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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
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|
X
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ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For
the year ended
June 30, 2011
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the transition period from___________ to __________
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Commission file number
000-50156
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MOLECULAR PHARMACOLOGY (USA) LIMITED
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(Exact name of registrant as specified in its charter)
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NEVADA
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71-0900799
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Drug Discovery Centre, 284 Oxford Street, Leederville 6007
Perth, Western Australia
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(Address of principal executive offices)
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(Zip Code)
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Registrant's telephone number, including area code
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011-61-8-9443-3011
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Name of each exchange on which registered
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Not Applicable
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Not Applicable
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Securities registered pursuant to Section 12(g) of the Act:
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Common Stock with a par value of $0.001 per share
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Indicate by check
mark if the registrant is a well known seasoned issuer, as defined by Rule 405
of the Securities Act
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Yes
o
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No
x
|
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Indicate by check
mark if the registrant is not required to file reports pursuant to Section 13
or Section 15(d) of the Act
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Yes
x
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No
o
|
|
Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding12 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
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No
o
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|
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Indicate by check mark whether
the registrant has submitted electronically and posted on its corporate Web
site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (S 232.405 of this chapter) during the
preceding 12
|
months (or for such
shorter period that the registrant was required to submit and post such
files).
Not Applicable
.
|
Yes
o
|
No
o
|
|
Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (S
229.405 of this chapter) is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements
|
incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Not Applicable
.
|
Yes
o
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No
o
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|
i
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):
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Large accelerated filer
o
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
x
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Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act)
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Yes
o
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No
x
|
|
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State the aggregate market value
of the voting and non-voting common equity held by non-affiliates computed by
reference to the price at which the common equity was last sold, or the
average bid and asked price of such common equity, as of the last business day
of the registrant's most recently completed second fiscal quarter.
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23,553,740 common shares @ $0.0051
(1)
=
$120,124.07
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(1) Last close price on June 30, 2011
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APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
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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
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Securities Exchange
Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court
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Yes
o
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No
o
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Not Applicable
.
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(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
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Indicate the number of shares
outstanding of each of the Registrant's classes of common stock, as of the
latest practicable date.
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111,553,740 common shares issued and outstanding as of
September 7, 2011.
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DOCUMENTS INCORPORATED BY REFERENCE
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None
.
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ii
Table of Contents
iii
iv
FORWARD LOOKING INFORMATION
This annual report contains forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995. These
statements relate to future events or our future financial performance. In some
cases, you can identify forward-looking statements by terminology such as "may",
"will", "should", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled "Risk Factors", that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.
Our financial statements are stated in United States Dollars (US$) and are
prepared in accordance with United States Generally Accepted Accounting
Principles. In this annual report, unless otherwise specified, all dollar
amounts are expressed in United States Dollars. All references to CDN$ refer to
Canadian Dollars.
As used in this annual report, the terms "
we
", "
us
", "
our
",
"
Corporation
" and "
Molecular USA
" mean Molecular Pharmacology
(USA) Limited unless otherwise indicated.
PART I
Item 1. Business
Business Development - Formation and Reorganization
Molecular USA was incorporated in the state of Nevada on May
1, 2002 under the name "
Blue Hawk Ventures, Inc
." Molecular USA changed
its name to "Molecular Pharmacology (USA) Limited" on August 29, 2005. At this
same time Molecular USA 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.
Molecular USA has not been involved in any bankruptcy,
receivership or similar proceeding nor has there been any material
reclassification or merger, consolidation or purchase or sale of a significant
amount of assets not in the ordinary course of business other than as disclosed
herein.
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 Pty. Ltd. ("
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 Corporation at a
stockholders meeting held on April 21, 2005. As a result of the transaction,
PharmaNet Group Limited ("
PharmaNet
"), the former parent corporation 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.
1
Our Current Business
The acquisition of MPLA provided Molecular USA an
immediate and solid international foundation which management believes will
allow it to grow its business into all major geographical markets. The assets
and resources of the Australian corporation and its existing teams and
development programs has augmented Molecular USA's
plan to develop safe and effective pain and inflammation management products.
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.
Licensed Products
Molecular USA has exclusive distribution rights to distribute, market,
promote, detail, 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 corporation MPLA.
The Licensed Products include all products in all dosage forms, formulations,
line extensions and package configurations using or otherwise incorporating any
aspect or production method of metallo-polypeptide analgesic and
anti-inflammatory activity as an active ingredient marketed by MPLA or its
affiliates under the trade name Tripeptafen 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 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 holding corporation 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.
Clinical programs are currently planned by MPLA for Europe, USA and Australia.
The clinical trial program is expected to be expanded with follow-up trials.
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. ("Cambridge
Scientific") 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.
2
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 corporation. 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 corporation 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 corporation's
intellectual property rights or the combined corporations 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
corporations. 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 corporation's ability to use processes covered by
such patents or expose the combined corporation to claims of patent infringement
or otherwise require the combined corporation 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 corporation's business.
To protect their intellectual property rights, MPLA relies on a combination
of license and patent applications held by Cambridge Scientific Pty. Ltd.,
namely "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. These patent applications embody all
the current Analgesic and Anti-inflammatory assets. MPLA will also rely on the
exclusive nature of its license, trademark and copyright law, trade secret
protection, confidentiality agreements and other contractual arrangements as it
may execute from time to time.
Management of Molecular USA and MPLA believes that MPLA's products,
trademarks, and other proprietary rights do not infringe on the proprietary
rights of third parties.
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 corporation'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 Good Manufacturing Practice ("GMP")
certified formulation and manufacturers of the Licensed Products for clinical
trial and sales purposes. These formulations and the manufacturing facilities
must comply with regulations and current good laboratory practices or CGLPs, and
current good manufacturing practices or GMPs, enforced by the Food and Drug
Administration ("FDA"). Molecular USA plans to continue MPLA's practice to
outsource formulation and manufacturing for its clinical trials and potential
commercialization after the acquisition of MPLA by Molecular USA.
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
3
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.
Governmental Regulation
FDA Regulation
. Pharmaceutical products are subject to extensive pre- and
post-marketing regulation by the Food and Drug Administration, 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
4
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.
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 officer and chief financial officer
are required to certify its financial statements;
5
-
ensure Molecular USA's directors and senior officers are required to
forfeit all bonuses or other incentive-based compensation and profits received
from the sale of Molecular USA's securities in the twelve month period
following initial publication of any of Molecular USA's financial statements
that later require restatement;
-
disclose any off-balance sheet transactions as required by SOA;
-
prohibit all personal loans to directors and officers;
-
insure directors, officers and 10% holders file their Forms 4's within two
days of a transaction;
-
adopt a code of ethics and file a Form 8-K whenever there is a change or
waiver of this code; and
-
insure Molecular USA's auditor is independent as defined by SOA.
SOA has required us to review our current procedures and policies to
determine whether they comply with the SOA and the new regulations promulgated
thereunder. We will continue to monitor our compliance with all future
regulations that are adopted under the SOA and will take whatever actions are
necessary to ensure that we are in compliance.
Environmental Compliance
The nature of Molecular USA's and MPLA's business does not
require special environmental or local government approval. Molecular USA and
MPLA are compliant with all environmental laws. The cost of such compliance is
minimal for the Corporation.
Employees
In the year ended 2011, Molecular USA did not have any employees and does not
intend to hire any employees in the upcoming year. We rely heavily on outside
contractors to conduct our business.
Immediate Business Plans
The Corporation, 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.
Reports to Securities Holders
We are required to file annual reports on Form 10-K and
quarterly reports on Form 10-Q 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 1A. Risk Factors
No disclosure is required hereunder as the Corporation is a "smaller
reporting company," as defined in Item 10(f) of Regulation S-K.
6
Item 1B. Unresolved Staff Comments
Not applicable.
Item 2. Propert
ies
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, 2011, from a
corporation controlled by an officer of PharmaNet.
Item 3. Legal Proceedings
We know of no material, active or pending legal proceedings
against our Corporation, 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.
