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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One) |
|
X |
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
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For
the quarterly period ended September 30, 2014 |
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or |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
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For the transition period from __________ to __________ |
Commission file number 000-50156 |
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|
MOLECULAR PHARMACOLOGY (USA) LIMITED |
(Exact name of registrant as specified in its charter) |
NEVADA |
|
71-0900799 |
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
Drug Discovery Centre
284 Oxford Street, Leederville 6007 Perth, Western Australia |
(Address of principal executive offices) |
(Zip Code) |
011-61-8-9443-3011 |
(Registrant's telephone number, including area code) |
Not Applicable |
(Former name, former address and formal fiscal year, if changed since last
report) |
|
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. |
|
Yes x |
No o |
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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
(s232.405 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 - Issuer does not have a Web site |
Yes o |
No o |
|
i
|
Indicate by check mark whether the registrant is large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. |
|
Large Accelerated Filer o |
|
Accelerated Filer o |
|
Non-Accelerated Filer o
(Do not check if a smaller reporting company) |
|
Smaller Reporting Company x |
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act) |
|
Yes o |
No x |
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
|
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 and 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court. |
|
Yes o |
No x |
|
|
|
APPLICABLE ONLY TO CORPORATE ISSUERS:
|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date. |
111,553,740 common shares issued and outstanding as of November 13, 2014. |
|
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i
i
MOLECULAR PHARMACOLOGY (USA) LIMITED
Form 10-Q
September 30, 2014
Table of Contents
i
ii
PART 1 - FINANCIAL INFORMATION
Item 1. Interim Consolidated Financial Statements.
The information in this report for the three months ended September 30, 2014, is
unaudited but includes all adjustments (consisting only of normal recurring
accruals, unless otherwise indicated) which Molecular Pharmacology (USA) Limited
("Molecular USA" or the "Company") considers necessary for a fair
presentation of the financial position, results of operations, changes in
stockholders' deficiency and cash flows for those periods.
The interim consolidated financial statements should be read in conjunction with
Molecular USA's consolidated financial statements and the notes thereto
contained in Molecular USA's Audited Financial Statements for the year ended
June 30, 2014, in the Form 10-K filed with the Securities and Exchange
Commission (the "SEC") on September 8, 2014.
Interim results are not necessarily indicative of results for the full fiscal
year.
The unaudited interim consolidated financial statements start on the next page.
1
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Interim Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
30 September 2014
2
Molecular
Pharmacology (USA) Limited
(A Development Stage Company)
Interim Consolidated Balance Sheets
(Expressed in U.S. Dollars)
