63 of Title 18 of the United States Code
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
October
30, 2009.
|
MOLECULAR
PHARMACOLOGY (USA) LIMITED
|
|
BY:
|
/s/ Jeff Edwards
|
|
|
Jeff
Edwards, President, Chief Executive Officer, Chief Financial Officer and a Member
of the Board of Directors
|
|
|
|
|
31
Molecular Pharmacology (PK) (USOTC:MLPH)
Historical Stock Chart
From Jun 2024 to Jul 2024
Molecular Pharmacology (PK) (USOTC:MLPH)
Historical Stock Chart
From Jul 2023 to Jul 2024