Removed and Reserved
Not Applicable.
PART II
Item 5. Market for Registrant's Common
Equity, Related Stockholder Matters
and Issuer Purchases of Equity
Securities
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.quotemedia.com) for each full financial quarter
for the two most recent full fiscal years were as follows:
Quarter Ended
(1)
(2)
|
High
|
Low
|
June 30, 2011
|
$0.006
|
$0.004
|
March 31, 2011
|
$0.013
|
$0.0138
|
December 31, 2010
|
$0.038
|
$0.008
|
September 30, 2010
|
$0.038
|
$0.037
|
June 30, 2010
|
$0.028
|
$0.018
|
March 31, 2010
|
$0.057
|
$0.018
|
December 31, 2009
|
$0.040
|
$0.015
|
September 30, 2009
|
$0.020
|
$0.005
|
June 30, 2009
|
$0.038
|
$0.010
|
March 31, 2009
|
$0.040
|
$0.010
|
Note
s:
|
|
(1)
|
The quotations above
reflect inter-dealer prices, without retail mark-up, mark-down or commission
and may not represent actual transactions.
|
|
(2)
|
Molecular USA was
originally first quoted on the OTCBB on May 13, 2005 under the symbol "BHWV".
Its symbol was changed to "MLPH" on August 29, 2005. On November 26, 2007, the
stock was moved to the PinkSheet quotation system for failure to comply with
NASD 6530. The shares of Molecular were eligible to be quoted once again on
the OTCBB on November 26, 2008 on application request by a market maker of the
common stock of Molecular.
|
7
Holders of Common Stock
As of September 7, 2011, there were 19 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
.
Equity Compensation Plan
We do not have any securities authorized for issuance under
any equity compensation plans.
Recent Sales of Unregistered Securities
None
Item 6. Selected Financial
Data
No disclosure is required hereunder as Molecular USA is a "smaller reporting
company," as defined in Item 10(f) of Regulation S-K.
Item 7. Management Discussion and Analysis
of
Financial Condition and Results of Operations.
THE FOLLOWING ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OF THE CORPORATION FOR YEAR ENDING JUNE
30, 2011, SHOULD BE READ IN CONJUNCTION WITH THE CORPORATION'S CONSOLIDATED
FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO CONTAINED ELSEWHERE IN THE
FORM 10-K.
Our consolidated financial statements are stated in United States Dollars and
are prepared in accordance with United States Generally Accepted Accounting
Principles.
2011 Activities and Developments
For the year ended June 30, 2011, our net loss was $121,860
($0.001 per share). The loss per share was based on a average of 111,553,740
common shares outstanding. For the year ended June 30, 2010, our net loss
was $117,220 ($0.001 per share). The loss per share was based on a weighted
average of 111,553,740
common shares outstanding. For the year ended June 30, 2009, the net loss was
$94,336 ($0.001 per share) based on a weighted average of 111,553,740
common shares outstanding. For the period from inception
on July 14, 2004 to June 30, 2011, Molecular USA has an accumulated net loss of
$1,672,666. Molecular has working capital deficit of $
4,771
at June 30, 2011 (June 30, 2010- working capital deficit
of $11,356). As a result our auditors have 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 future private placements of our equity securities
and/or future financing from our majority shareholder PharmaNet and, if
available on satisfactory terms, or debt financing.
If we are unsuccessful in obtaining new capital, our ability
to seek and consummate strategic acquisitions to build our corporation
internationally and to expand on our business development and marketing programs
could be adversely affected.
8
Results of Operation
For the years ended June 30, 2011, June 30, 2010 and June 30, 2009 and for
the period from July 14, 2004 (inception) through to June 30, 2011.
REVENUES
REVENUE- Molecular has net loss of $121,860 for the year ended June 30, 2011
(year ended June 30, 2010- loss of $117,220 and year ended June 30, 2009- loss
of $94,336) and $1,672,666 for the period from inception to June 30, 2011. To
date, we have generated no revenue from our business operations.
LOANS- As of June 30, 2011, PharmaNet has loaned Molecular USA a total of
$1,896,625 for working capital (year ended June 30, 2010 - $1,465,002). 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, 2011 was $Nil (year ended June 30, 2010 - $Nil).
EXPENSES
SUMMARY-
Total expenses were $121,860 for the year ended June 30, 2011.
Total expenses were $117,220 for the year ended June 30, 2010 and $117,942 for
the year ended June 30, 2009. Expenses have increased in the year ended June 30,
2011, by $4,640. A total of $1,957,637 in expenses has been incurred by
Molecular USA since inception on July 14, 2004, through to June 30, 2011. The
increase in costs over the past year has occurred as the result of an increase
in consulting fees over the year. The costs can be subdivided into the following
categories.
-
Rent Expenses
: Molecular USA incurred $Nil in rent expenses for the
years ended June 30, 2011, June 30, 2010 and June 30, 2009, while a total of
$27,759 was incurred in the period from inception on July 14, 2004 to June
30, 2011.
-
Consulting Expenses
: Molecular USA relies on consultants and other
third parties to conduct the majority of its research. For the year ended June
30, 2011, a total of $52,690 in consulting expenses was incurred as compared to
$41,920 for the year ended June 30, 2010 and $35,214 for the year ended June
30, 2009. We have incurred a total of $1,189,517 in the period from inception
on July 14, 2004 to June 30, 2011.
-
Analysis Costs:
Molecular USA incurred $Nil in analysis costs for the
years ended June 30, 2011, June 30, 2010, and June 30, 2009, while a total of
$33,947 was incurred in the period from inception on July 14, 2004 to June 30,
2011.
-
Advertising and Promotion Fees
: Molecular USA
has spent a nominal amount in this area. During the years ended June 30, 2011,
June 30, 2010 and June 30, 2009, we spent $Nil on advertising and promotional
fees. We have incurred a total of $23,739 in the period from inception on July
14, 2004 to June 30, 2011.
-
Professional Fees
: Molecular USA incurred $42,142 in professional fees
for the year ended on June 30, 2011, as compared to $44,766 for the year ended
June 30, 2010 and $52,386 for the year ended June 30, 2009. From inception to
June 30, 2011, we have incurred a total of $310,976 in professional fees mainly
spent on legal and accounting matters.
-
Public Relations
: Molecular USA incurred $Nil for the years ended June
30, 2011, June 30, 2010 and June 30, 2009, while a total of $3,656 was incurred
in the period from inception on July 14, 2004 to June 30, 2011.
-
Travel Costs
: Molecular USA incurred $Nil in travel costs for the years
ended on June 30, 2011, June
30, 2010 and $1,683 in travel costs for the year ended June 30, 2009. We have
incurred a total of $104,249 in the period from inception on July 14, 2004 to
June 30, 2011. 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 we have ongoing trials or research
projects.
-
Salaries and Benefit Costs
: Molecular USA and its subsidiary rely
primarily on outside consultants and not salaried employees. As a result,
Molecular USA incurred $Nil in salaries and benefits for the years ended June
30, 2011, June 30, 2010 and June 30, 2009. For the period July
14, 2004 (inception) through June 30, 2011, 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.
9
INCOME TAX PROVISION
: We have losses carried forward for income tax
purpose to June 30, 2011. There are no current or deferred tax expenses for the
year ended June 30, 2011, 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.
Off-Balance Sheet Arrangement
As of June 30, 2011, 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 during the year ended June 30, 2011,
amounted to $Nil ($Nil for the years ended June 30, 2010 and
June 30, 2009) Molecular USA does not anticipate any significant purchase
or sale of equipment over the next 12 months.
10
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 corporation of MPLA. Accordingly,
PharmaNet controls approximately 79% of Molecular USA's issued and outstanding
shares of common stock.