|
|
As at
30 September
2014 |
|
As at
30 June
2014
(Audited) |
|
|
$ |
|
$ |
Assets |
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
Cash and cash equivalents |
|
1,517 |
|
2,378 |
Amounts receivable |
|
7,327 |
|
6,493 |
|
|
|
|
|
|
|
8,844 |
|
8,871 |
|
|
|
|
|
Equipment (Note 4) |
|
- |
|
97 |
|
|
|
|
|
|
|
8,844 |
|
8,968 |
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
Accounts payable and accrued liabilities (Note 5) |
|
32,008 |
|
34,526 |
|
|
|
|
|
Due to related parties
(Note 6) |
|
2,075,710 |
|
2,207,296 |
|
|
|
|
|
|
|
2,107,718 |
|
2,241,822 |
|
|
|
|
|
Stockholders' deficiency |
|
|
|
|
Capital stock
(Note 7) |
|
|
|
|
Authorized |
|
|
|
|
300,000,000 common shares, par value $0.001 |
|
|
|
|
Issued and outstanding |
|
|
|
|
30 September 2014 - 111,553,740 common shares, par value $0.001 |
|
|
|
|
30 June 2014 - 111,553,740 common shares, par value $0.001 |
|
111,554 |
|
111,554 |
Additional paid-in capital |
|
106,707 |
|
106,707 |
Cumulative translation adjustment |
|
(109,233) |
|
(272,239) |
Deficit, accumulated during the development stage |
|
(2,207,902) |
|
(2,178,876) |
|
|
|
|
|
|
|
(2,098,874) |
|
(2,232,854) |
|
|
|
|
|
|
|
8,844 |
|
8,968 |
Nature and Continuance of Operations (Note 1), Commitment
(Note 13) and Subsequent Event (Note 14)
On behalf of the Board:
/s/
Jeffrey Edwards |
Director |
Jeffrey Edwards
The accompanying notes are an integral part of these interim consolidated
financial statements
3
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Interim Consolidated Statements of Operations
(Expressed in U.S. Dollars)
|
|
For the
period from
the date of inception on
14 July 2004
to 30 September
2014 |
|
For the
three month
period ended
30 September
2014 |
|
For the
Three month
period ended
30 September
2013 |
|
|
$ |
|
$ |
|
$ |
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
Advertising and promotion |
|
23,739 |
|
- |
|
- |
Amortization (Note 4) |
|
6,930 |
|
- |
|
11 |
Analysis |
|
33,947 |
|
- |
|
- |
Consulting (Note 6) |
|
1,468,453 |
|
6,933 |
|
15,285 |
Office and miscellaneous (Note 6) |
|
290,045 |
|
12,717 |
|
10,120 |
Professional fees |
|
455,482 |
|
7,515 |
|
13,697 |
Public relations |
|
3,656 |
|
- |
|
- |
Rent (Note 6) |
|
27,759 |
|
- |
|
- |
Salaries and benefits |
|
44,464 |
|
- |
|
- |
Transfer agent and filing fees |
|
25,768 |
|
1,764 |
|
1,660 |
Travel |
|
111,710 |
|
- |
|
- |
|
|
|
|
|
|
|
Net loss before other items |
|
(2,491,953) |
|
(28,929) |
|
(40,773) |
|
|
|
|
|
|
|
Other items |
|
|
|
|
|
|
Export market development grants |
|
69,629 |
|
- |
|
- |
Write-off of equipment (Note 4) |
|
(920) |
|
(97) |
|
- |
Interest income |
|
2,322 |
|
- |
|
- |
Research and development tax refund |
|
213,020 |
|
- |
|
- |
|
|
|
|
|
|
|
Net loss for the period |
|
(2,207,902) |
|
(29,026) |
|
(40,773) |
|
|
|
|
|
|
|
Basic and diluted loss per common share |
|
|
(0.000) |
|
(0.000) |
|
|
|
|
|
|
Weighted average number of common shares
used in per share calculations |
|
|
111,553,740 |
|
111,553,740 |
|
|
|
|
|
|
|
Comprehensive income (loss) |
|
|
|
|
|
|
Net loss for the period |
|
(2,207,902) |
|
(29,026) |
|
(40,773) |
Foreign currency translation adjustment |
|
(109,233) |
|
163,006 |
|
(39,281) |
|
|
|
|
|
|
|
Total comprehensive income (loss) for the period |
|
(2,317,135) |
|
133,980 |
|
(80,054) |
|
|
|
|
|
|
|
Basic and diluted comprehensive income
(loss) per common share |
|
|
0.001 |
|
(0.001) |
The accompanying notes are an integral part of these interim consolidated
financial statements.
4
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Interim Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)
|
|
For the
period from
the date of inception on
14 July 2004
to 30 September
2014 |
|
For the
three month
period ended
30 September
2014 |
|
For the
Three month
period ended
30 September
2013 |
|
|
$ |
|
$ |
|
$ |
|
|
|
|
|
|
|
Cash flows used in operating activities |
|
|
|
|
|
|
Net loss for the period |
|
(2,207,902) |
|
(29,026) |
|
(40,773) |
Adjustments to reconcile net loss to cash used by operating activities |
|
|
|
|
|
|
Amortization |
|
6,930 |
|
- |
|
11 |
Write-down of intangible assets |
|
1,278 |
|
- |
|
- |
Write-off of equipment |
|
920 |
|
97 |
|
- |
Changes in operating assets and liabilities |
|
|
|
|
|
|
Increase in amounts receivable |
|
(5,101) |
|
(834) |
|
(353) |
Increase (decrease) in accounts payable and accrued liabilities |
|
(15,409) |
|
(2,518) |
|
12,772 |
|
|
|
|
|
|
|
|
|
(2,219,284) |
|
(32,281) |
|
(28,343) |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
Purchase of equipment |
|
(7,850) |
|
- |
|
- |
Purchase of intangible assets |
|
(1,278) |
|
- |
|
- |
Cash acquired on the purchase of Molecular Pharmacology (USA) Limited |
|
37,163 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
28,035 |
|
- |
|
- |
|
|
|
|
|
|
|
Cash flows from (used in) financing activities |
|
|
|
|
|
Common shares issued for cash |
|
234,497 |
|
- |
|
- |
Increase (decrease) in due to related parties |
|
2,067,502 |
|
(131,586) |
|
67,728 |
|
|
|
|
|
|
|
|
|
2,301,999 |
|
(131,586) |
|
67,728 |
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
(109,233) |
|
163,006 |
|
(39,281) |
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents |
|
1,517 |
|
(861) |
|
104 |
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period |
|
- |
|
2,378 |
|
7,046 |
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
1,517 |
|
1,517 |
|
7,150 |
Supplemental
Disclosures with Respect to Cash Flows (Note 11)
The accompanying notes are an integral part of these interim consolidated
financial statements.
5
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Interim Consolidated Statements of Changes in Stockholders' Deficiency
(Expressed in U.S. Dollars)
|
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 (unaudited) |
|
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
(unaudited) |
111,553,740 |
|
111,554 |
|
106,707 |
|
(1,550,806) |
|
(154,325) |
|
(1,486,870) |
Net loss for the year |
- |
|
- |
|
- |
|
(121,860) |
|
- |
|
(121,860) |
Cumulative translation adjustment |
- |
|
- |
|
- |
|
- |
|
(357,962) |
|
(357,962) |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2011 |
111,553,740 |
|
111,554 |
|
106,707 |
|
(1,672,666) |
|
(512,287) |
|
(1,966,692) |
Net loss for the year |
- |
|
- |
|
- |
|
(179,382) |
|
- |
|
(179,382) |
Cumulative translation adjustment |
- |
|
- |
|
- |
|
- |
|
66,215 |
|
66,215 |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2012 |
111,553,740 |
|
111,554 |
|
106,707 |
|
(1,852,048) |
|
(446,072) |
|
(2,079,859) |
Net loss for the year |
- |
|
- |
|
- |
|
(209,900) |
|
- |
|
(209,900) |
Cumulative translation adjustment |
- |
|
- |
|
- |
|
- |
|
235,886 |
|
235,886 |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2013 |
111,553,740 |
|
111,554 |
|
106,707 |
|
(2,061,948) |
|
(210,186) |
|
(2,053,873) |
Net loss for the year |
- |
|
- |
|
- |
|
(116,928) |
|
- |
|
(116,928) |
Cumulative translation adjustment |
- |
|
- |
|
- |
|
- |
|
(62,053) |
|
(62,053) |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2014 |
111,553,740 |
|
111,554 |
|
106,707 |
|
(2,178,876) |
|
(272,239) |
|
(2,232,854) |
Net loss for the period |
- |
|
- |
|
- |
|
(29,026) |
|
- |
|
(29,026) |
Cumulative translation adjustment |
- |
|
- |
|
- |
|
- |
|
163,006 |
|
163,006 |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 September 2014 |
111,553,740 |
|
111,554 |
|
106,707 |
|
(2,207,902) |
|
(109,233) |
|
(2,098,874) |
The accompanying notes are an integral part of these interim consolidated
financial statements.
6
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
30 September 2014
1. |
Nature and Continuance of Operations |
Molecular Pharmacology (USA) Limited (the "Company") was incorporated in the
state of Nevada on 1 May 2002 under the name Blue Hawk Ventures, Inc. The
Company changed its name to Molecular Pharmacology (USA) Limited on 29 August
2005. At the same time, the Company completed a four for one forward split of
its issued and outstanding share capital and altered its authorized share
capital to 300,000,000 shares of common stock with a par value of $0.001 per
share.