Recent Accounting Pronouncements
In June 2011, the Financial Accounting Standards Board ("FASB") issued ASU
No. 2011-05,
"Presentation of Comprehensive Income"
. This ASU presents an
entity with the option to present the total of comprehensive income, the
components of net income, and the component of other comprehensive income either
in a single continuous statement of comprehensive income or in two separate but
consecutive statements. In both choices, an entity is required to present each
component of other comprehensive income along with a total for other
comprehensive income, and a total amount for comprehensive income. This update
eliminates the option to present the components of other comprehensive income as
part of the statement of changes in stockholders' equity/deficit. The amendments
in this update do not change the items that must be reported in other
comprehensive income or when an item of other comprehensive income must be
reclassified to net income. ASU No. 2011-05 should be applied retrospectively
and is effective for fiscal years, and interim periods within those years,
beginning after December 15, 2011. As ASU No. 2011-05 relates only to the
presentation of Comprehensive Income, the Corporation does not expect the
adoption of this update will have a material effect on its consolidated
financial statements.
In May 2011, the FASB issued ASU No. 2011-04,
"Fair Value Measurement"
to amend the accounting and disclosure requirements on fair value measurements.
This ASU limits the highest-and-best-use measure to nonfinancial assets, permits
certain financial assets and liabilities with offsetting positions in market or
counterparty credit risks to be measured at a net basis, and provides guidance
on the applicability of premiums and discounts. Additionally, this update
expands the disclosure on Level 3 inputs by requiring quantitative disclosure of
the unobservable inputs and assumptions, as well as description of the valuation
processes and the sensitivity of the fair value to changes in unobservable
inputs. ASU No. 2011-04 is to be applied prospectively and is effective during
interim and annual periods beginning after December 15, 2011. The Corporation
does not expect the adoption of this update will have a material effect on its
consolidated financial statements.
In February 2010, the FASB issued ASU No. 2010-09,
"Amendments to Certain Recognition and Disclosure Requirements"
, which
eliminates the requirement for Securities and Exchange Commission ("SEC") filers
to disclose the date through which an entity has evaluated subsequent events.
ASU No. 2010-09 is effective for its fiscal quarter beginning after 15 December
2010. The adoption of ASU No. 2010-09 did not have a material impact on
the Company's consolidated financial statements.
In January 2010, the FASB issued ASU No. 2010-06,
"Fair
Value Measurement and Disclosures (Topic 820): Improving Disclosure and Fair
Value Measurements"
, which requires that purchases, sales, issuances, and
settlements for Level 3 measurements be disclosed. ASU No. 2010-06 is
effective for its fiscal quarter beginning after 15 December 2010. The
adoption of ASU No. 2010-06 did not have a material impact on the Company's
consolidated financial statements.
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.
11
Stock-based Compensation
Effective January 1, 2006, the Corporation adopted the provisions of ASC 718,
"
Compensation- Stock Compensation
", which establishes accounting for
equity instruments exchanged for employee services. Under the provisions of ASC
718, stock-based compensation cost is measured at the grant date, based on the
calculated fair value of the award, and is recognized as an expense over the
employees' requisite service period (generally the vesting period of the equity
grant). The Corporation adopted ASC 718 using the modified prospective method,
which requires the Corporation to record compensation expense over the vesting
period for all awards granted after the date of adoption, and for the unvested
portion of previously granted awards that remain outstanding at the date of
adoption. Accordingly, the financial statements for the periods prior to January
1, 2006 have not been restated to reflect the fair value method of expensing
share-based compensation. The adoption of ASC 718 does not change the way the
Corporation accounts for share-based payments to non-employees, with guidance
provided by ASC 505-50, "
Equity-Based Payments to Non-Employees
".
Item 7A. Quantitative and Qualitative Disclosures
about Market Risk
No disclosure is required hereunder as the
Corporation is a "smaller reporting company," as defined in Item 10(f) of
Regulation S-K.
Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
dated August 9, 2011.
Consolidated Balance Sheets as at June 30, 2011 and June 30, 2010.
Consolidated Statements of Operations for the years ended June 30, 2011,
June 30, 2010 and June 30, 2009 and for the period from the date of inception
on July 14, 2004 to June 30, 2011.
Consolidated Statements of Cash Flows for the years ended June 30, 2011,
June 30, 2010 and June 30, 2009 and for the period from the date of inception
on July 14, 2004 to June 30, 2011.
Consolidated Statement of Stockholders' Deficiency for the years ended June
30, 2011, June 30, 2010 and June 30, 2009 and for the period from the date of
inception on July 14, 2004 to June 30, 2011.
Notes to Consolidated Financial Statements
12
James Stafford
|
|
|
James Stafford,
Inc.
Chartered Accountants
Suite 350 - 1111 Melville Street
Vancouver, British Columbia
Canada V6E 3V6
Telephone +1 604 669 0711
Facsimile +1 604 669 0754
www.jamesstafford.ca
|
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
We have audited the accompanying consolidated balance sheets of
Molecular Pharmacology (USA) Limited
(A Development
Stage Company) (the "Company")
as of 30 June 2011 and 2010 and the
related consolidated statements of operations, cash flows and changes in
stockholders' deficiency for each of the years in the three-year period ended 30
June 2011. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States of America). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
also includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of 30 June 2011 and 2010 and the results of its operations and its cash flows
for each of the years in the three-year period ended 30 June 2011 in conformity
with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the consolidated financial statements, conditions exist which raise
substantial doubt about the Company's ability to continue as a going concern
unless it is able to generate sufficient cash flows to meet its obligations and
sustain its operations. Management's plans in regard to these matters are also
described in Note 1. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Chartered Accountants
Vancouver, Canada
9 August 2011
13
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2011
14
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Consolidated Balance Sheets
(Expressed in U.S. Dollars)
|
|
As at
30 June
2011
|
|
As at
30 June
2010
|
|
|
$
|
|
$
|
Assets
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
Cash and cash equivalents
|
|
8,675
|
|
7,975
|
Amounts receivable
|
|
6,606
|
|
1,480
|
|
|
|
|
|
|
|
15,281
|
|
9,455
|
|
|
|
|
|
Equipment
(Note 3)
|
|
1,608
|
|
2,197
|
|
|
|
|
|
|
|
16,889
|
|
11,652
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
Accounts payable and accrued
liabilities (Note 4)
|
|
20,052
|
|
20,811
|
|
|
|
|
|
Due to related parties
(Note 5)
|
|
1,963,529
|
|
1,477,711
|
|
|
|
|
|
|
|
1,983,581
|
|
1,498,522
|
|
|
|
|
|
Stockholders' deficiency
|
|
|
|
|
Capital stock
(Note 6)
|
|
|
|
|
Authorized
|
|
|
|
|
300,000,000 common shares, par
value $0.001
|
|
|
|
|
Issued and outstanding
|
|
|
|
|
30 June 2011- 111,553,740 common shares, par value $0.001
|
|
|
|
|
30 June 2010- 111,553,740 common shares, par value $0.001
|
|
111,554
|
|
111,554
|
Additional paid-in capital
|
|
106,707
|
|
106,707
|
Cumulative translation
adjustment
|
|
(512,287)
|
|
(154,325)
|
Deficit, accumulated during the
development stage
|
|
(1,672,666)
|
|
(1,550,806)
|
|
|
|
|
|
|
|
(1,966,692)
|
|
(1,486,870)
|
|
|
|
|
|
|
|
16,889
|
|
11,652
|
Nature and Continuance of Operations
(Note 1),
Commitment
(Note
8),
Contingency
(Note 11) and
Subsequent Events
(Note 13)
On behalf of the Board:
/s/ Jeffrey Edwards
Director
Jeffrey Edwards
The accompanying notes are an integral part of these
consolidated financial statements.