The Company is a development stage enterprise, as defined in
Accounting Standards Codification (the
"Codification" or "ASC") 915-10, "Development Stage Entities". The
Company is devoting all of its present efforts to securing and establishing a
new business and its current planned principle operations have not commenced.
Accordingly, no revenue has been derived during the organization period.
Up until the fall of 2005, the Company was in the business of mineral
exploration and development of a mineral property. The Company allowed the
option on its mineral claim to lapse in the fall of 2005.
On 13 October 2005, the Company acquired the exclusive distribution rights to
distribute, market, promote, detail, advertise and sell certain "Licensed
Products" through Molecular Pharmacology Pty. Ltd. (formerly Molecular
Pharmacology Limited) ("MPLA") (Note 10). MPLA was incorporated under the laws
of Australia and converted to a proprietary company on 29 October 2009. MPLA is
a wholly owned subsidiary company of PharmaNet Group Limited ("PharmaNet"), an
Australian company listed on the Australian Stock Exchange.
Since then, the Company has engaged in organizational and start up activities,
including developing a new business plan, recruiting new directors, scientific
advisors and key scientists, making arrangements for laboratory facilities and
office space and raising additional capital. The Company has generated no
revenue from product sales. The Company does not have any pharmaceutical
products currently available for sale, and none are expected to be commercially
available for some time, if at all. The Licensed Products must first undergo
pre-clinical and human clinical testing in the United States before they may be
sold commercially.
The Company completed a share purchase agreement on 8 May 2006 with PharmaNet
(the "Purchase Agreement"). Under the terms of the Purchase Agreement the
Company acquired 100% of the issued and outstanding shares of MPLA. The Company,
in exchange for 100% of the issued and outstanding shares of MPLA, issued
PharmaNet an aggregate total of 88,000,000 common shares of the Company on the
closing of the transaction. The issuance of 88,000,000 common shares of the
Company constituted an acquisition of control of the Company by PharmaNet. The
transaction has been accounted for as a recapitalization of the Company (Note
2).
MPLA was incorporated on 14 July 2004 under the laws of Australia. The
accompanying interim consolidated financial statements are the historical
financial statements of MPLA.
On 15 March 2007, the Board of Directors approved a change in the Company's
financial year end from 31 October to 30 June. The decision to change the fiscal
year end was intended to assist the financial community in its analysis of the
business and in comparing the Company's financial results to others in the
industry, and to synchronize the Company's fiscal reporting with MPLA.
7
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
The Company's interim consolidated financial statements as at 30 September 2014
and for the three month period then ended have been prepared on a going concern
basis, which contemplates the realization of assets and settlement of
liabilities and commitments in the normal course of business. The Company has a
net loss of $29,026 for the three month period ended 30 September 2014 (30
September 2013 - $40,773; cumulative - $2,207,902) and has working capital
deficit of $23,164 at 30 September 2014 (30 June 2014 - $25,655).
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
for the next twelve month period from the date of these interim consolidated
financial statements. 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. Management is aware, in making its assessment, of material
uncertainties related to events or conditions that may cast significant doubt
upon the Company's ability to continue as a going concern. These interim
consolidated financial statements do not include any adjustments related to the
recoverability and classification of assets or the amounts and classification of
liabilities that might be necessary should the Company be unable to continue as
a going concern.
At 30 September 2014, the Company has suffered losses from development stage
activities to date. Although management is currently attempting to implement its
business plan, and is seeking additional sources of equity or debt financing,
there is no assurance these activities will be successful. These factors raise
substantial doubt about the ability of the Company to continue as a going
concern. The interim consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
2. |
Significant Accounting Policies |
The following is a summary of significant accounting policies used in the
preparation of these interim consolidated financial statements.
Basis of presentation
These interim consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
("U.S. GAAP") applicable for a development stage company for financial
information and are expressed in U.S. dollars.