15
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Consolidated Statements of Operations
(Expressed in U.S. Dollars)
|
|
For the
period from
the date of inception on
14 July 2004
to
30 June
2011
(Unaudited)
|
For the
year
ended
30 June
2011
|
For the
year
ended
30 June
2010
|
For the
year
ended
30 June
2009
|
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
Advertising and promotion
|
|
|
|
23,739
|
|
-
|
|
-
|
|
-
|
Amortization (Note 3)
|
|
|
|
6,242
|
|
589
|
|
723
|
|
906
|
Analysis
|
|
|
|
33,947
|
|
-
|
|
-
|
|
-
|
Consulting (Note 5)
|
|
|
|
1,189,517
|
|
52,690
|
|
41,920
|
|
35,214
|
Office and miscellaneous (Note 5)
|
|
|
|
195,916
|
|
24,761
|
|
25,144
|
|
22,358
|
Professional fees
|
|
|
|
310,976
|
|
42,142
|
|
44,766
|
|
52,386
|
Public relations
|
|
|
|
3,656
|
|
-
|
|
-
|
|
-
|
Rent (Note 5)
|
|
|
|
27,759
|
|
-
|
|
-
|
|
-
|
Salaries and benefits
|
|
|
|
44,464
|
|
-
|
|
-
|
|
-
|
Transfer agent and filing fees
|
|
|
|
17,172
|
|
1,678
|
|
4,667
|
|
5,395
|
Travel
|
|
|
|
104,249
|
|
-
|
|
-
|
|
1,683
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before other items
|
|
|
|
(1,957,637)
|
|
(121,860)
|
|
(117,220)
|
|
(117,942)
|
|
|
|
|
|
|
|
|
|
|
|
Other items
|
|
|
|
|
|
|
|
|
|
|
Export market development grants
|
|
|
|
69,629
|
|
-
|
|
-
|
|
6,455
|
Interest income
|
|
|
|
2,322
|
|
-
|
|
-
|
|
-
|
Research and development tax refund
|
|
|
213,020
|
|
-
|
|
-
|
|
17,151
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
|
|
(1,672,666)
|
|
(121,860)
|
|
(117,220)
|
|
(94,336)
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
loss per common share
|
|
|
|
(0.001)
|
|
|
|
(0.001)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares used in per share calculations
|
|
|
|
111,553,740
|
|
111,553,740
|
|
111,553,740
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period
|
|
|
|
(1,672,666)
|
|
(121,860)
|
|
(117,220)
|
|
(94,336)
|
Foreign currency translation adjustment
|
|
|
|
(512,287)
|
|
(357,962)
|
|
(78,521)
|
|
219,034
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income (loss) for the period
|
|
|
(2,184,953)
|
|
(479,822)
|
|
(195,741)
|
|
124,698
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted comprehensive income (loss) per common share
|
|
|
|
(0.004)
|
|
(0.002)
|
|
0.001
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
16
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)
|
|
For the
period
from
the date of inception on
14 July 2004
to
30 June
2011
(Unaudited)
|
For the
year
ended
30 June
2011
|
For the
year
ended
30 June
2010
|
For the
year
ended
30 June
2009
|
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in
operating activities
|
|
|
|
|
|
|
|
|
Net loss for
the period
|
|
|
|
(1,672,666)
|
|
(121,860)
|
|
(117,220)
|
|
(94,336)
|
Adjustments to reconcile loss to net cash used by operating activities
|
|
|
|
|
|
|
|
|
|
|
Amortization
(Note 3)
|
|
|
|
6,242
|
|
589
|
|
723
|
|
906
|
Write-down of
intangible assets
|
|
|
|
1,278
|
|
-
|
|
-
|
|
-
|
Changes in
operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in amounts receivable
|
|
|
(4,380)
|
|
(5,126)
|
|
1,437
|
|
6,479
|
Increase (decrease) in accounts payable and accrued liabilities (Note 4)
|
|
|
(27,365)
|
|
(759)
|
|
(10,018)
|
|
11,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,696,891)
|
|
(127,156)
|
|
(125,078)
|
|
(75,180)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from (used in) investing activities
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment (Note 3)
|
|
|
(7,850)
|
|
-
|
|
-
|
|
(114)
|
Purchase of
intangible assets
|
|
|
|
(1,278)
|
|
-
|
|
-
|
|
-
|
Cash acquired
on the purchase of
Molecular Pharmacology (USA) Limited (Note 1)
|
|
|
|
37,163
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,035
|
|
-
|
|
-
|
|
(114)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from (used in) financing activities
|
|
|
|
|
|
|
|
|
Common shares
issued for cash
|
|
|
|
234,497
|
|
-
|
|
-
|
|
-
|
Increase (decrease) in due to related parties (Note 5)
|
|
|
1,955,321
|
|
485,818
|
|
204,031
|
|
(157,687)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,189,818
|
|
485,818
|
|
204,031
|
|
(157,687)
|
|
|
|
|
|
|
|
|
|
|
|
Effect of
exchange rate changes on cash
|
|
|
|
(512,287)
|
|
(357,962)
|
|
(78,521)
|
|
219,034
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
8,675
|
|
700
|
|
432
|
|
(13,947)
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents, beginning of period
|
|
|
|
-
|
|
7,975
|
|
7,543
|
|
21,490
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents, end of period
|
|
|
|
8,675
|
|
8,675
|
|
7,975
|
|
7,543
|
Supplemental Disclosures with Respect to Cash Flows
(Note 9)
The accompanying notes are an integral part of these
consolidated financial statements.
17
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Consolidated Statements of Changes in Stockholders'
Deficiency
(Expressed in U.S. Dollars)
|
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 (Unaudited)
|
|
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 (Unaudited)
|
|
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 (Unaudited)
|
|
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 (Unaudited)
|
|
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 (Unaudited)
|
|
111,553,740
|
|
111,554
|
|
106,707
|
|
(1,339,250)
|
|
(294,838)
|
|
(1,415,827)
|
Net
loss for the year
|
|
-
|
|
-
|
|
-
|
|
(94,336)
|
|
-
|
|
(94,336)
|
Cumulative translation
adjustment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
219,034
|
|
219,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2009
|
|
111,553,740
|
|
111,554
|
|
106,707
|
|
(1,433,586)
|
|
(75,804)
|
|
(1,291,129)
|
Net loss for the year
|
|
-
|
|
-
|
|
-
|
|
(117,220)
|
|
-
|
|
(117,220)
|
Cumulative translation
adjustment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(78,521)
|
|
(78,521)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2010
|
111,553,740
|
|
111,554
|
|
106,707
|
|
(1,550,806)
|
|
(154,325)
|
|
(1,486,870)
|
Net loss for the year
|
-
|
|
-
|
|
-
|
|
(121,860)
|
|
-
|
|
(121,860)
|
Cumulative translation
adjustment
|
-
|
|
-
|
|
-
|
|
-
|
|
(357,962)
|
|
(357,962)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2011
|
111,553,740
|
|
111,554
|
|
106,707
|
|
(1,672,666)
|
|
(512,287)
|
|
(1,966,692)
|
The accompanying notes are an integral part of these
consolidated financial statements.
18
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2011
-
Nature and Continuance of Operations
Molecular Pharmacology (USA) Limited (the "Company") was incorporated in the
state of Nevada on 1 May 2002 under the name Blue Hawk Ventures, Inc. The
Company changed its name to Molecular Pharmacology (USA) Limited on 29 August
2005. At the same time, the Company completed a four for one forward split of
its issued and outstanding share capital and altered its authorized share
capital to 300,000,000 shares of common stock with a par value of $0.001 per
share.
The Company is a development stage enterprise, as defined in Accounting
Standards Codification (the "Codification" or "ASC") 915-10, "
Development
Stage Entities
". The Company is devoting all of its present efforts to
securing and establishing a new business and its current planned principle
operations have not commenced. Accordingly, no revenue has been derived during
the organization period.
Up until the fall of 2005, the Company was in the business of mineral
exploration and development of a mineral property. The Company allowed the
option on its mineral claim to lapse in the fall of 2005.
On 13 October 2005, the Company entered into a distribution and supply
agreement (the "Distribution Agreement") with Molecular Pharmacology Pty. Ltd.