Principles of consolidation
These interim consolidated financial statements include the accounts of MPLA
since its incorporation on 14 July 2004 and the Company since the reverse
acquisition on 8 May 2006 (Note 1). All intercompany balances and transactions
have been eliminated.
8
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
30 September 2014
Cash and cash equivalents
Cash and cash equivalents include highly liquid investments with original
maturities of three months or less.
Equipment
Equipment is recorded at cost and amortization is provided over its estimated
economic life at the rate of 15% declining balance.
Segments of an enterprise and related information
ASC 280, "Segment Reporting" establishes guidance for the way that public
companies report information about operating segments in annual financial
statements and requires reporting of selected information about operating
segments in interim financial statements issued to the public. It also
establishes standards for disclosures regarding products and services,
geographic areas and major customers. ASC 280 defines operating segments as
components of a company about which separate financial information is available
that is evaluated regularly by the chief operating decision maker in deciding
how to allocate resources and in assessing performance.
Foreign currency translation
The Company's functional and reporting currency is U.S. dollars. The
interim consolidated financial statements of the Company are translated to U.S.
dollars in accordance with ASC 830, "Foreign Currency Matters". Assets
and liabilities denominated in foreign currencies are translated using the
exchange rate prevailing at the balance sheet date. Revenue and expenses are
translated at average rates of exchange prevailing during the period.
Translation adjustments resulting from this process are charged or credited to
other comprehensive income.
The Company has not, to the date of these interim consolidated financial
statements, entered into derivative instruments to offset the impact of foreign
currency fluctuations.
Income taxes
Deferred income taxes are reported for timing differences between items of
income or expense reported in the interim consolidated financial statements and
those reported for income tax purposes in accordance with ASC 740, "Income
Taxes", which requires the use of the asset/liability method of accounting
for income taxes. Deferred income taxes and tax benefits are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases, and for tax losses and credit carry-forwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The Company provides for deferred taxes for the
estimated future tax effects attributable to temporary differences and
carry-forwards when realization is more likely than not.
9
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
30 September 2014
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. As at 30
September 2014, the Company had no outstanding stock options or warrants.
Comprehensive income (loss)
ASC 220, "Comprehensive Income", establishes standards for the reporting
and disclosure of comprehensive income (loss) and its components in the
financial statements. As at 30 September 2014, the Company has items that
represent a comprehensive loss and, therefore, has included a schedule of
comprehensive loss in the interim consolidated financial statements.
Stock-based compensation
Effective 1 January 2006, the Company adopted the provisions of ASC 718, "Compensation
- Stock Compensation", which establishes accounting for equity instruments
exchanged for employee services. Under the provisions of ASC 718, stock-based
compensation cost is measured at the grant date, based on the calculated fair
value of the award, and is recognized as an expense over the employees'
requisite service period (generally the vesting period of the equity grant). The
Company adopted ASC 718 using the modified prospective method, which requires
the Company to record compensation expense over the vesting period for all
awards granted after the date of adoption, and for the unvested portion of
previously granted awards that remain outstanding at the date of adoption.
Accordingly, the financial statements for the periods prior to 1 January 2006
have not been restated to reflect the fair value method of expensing share-based
compensation. The adoption of ASC 718 does not change the way the Company
accounts for share-based payments to non-employees, with guidance provided by
ASC 505-50, "Equity-Based Payments to Non-Employees".
Comparative figures
Certain comparative figures have been adjusted to conform to the current
period's presentation.
10
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
30 September 2014
3. |
Recent Accounting Pronouncements |
Certain new standards, interpretations, amendments and improvements to existing
standards were issued by Financial Accounting Standards Board ("FASB"). The new
standards, amendments to standards and interpretations that have been issued and
that are applicable to the Company but not effective during the three month
period ended 30 September 2014 are as follows:
In July 2013, the FASB issued ASU 2013-11, "Income Taxes (Topic 740):
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss
Carry-forward, a Similar Tax Loss, or a Tax Credit Carry-forward Exist".