(formerly Molecular Pharmacology Limited) ("MPLA"). MPLA was incorporated under
the laws of Australia and converted to a proprietary company on 29 October
2009. MPLA is a wholly owned subsidiary company of PharmaNet Group Limited ("PharmaNet"),
an Australian company listed on the Australian Stock Exchange. Under the terms
of the Distribution Agreement, the Company has the exclusive distribution
rights to distribute, market, promote, detail, advertise and sell certain
"Licensed Products", as defined in the Distribution 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 (the "Purchase Agreement"). Under the terms of the Purchase Agreement
the Company acquired 100% of the issued and outstanding shares of MPLA. The
Company, in exchange for 100% of the issued and outstanding shares of MPLA,
issued PharmaNet an aggregate total of 88,000,000 common shares of the Company
on the closing of the transaction. The issuance of 88,000,000 common shares of
the Company constituted an acquisition of control of the Company by PharmaNet.
The transaction has been accounted for as a recapitalization of the Company
(Note 2).
MPLA was incorporated on 14 July 2004 under the laws of Australia. The
accompanying consolidated financial statements are the historical financial
statements of MPLA.
19
Molecular
Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2011
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 2011 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 a net loss of
$121,860 for the year ended 30 June 2011 (2010- $117,220) and has a working
capital deficit of $4,771 at 30 June 2011 (2010- $11,356).
Management cannot provide assurance that the Company will ultimately achieve
profitable operations or become cash flow positive, or raise additional debt
and/or equity capital. Management believes that the Company's capital resources
should be adequate to continue operating and maintaining its business strategy
during the fiscal year ending 30 June 2012. 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 2011, 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.
-
Significant Accounting Policies
The following is a summary of significant accounting policies used in the
preparation of these consolidated financial statements.
Basis of presentation
These consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
("U.S. GAAP") applicable for a development stage company for financial
information and are expressed in U.S. dollars.
Principles of consolidation
These consolidated financial statements include the accounts of MPLA since
its incorporation on 14 July 2004 and the Company since the reverse acquisition
on 8 May 2006 (Note 1). All intercompany balances and transactions have been
eliminated.
Cash and cash equivalents
Cash and cash equivalents include highly liquid investments with original
maturities of three months or less.
20
Molecular
Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2011
Segments of an enterprise and related information
ASC 280, "
Segment Reporting
"
establishes guidance for the way that public companies report information about
operating segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial statements
issued to the public. It also establishes standards for disclosures regarding
products and services, geographic areas and major customers. ASC 280 defines
operating segments as components of a company about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance.
Foreign currency translation
The Company's functional and reporting currency is U.S. dollars. The
consolidated financial statements of the Company are translated to U.S. dollars
in accordance with ASC 830, "
Foreign Currency Matters
".
Assets and liabilities denominated in foreign currencies are translated
using the exchange rate prevailing at the balance sheet date. Revenue and
expenses are translated at average rates of exchange prevailing during the
year. Translation adjustments resulting from this process are charged or
credited to Other Comprehensive Income
.
The Company has not, to the date of these consolidated
financial statements, entered into derivative instruments to offset the impact
of foreign currency fluctuations.
Equipment
Equipment is recorded at cost and amortization is provided over its
estimated economic life at the rate of
15% declining balance.
Income taxes
Deferred income taxes are reported for timing differences
between items of income or expense reported in the financial statements and
those reported for income tax purposes in accordance with ASC 740,
"Income
Taxes"
, which requires the use of the asset/liability method of accounting
for income taxes. Deferred income taxes and tax benefits are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases, and for tax losses and credit carry-forwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The Company provides for deferred taxes
for the estimated future tax effects attributable to temporary differences and
carry-forwards when realization is more likely than not.
Comprehensive income (loss)
ASC 220, "
Comprehensive Income
", establishes standards for the
reporting and disclosure of comprehensive income (loss) and its components in
the financial statements. As at 30 June 2011, the Company has items that
represent a comprehensive loss and, therefore, has included a schedule of
comprehensive loss in the consolidated financial statements.
21
Molecular
Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2011
Basic and diluted net income (loss) per share
The Company computes net income (loss) per share in accordance with ASC 260,
"
Earnings per Share
". ASC 260 requires presentation of both basic and
diluted earnings per share ("EPS") on the face of the income statement. Basic
EPS is computed by dividing net income (loss) available to common shareholders
(numerator) by the weighted average number of shares outstanding (denominator)
during the period. Diluted EPS gives effect to all potentially dilutive common
shares outstanding during the period using the treasury stock method and
convertible preferred stock using the if-converted method. In computing diluted
EPS, the average stock price for the period is used in determining the number
of shares assumed to be purchased from the exercise of stock options or
warrants. Diluted EPS excludes all potentially dilutive shares if their effect
is anti-dilutive.
Stock-based compensation
Effective 1 January 2006, the Company adopted the provisions of ASC 718, "
Compensation- Stock Compensation
", which establishes accounting for equity instruments
exchanged for employee services. Under the provisions of ASC 718, stock-based
compensation cost is measured at the grant date, based on the calculated fair
value of the award, and is recognized as an expense over the employees'
requisite service period (generally the vesting period of the equity grant).
The Company adopted ASC 718 using the modified prospective method, which
requires the Company to record compensation expense over the vesting period for
all awards granted after the date of adoption, and for the unvested portion of
previously granted awards that remain outstanding at the date of adoption.
Accordingly, the financial statements for the periods prior to 1 January 2006
have not been restated to reflect the fair value method of expensing
share-based compensation. The adoption of ASC 718 does not change the way the
Company accounts for share-based payments to non-employees, with guidance
provided by ASC 505-50, "
Equity-Based Payments to Non-Employees
".
Comparative figures
Certain comparative figures have been adjusted to conform to the current
year's presentation.
Changes in accounting policies
In February 2010, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") No. 2010-09,
"Amendments to Certain
Recognition and Disclosure Requirements"
, which eliminates the requirement
for Securities and Exchange Commission ("SEC") filers to disclose the date
through which an entity has evaluated subsequent events. ASU No. 2010-09
is effective for its fiscal quarter beginning after 15 December 2010. The
adoption of ASU No. 2010-09 did not have a material impact on the Company's
consolidated financial statements.
In January 2010, the FASB issued ASU No. 2010-06,
"Fair Value Measurement
and Disclosures (Topic 820): Improving Disclosure and Fair Value Measurements"
,
which requires that purchases, sales, issuances, and settlements for Level 3
measurements be disclosed. ASU No. 2010-06 is effective for its fiscal
quarter beginning after 15 December 2010. The adoption of ASU No. 2010-06
did not have a material impact on the Company's consolidated financial
statements.
22
Molecular
Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2011
Recent Accounting Pronouncements
In June 2011, the FASB issued ASU No. 2011-05,
"Presentation of
Comprehensive Income"
. This ASU presents an entity with the option to
present the total of comprehensive income, the components of net income, and
the component of other comprehensive income either in a single continuous
statement of comprehensive income or in two separate but consecutive
statements. In both choices, an entity is required to present each component of
other comprehensive income along with a total for other comprehensive income,
and a total amount for comprehensive income. This update eliminates the option
to present the components of other comprehensive income as part of the
statement of changes in stockholders' equity/deficit. The amendments in this
update do not change the items that must be reported in other comprehensive
income or when an item of other comprehensive income must be reclassified to
net income. ASU No. 2011-05 should be applied retrospectively and is effective
for fiscal years, and interim periods within those years, beginning after 15
December 2011. As ASU No. 2011-05 relates only to the presentation of
Comprehensive Income, the Company does not expect the adoption of this update
will have a material effect on its consolidated financial statements.
In May 2011, the FASB issued ASU No. 2011-04,
"Fair Value Measurement"
to amend the accounting and disclosure requirements on fair value measurements.
This ASU limits the highest-and-best-use measure to nonfinancial assets,
permits certain financial assets and liabilities with offsetting positions in
market or counterparty credit risks to be measured at a net basis, and provides
guidance on the applicability of premiums and discounts. Additionally, this
update expands the disclosure on Level 3 inputs by requiring quantitative
disclosure of the unobservable inputs and assumptions, as well as description
of the valuation processes and the sensitivity of the fair value to changes in
unobservable inputs. ASU No. 2011-04 is to be applied prospectively and is
effective during interim and annual periods beginning after 15 December 2011.
The Company does not expect the adoption of this update will have a material
effect on its consolidated financial statements.
-
Equipment
|
|
|
Accumulated amortization
|
|
Net Book Value
|
|
|
Cost
|
|
As at
30 June
2011
|
|
As at
30 June
2010
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
Office
equipment
|
|
7,850
|
|
6,242
|
|
1,608
|
|
2,197
|
During the year ended 30 June 2011, the total additions to equipment were
$Nil (2010- $Nil).
-
Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities are non-interest bearing, unsecured
and have settlement dates within one year.
23
Molecular
Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2011
-
Due to Related Parties and Related Party Transactions
As at 30 June 2011, the amount due to related parties includes $1,000
payable to a director of the Company (2010- $1,000). This balance is
non-interest bearing, unsecured and has no fixed terms of repayment.
As at 30 June 2011, the amount due to related parties includes $65,231
payable to a company owned by a director of the Company or an officer of
PharmaNet (2010- $11,030). This
balance is non-interest bearing, unsecured and has no fixed terms of
repayment.
As at 30 June 2011, the amount due to related parties includes $673 payable
to a company owned by a director of the Company or an officer of PharmaNet
(2010- $679). This balance is
non-interest bearing, unsecured and has no fixed terms of repayment.
As at 30 June 2011, the amount due to related parties includes $1,896,625
payable to PharmaNet (2010- $1,465,002). This balance is non-interest
bearing, unsecured and has no fixed terms of repayment.
During the year ended 30 June
2011, a director of the Company or an officer of PharmaNet, and their
controlled entities were paid or accrued consulting fees of $43,786 (2010-
$41,920; 2009- $33,877; cumulative- $816,280) by the Company.
During the year ended 30 June 2011, a director of the Company or an officer
of PharmaNet, and their controlled entities were paid or accrued consulting
and administration fees of $22,897 (2010-
$Nil; 2009 - $Nil; cumulative-
$22,897) by the Company.
During the year ended 30 June 2011, a director of the Company or an officer
of PharmaNet, and their controlled entities were paid or accrued consulting
fees of $8,904 (2010- $Nil; 2009 - $Nil; cumulative- $8,904) by the Company.
During the year ended 30 June 2011, a director of the Company or an officer
of PharmaNet, and their controlled entities were paid or accrued office and
miscellaneous expenses of $Nil (2010-
$17,352; 2009- $19,279; cumulative-
$80,468) by the Company.
During the year ended 30 June 2011, a director of the Company or an officer
of PharmaNet, and their controlled entities were paid or accrued office and
miscellaneous expenses of and $Nil (2010- $4,481; 2009- $Nil; cumulative-
$4,481) by the Company.
During the year ended 30 June 2011, a director of the Company or an officer
of PharmaNet, and their controlled entities were paid or accrued rental fees
of $Nil (2010- $Nil; 2009- $Nil;
cumulative- $12,987) by the Company.
24
Molecular
Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2011
Transactions comprising the amount due to PharmaNet are as follows:
|
|
For the
year
ended
30 June
2011
|
|
For the
year
ended
30 June
2010
|
|
|
$
|
|
$
|
|
|
|
|
|
Opening
balance, beginning of year
|
|
1,465,002
|
|
1,246,058
|
Funds transferred to the Company
by PharmaNet
|
|
70,947
|
|
144,667
|
Expenses paid by PharmaNet on
behalf of the Company
|
|
9,894
|
|
1,557
|
Foreign currency translation
adjustment
|
|
350,782
|
|
72,720
|
|
|
|
|
|
Balances as at 30 June 2011 and
2010
|
|
1,896,625
|
|
1,465,002
|
The average amount due to PharmaNet for the year ended 30 June 2011 was
$1,660,885 (2010- $1,540,053; 2009- $1,270,929).
-
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.
25
Molecular
Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2011
-
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
2011
|
|
For the
year
ended
30 June
2010
|
|
For the
year
ended
30 June
2009
|
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
Loss before
income taxes
|
|
(121,860)
|
|
(117,220)
|
|
(94,336)
|
|
|
|
|
|
|
|
Federal income tax rates
|
|
34.0%
|
|
34.0%
|
|
34.0%
|
|
|
|
|
|
|
|
Income tax recovery based on the
above rates
|
|
(41,432)
|
|
(39,855)
|
|
(32,074)
|
|
|
|
|
|
|
|
Increase (decrease) due to:
|
|
|
|
|
|
|
Difference between U.S. and
foreign tax rates
|
|
3,121
|
|
2,738
|
|
1,458
|
Change in valuation allowance
|
|
99,383
|
|
53,228
|
|
(16,114)
|
Research and development tax refund not subject to tax
|
|
-
|
|
-
|
|
(5,145)
|
Foreign exchange and other
|
|
(61,072)
|
|
(16,111)
|
|
51,875
|
|
|
|
|
|
|
|
Income tax expense
|
|
-
|
|
-
|
|
-
|
The composition of the Company's deferred tax assets as at 30 June 2011 and
2010 are as follows:
|
|
As at
30 June
2011
|
|
As at
30 June
2010
|
|
|
$
|
|
$
|
|
|
|
|
|
Net income tax
operating loss carryforward
|
|
1,976,478
|
|
1,650,819
|
|
|
|
|
|
Deferred tax assets
|
|
621,252
|
|
521,868
|
Less: Valuation
allowance
|
|
(621,252)
|
|
(521,868)
|
|
|
|
|
|
Net deferred tax asset
|
|
-
|
|
-
|
26
Molecular
Pharmacology (USA) Limited
A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2011
The Company has
non-capital loss carry-forwards of approximately $1,976,478 that may be
available for tax purposes. The loss carry-forwards are all in respect to U.S.
and Australian operations and expire as follows:
2022
|
20,402
|
2023
|
46,992
|
2024
|
27,717
|
2025
|
14,187
|
2026
|
261,311
|
2027
|
111,155
|
2028
|
75,463
|
2029
|
57,882
|
2030
|
48,765
|
2031
|
43,836
|
No expiry
|
1,268,768
|
|
|
|
1,976,478
|
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.
Commitment
On 13 October 2005, the
Company entered into the Distribution Agreement with MPLA (Note 1).
The basic terms of the Distribution Agreement are as follows:
-
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);
-
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;
-
The Company is also required to pay MPLA a royalty of 5% as set out in the
Distribution Agreement;
-
MPLA will supply all Licensed Products to the Company under the
Distribution Agreement;
-
The Company is responsible for obtaining all necessary regulatory approvals
for the Licensed Products and incorporating the Licensed Products in the United
States; and
27
Molecular
Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2011
-
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).
Supplemental Disclosures with Respect to Cash Flows
|
|
For the
period from
the date of
inception on
14 July 2004
to 30 June
2011
(Unaudited)
|
For the
year
ended
30 June
2011
|
For the
year
ended
30 June
2010
|
For the
year
ended
30 June
2009
|
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid
during the year for interest
|
|
|
|
-
|
|
-
|
|
-
|
|
-
|
Cash paid
during the year for income taxes
|
|
|
|
-
|
|
-
|
|
-
|
|
-
|
Common shares
issued on acquisition of MPLA
|
|
|
|
16,236
|
|
-
|
|
-
|
|
-
|
Amounts
receivable acquired on recapitalization of the Company
|
|
|
|
2,226
|
|
-
|
|
-
|
|
-
|
Accounts
payable assumed on recapitalization of the Company
|
|
|
|
54,624
|
|
-
|
|
-
|
|
-
|
Due to related
party assumed on recapitalization of the Company
|
|
|
|
1,000
|
|
-
|
|
-
|
|
-
|
Segmented Information
Details on a geographic basis as at and for the year ended 30 June 2011 are
as follows:
|
|
Australia
|
|
U.S.A.