These amendments require that an unrecognized tax benefit, or a portion of an
unrecognized tax benefit, should be presented in the financial statements as a
reduction to a deferred tax asset for a net operating loss carry-forward, a
similar tax loss, or a tax credit carry-forward except as follows. To the extent
a net operating loss carry-forward, a similar tax loss, or a tax credit
carry-forward is not available at the reporting date under the tax law of the
applicable jurisdiction to settle any additional income taxes that would result
from a disallowance of a tax position or the tax law of the applicable
jurisdiction does not require the entity to use, and the entity does not intend
to use, the deferred tax asset for such purpose, the unrecognized tax benefit
should be presented in the financial statements as a liability and should not be
combined with deferred tax assets. These amendments are effective for fiscal
years, and interim periods within those years, beginning after 1 July 2014. The
amendments should be applied prospectively to all unrecognized tax benefits that
exist at the effective date. Retrospective application and early adoption is
permitted. The adoption is not expected to have a material impact on the
Company's interim consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with
Customers". The update is intended to improve the financial reporting
requirements for revenue from contracts with customers by providing a principle
based approach. The core principal of the standard is that revenue should be
recognized when the transfer of promised goods or services is made in an amount
that the entity expects to be entitled to in exchange for the transfer of goods
and services. ASU 2014-09 also requires disclosures enabling users of financial
statements to understand the nature, amount, timing and uncertainty of revenue
and cash flows arising from contracts with customers. This standard will be
effective for financial statements issued by public companies for annual
reporting periods beginning after 15 December 2016. Early adoption is not
permitted. The adoption is not expected to have a material impact on the
Company's interim consolidated financial statements.
11
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
30 September 2014
|
|
|
|
|
|
Net Book Value |
|
|
Cost |
|
Accumulated amortization and impairment |
|
As at
30 September
2014 |
|
As at
30 June
2014
(Audited) |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
|
|
|
|
|
|
|
|
Office equipment |
|
864 |
|
864 |
|
- |
|
97 |
During the three month period ended 30 September 2014, the total additions to
equipment were $Nil (30 June 2014 - $Nil) and equipment with a carrying value of
$97 was written off (30 June 2014 - $Nil)
5. |
Accounts Payable and Accrued Liabilities |
Accounts payable and accrued liabilities are non-interest bearing, unsecured and
have settlement dates within one year.
6. |
Due to Related Parties and Related Party Transactions |
As at 30 September 2014, the amount due to related parties includes $1,000
payable to a director of the Company (30 June 2014 -
$1,000). This balance is non-interest bearing, unsecured and has no fixed terms
of repayment.
As at 30 September 2014, the amount due to related parties includes $61,291
payable to a company owned by a director of the Company or an officer of
PharmaNet (30 June 2014 - $55,756). This
balance is non-interest bearing, unsecured and has no fixed terms of repayment.
As at 30 September 2014, the amount due to related parties includes $21,899
payable to a company owned by a director of the Company or an officer of
PharmaNet (30 June 2014 - $14,779). This
balance is non-interest bearing, unsecured and has no fixed terms of repayment.
As at 30 September 2014, the amount due to related parties includes $7,266
payable to a company owned by a director of the Company or an officer of
PharmaNet (30 June 2014 - $7,844). This balance is non-interest bearing,
unsecured and has no fixed terms of repayment.
As at 30 September 2014, the amount due to related parties includes $3,494
payable to a company owned by a director of the Company or an officer of
PharmaNet (30 June 2014 - $Nil). This balance is non-interest bearing, unsecured
and has no fixed terms of repayment.
As at 30 September 2014, the amount due to related parties includes $1,980,760
payable to PharmaNet (30 June 2014 -
$2,127,917). This balance is non-interest bearing, unsecured and has no fixed
terms of repayment.
12
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
30 September 2014
During the three month period ended 30 September 2014, a director of the Company
or an officer of PharmaNet, and their controlled entities were paid or accrued
consulting fees of $6,933 (30 September 2013 -
$8,356, cumulative - $936,952).