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
Assets
|
|
16,889
|
|
-
|
|
16,889
|
Loss for the year
|
|
(78,024)
|
|
(43,836)
|
|
(121,860)
|
28
Molecular
Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2011
Details on a geographic basis as at and for the year ended 30 June 2010 are
as follows:
|
|
Australia
|
|
U.S.A.
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
Assets
|
|
11,652
|
|
-
|
|
11,652
|
Loss for the year
|
|
(68,454)
|
|
(48,766)
|
|
(117,220)
|
Details on a geographic basis as at and for the year ended 30 June 2009 are
as follows:
|
|
Australia
|
|
U.S.A.
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
Assets
|
|
13,380
|
|
-
|
|
13,380
|
Loss for the year
|
|
(36,455)
|
|
(57,881)
|
|
(94,336)
|
-
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).
-
Financial Instruments
The carrying value of cash and cash equivalents, amounts receivable and
accounts payable approximates fair value due to the short term maturity of
these financial instruments.
Credit Risk
Financial instruments that potentially subject the Company to credit risk
consist of cash and cash equivalents and amounts receivable. The Company
deposits cash and cash equivalents with high credit quality financial
institutions as determined by rating agencies and amounts receivable consist of
Goods and Services Tax receivable of $6,606 (2010 - $1,480).
Currency Risk
The Company's subsidiary is located in Australia. As a result, a significant
portion of the Company's assets, liabilities and expenses were denominated in
the Australian dollar and were therefore subject to fluctuation in exchange
rates.
The Company's objective in managing its foreign currency
risk is to minimize its net exposures to foreign currency cash flows by holding
most of its cash and cash equivalents in Australian dollars. The Company
monitors and forecasts the values of net foreign currency cash flow and balance
sheet exposures and from time to time could authorize the use of derivative
financial instruments such as forward foreign exchange contracts to
economically hedge a portion of foreign currency fluctuations.
29
Molecular
Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2011
I
f the Australian dollar had weakened (strengthened) against the U.S.
dollar, with all other variables held constant, by 100 basis points (1%) at
year end, the impact on net loss and other comprehensive loss would have been
$19,475 higher ($19,475 lower).
The Company has not, to the date of these consolidated financial statements,
entered into derivative instruments to offset the impact of foreign currency
fluctuations.
Interest Rate Risk
The Company has non-interest paying cash balances and no interest-bearing
debt. It is management's opinion that the Company is not exposed to
significant interest risk arising from these financial instruments.
Liquidity Risk
Liquidity risk is the risk that an entity will encounter difficulty in
meeting obligations associated with its financial liabilities. The Company is
reliant upon PharmaNet as its sole source of cash. The Company has received
financing from PharmaNet in the past; however, there is no assurance that it
will be able to do so in the future.
-
Subsequent Events
There are no subsequent events for the period from the date of the year
ended 30 June 2011 to the date the consolidated financial statements were
available to be issued on 9 August 2011.
30
Item 9. 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 9.
Item 9A. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
Disclosure controls are controls and procedures that are
designed to ensure that information required to be disclosed in our reports
filed under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the SEC's rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by a corporation in
the reports that it files or submits under the Exchange Act is accumulated and
communicated to the corporation's management, including its principal executive
and principal financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.
Our management carried out an evaluation (with the
participation of our Chief Executive Officer ("CEO") and Chief Financial Officer
("CEO") ), 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 effective as of June 30, 2011.
(b) Internal control over financial reporting
Management's annual report on internal control over financial
reporting
Management is responsible for establishing and maintaining
adequate internal control over financial reporting as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act. Our internal control over financial
reporting is intended to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with U.S. GAAP. Our internal control over financial
reporting should include those policies and procedures that:
-
pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of our assets;
-
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with applicable GAAP,
and that receipts and expenditures are being made only in accordance with
authorizations of management and the Board of Directors; and
-
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
As required by Rule 13a-15(c) promulgated under the Exchange
Act, our management, with the participation of our CEO and CFO, evaluated the
effectiveness of our internal control over financial reporting as of June 30,
2011. Management's assessment took into consideration the size and complexity of
the corporation and was based on criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission in Internal Control over
Financial Reporting -Guidance for Smaller Public Companies. In performing the
assessment, management has concluded that our internal control over financial
reporting was effective as of June 30, 2011.
Attestation report of the registered public accounting firm
This annual report does not include an attestation report of
the Corporation's registered public accounting firm regarding internal control
over financial reporting. Management's report was not subject to attestation by
the Corporation's registered public accounting firm pursuant to temporary rules
of the Securities and Exchange Commission that permit the Corporation to provide
only management's report in this annual report.
31
Changes in internal control over financial reporting
There were no changes in our internal controls that occurred
during the year 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, 2011, Jeff Edwards, our President and
Chief Executive Officer, and 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 9A(T)- Controls
and Procedures
See Item 9A - Controls and Procedures above
Item 9B. Other Information
None
PART III
Item 10. Directors and Executive Officers
and
Corporate Governance
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 7, 2011 and June 30,
2011. 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.
Name
|
Age
|
Position
|
Date Position
First Held
|
Jeffrey D. Edwards
|
60
|
President and Chief Executive
Officer, acting Chief Financial Officer and Director
|
October 28, 2005
|
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 corporation 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 corporation 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 corporation listed on the
Australian Stock Exchange ("OBJ") (2005) and Global Energy Medicine Pty Ltd., a
private therapeutic device corporation (2005). He also holds the office of Chief
Operations Officer of Molecular Pharmacology Limited, a wholly owned subsidiary
of Molecular USA.
Family relationships
Not applicable.
32
Significant Employees
We have no employees who are not executive officers, but who
are expected to make a significant contribution to the Corporation'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 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 Corporation
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
solely of Mr. Edwards. Mr. Edwards does not 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.
33
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, 2011, all executive officers, directors and greater than 10%
shareholders filed the required reports in a timely manner.
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.
Item 11. 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
$100,000 during the last three complete fiscal years.
SUMMARY COMPENSATION TABLE
|
Name and Principal Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Stock Awards
($)
|
Option Awards
($)
|
Non-Equity Incentive Plan Compen-
sation
($)
|
Nonquali-fied Deferred Compen-sation ($)
|
All Other
Compen-sation
($)
|
Total
($)
|
John Palermo
Corporate Secretary
of PharmaNet
(1)
|
2011
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
$75,587
|
$75,587
|
2010
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
$63,753
|
$63,753
|
2009
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
$58,877
|
$58,877
|
Jeffery D. Edwards, President, CEO and Director
(2)
|
2011
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
2010
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
2009
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Notes
:
|
(1)
|
Mr. John Palermo is the Corporate Secretary of PharmaNet.
He is not a director or officer of Molecular USA. Mr. Palermo or
entities controlled by him were paid or accrued consulting fees during the
fiscal years ended June 30, 2011, June 30, 2010 and June 30, 2009. Mr.
Palermos or entities controlled by him also were paid or accrued rental fees
of $75,587 during the fiscal year ended June 30, 2011.
|
(2)
|
Mr. Jeffery D. Edwards was appointed to the office of President
and Chief Executive Officer of Molecular USA on July 20, 2006.
|
|
|
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 our
Corporation, from a change in control of our Corporation or a change in such
officer's responsibilities following a change in control.
34
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 years ended June 30, 2011 and June 30,
2010, 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 years ended June 30, 2011 or June 30, 2010, and there were no stock
options or stock appreciation rights outstanding on June 30, 2011 or June 30,
2010.
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 year ended June 30, 2011 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 Corporation 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.
Stock Option Plans
Molecular USA has not adopted a stock option plan or
long-term incentive plans at this time.
35
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth, as at September 7, 2011,
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.
Name and Address of Beneficial Owner
|
Amount and Nature of Beneficial Ownership
(1)
|
Percentage of Class
(1)
|
Pharmanet Group Limited
Level 1
284 Oxford Street
Leederville,
Western Australia 6007
|
78.89%
|
78.89%
|
Jeffery Edwards
10 Koeppe Road, Claremont
Perth, Australia 6010
|
0
|
0%
|
Directors and Executive Officers as a Group
|
0
|
0%
|
Notes:
|
|
(1)
|
Based on 111,553,740 shares of common stock issued and
outstanding as of September 7, 2011. Except as otherwise indicated, we believe
that the beneficial owners of the common stock listed above, based on
information furnished by such owners, have sole investment and voting power
with respect to such shares, subject to community property laws where
applicable. Beneficial ownership is determined in accordance with the rules of
the SEC and generally includes voting or investment power with respect to
securities. Shares of common stock subject to options or warrants currently
exercisable, or exercisable within 60 days, are deemed outstanding for
purposes of computing the percentage ownership of the person holding such
option or warrants, but are not deemed outstanding for purposes of computing
the percentage ownership of any other person.
|
Changes in Control
There are no present arrangements or pledges of the Corporation's securities
which may result in a change in control of the Corporation.
Item 13. Certain Relationships and Related
Transactions, and Directors Independence
Certain Relationships and Related Transactions
Other than as noted below, none of the following parties has, during the
fiscal year ended June 30, 2011, had any material interest, direct or indirect,
in any transaction with us or in any presently proposed transaction that has or
will materially affect us:
-
Any of our directors or officers;
-
Any person proposed as a nominee for election as a director;
-
Any person who beneficially owns, directly or indirectly, shares carrying
more than 10% of the voting rights attached to our outstanding shares of common
stock;
-
Any of our promoters; or
-
Any relative or spouse of any of the foregoing persons who has the same
house as such person.
As at June 30, 2011, we owe $1,000 to Jeff Edwards, a director and officer of
Molecular USA, for monies advanced by him to us (June 30, 2010 -$1,000).
The advances do not carry an interest rate, are unsecured and are due on demand.
36
As at June 30, 2011 we owed $65,231 to a corporation owned by a director of
Molecular USA or an officer of PharmaNet (June 30, 2010 - $11,030).
As at June 30, 2011, the amount due to related parties includes $673 payable
to a corporation owned by a director of Molecular USA or an officer of PharmaNet
(June 30, 2010- $679). This balance is non-interest bearing, unsecured and has
no fixed terms of repayment.
As of June 30, 2011 we owed $1,896,625 to PharmaNet for loans advanced to us
(June 30, 2010- $1,465,002). PharmaNet owns approximately 78.89% of the
common stock of Molecular USA. This balance is non-interest bearing,
unsecured and has no fixed terms of repayment.
During the fiscal year ended June 30, 2011, a director of the Corporation or
an officer of PharmaNet and companies controlled by them were paid or accrued
consulting fees of $43,786 (June 30, 2010 - $41,920; June 30, 2009- $33,877;
cumulative - $816,280) by the Corporation.
During the year ended June 30, 2011, a director of the Corporation or an
officer of PharmaNet, and their controlled entities were paid or accrued
consulting and administration fees of $22,897 (June 30, 2010 - $Nil; 2009 -
$Nil; cumulative - $22,897) by the Corporation.
During the year ended June 30, 2011, a director of the Corporation or an
officer of PharmaNet and their controlled entities were paid or accrued
consulting fees of $8,904 (2010 - $Nil; 2009 - $Nil; cumulative - $8,904) by the
Corporation.
During the year ended June 30, 2011, a director of Molecular USA or an
officer of PharmaNet, and their controlled entities were paid or accrued office
and miscellaneous expenses of $Nil (June 30, 2010- $17,352; June 30, 2009-
$19,279; cumulative- $80,468) by the Corporation.
During the year ended June 30, 2011, a director Molecular USA or an officer
of PharmaNet, and their controlled entities were paid or accrued office and
miscellaneous expenses of and $Nil (June 30, 2010- $4,481; June 30, 2009-
$Nil; cumulative- $4,481) by the Corporation.
During the fiscal year ended June 30, 2011, officers and directors of
PharmaNet or companies controlled by them were paid or accrued rental fees of
$Nil (June 30, 2010 - $Nil; June 30, 2009 - $Nil; cumulative - $12,987).
As at the date of this annual report, we do not have any policies in place
with respect to whether we will enter into agreements with related parties in
the future.
Director Independence
We currently do not have any independent directors, as the term "independent"
is defined by the rules of the NASDAQ Stock Market (Note: Our shares of common
stock are not listed on NASDAQ or any other national securities exchange and
this reference is used for definition purposes only).
Item 14. Principal Accountant Fees and Services
Fees and Services
Our principal accountant, James Stafford, Chartered
Accountants billed an aggregate of $19,694 for the fiscal year ended June 30,
2011 and for professional services rendered for the audit of the Corporation's
annual consolidated financial statements and review of the consolidated
financial statements for the included in its quarterly reports.
37
The following is an aggregate of fees billed for each of the
fiscal years ended June 30, 2011 and June 30, 2010 for professional services
rendered by our principal accountants:
|
Fiscal
year
ended
June 30,
2011
|
Fiscal
year
ended
June 30,
2010
|
Audit fees*
|
$11,228
|
$12,881
|
Audit-related fees
|
4,765
|
5,277
|
Tax fees
|
-
|
-
|
All other fees
|
3,701
|
-
|
Total fees paid or accrued to our
principal accountants
|
$19,694
|
$18,158
|
* Audit fees consist of fees related to professional services
rendered in connection with the audit of our annual consolidated financial
statements, the review of the consolidated financial statements included in each
of our quarterly reports on Form 10-Q.
Pre-Approval Policies and Procedures
Our policy is to pre-approve all audit and permissible
non-audit services performed by the independent accountants. These services may
include audit services, audit-related services, tax services and other services.
Under our audit committee's policy, pre-approval is generally provided for
particular services or categories of services, including planned services,
project based services and routine consultations. In addition, the audit
committee may also pre-approve particular services on a case-by-case basis. We
approved all services that our independent accountants provided to us in the
past two fiscal years.
PART I
V
Item 15. Exhibits, Financial Statement Schedules
Exhibit Number and Exhibit Title
2.1
|
Share Purchase
Agreement dated November 25, 2005 to acquire Molecular Pharmacology Limited
(incorporated by reference from our Form 10-KSB Registration Statement, filed
January 31, 2006)
|
3.1
|
Articles of
Incorporation as Amended (incorporated by reference from our Form 10-SB
Registration Statement, filed January 23, 2003)
|
3.2
|
Certificate of
Amendment to Articles of Incorporation, dated July 15, 2002 (incorporated by
reference from our Form 10-SB, filed January 23, 2003)
|
3.3
|
Certificate of
Amendment to Articles of Incorporation, dated August 29, 2005
|
3.4
|
Bylaws (incorporated
by reference from our Form 10-SB Registration Statement, filed May 2002
|
14.1
|
Code of Ethics
(incorporated by reference from our Form 10-KSB Registration Statement, filed
January 31, 2006)
|
21
|
Subsidiaries of
Molecular USA (incorporated by reference from our Form 10-KSB Registration
Statement, filed January 31, 2006)
|
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
|
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
|
99.1
|
Disclosure Committee
Charter (incorporated by reference from our Form 10-KSB Registration
Statement, filed January 31, 2006)
|
99.2
|
Audit Committee
Charter (incorporated by reference from our Form 10-KSB Registration
Statement, filed January 31, 2006)
|
38
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
|
MOLECULAR
PHARMACOLOGY (USA) LIMITED
|
|
BY:
|
/s/ Jeffrey D. Edwards
|
|
|
Jeffrey D. Edwards, President and Chief Executive Officer,
Chief Financial Officer and Member of the Board of Directors
|
|
Date:
|
September 30, 2011
|
|
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
|
|
|
|
BY:
|
/s/ Jeffrey D. Edwards
|
|
|
Jeffrey D. Edwards, President and Chief Executive Officer,
Chief Financial Officer and Member of the Board of Directors
|
|
Date:
|
September 30, 2011
|
|
|
|
39
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