During the three month period ended 30 September 2014, a director of the Company
or an officer of PharmaNet, and their controlled entities were paid or accrued
administrative fees of $8,651 (30 September 2013
- $9,489, cumulative - $99,623) by the
Company, which have been recorded in office and miscellaneous expense.
During the three month period ended 30 September 2014, a director of the Company
or an officer of PharmaNet, and their controlled entities were paid or accrued
consulting fees of $Nil (30 September 2013 - $6,929, cumulative - $118,607) by
the Company.
During the three month period ended 30 September 2014, a director of the Company
or an officer of PharmaNet, and their controlled entities were paid or accrued
consulting fees of $Nil (30 September 2013 - $Nil, cumulative - $41,928) by the
Company.
During the three month period ended 30 September 2014, a director of the Company
or an officer of PharmaNet, and their controlled entities were paid or accrued
office and miscellaneous expenses of $Nil (30 September 2013
- $Nil, cumulative -
$80,468) by the Company.
During the three month period ended 30 September 2014, a director of the Company
or an officer of PharmaNet, and their controlled entities were paid or accrued
rental fees of $Nil (30 September 2013 - $Nil,
cumulative - $12,987) by the Company.
During the three month period ended 30 September 2014, a director of the Company
or an officer of PharmaNet, and their controlled entities were paid or accrued
office and miscellaneous expenses of $Nil (30 September 2013 - $Nil, cumulative
- $4,481) by the Company.
During the three month period ended 30 September 2014, a director of the Company
or an officer of PharmaNet, and their controlled entities were paid or accrued
consulting fees of $Nil (30 September 2013 - $Nil, cumulative - $8,473) by the
Company.
13
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
30 September 2014
Transactions comprising the amount due to PharmaNet are as follows:
|
|
For the
three month
period ended
30 September
2014 |
|
For the
year
ended
30 June
2014
(Audited) |
|
|
$ |
|
$ |
|
|
|
|
|
Opening balance, beginning of period |
|
2,127,917 |
|
2,007,468 |
Funds transferred to the Company by PharmaNet |
|
9,172 |
|
60,054 |
Expenses paid by PharmaNet on behalf of the Company |
|
291 |
|
1,304 |
Foreign currency translation adjustment |
|
(156,620) |
|
59,091 |
|
|
|
|
|
Balance, end of period |
|
1,980,760 |
|
2,127,917 |
The weighted average amount due to PharmaNet for the three month period ended 30
September 2014 was $2,134,208 (30 June 2014 - $2,047,991).
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.
Details on a geographic basis as at and for the three month period ended 30
September 2014 are as follows:
|
Australia |
|
U.S.A. |
|
Total |
|
$ |
|
$ |
|
$ |
|
|
|
|
|
|
Current assets |
8,844 |
|
- |
|
8,844 |
Long-term assets |
- |
|
- |
|
- |
Loss for the period |
(19,215) |
|
(9,811) |
|
(29,026) |
14
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
30 September 2014
Details on a geographic basis as at and for the year ended 30 June 2014 are as
follows:
|
Australia |
|
U.S.A. |
|
Total |
|
$ |
|
$ |
|
$ |
|
|
|
|
|
|
Current assets |
8,871 |
|
- |
|
8,871 |
Long-term assets |
97 |
|
- |
|
97 |
Loss for the year |
(65,012) |
|
(51,916) |
|
(116,928) |
Details on a geographic basis as at and for the three month period ended 30
September 2013 are as follows:
|
Australia |
|
U.S.A. |
|
Total |
|
$ |
|
$ |
|
$ |
|
|
|
|
|
|
Current assets |
12,573 |
|
- |
|
12,573 |
Long-term assets |
129 |
|
- |
|
129 |
Loss for the period |
(25,416) |
|
(15,357) |
|
(40,773) |
9. |
Distribution Agreement |
The Company has the exclusive distribution rights, through MPLA, to distribute,
market, promote, detail, advertise and sell certain Licensed Products, with
metallo-polypeptide analgesic as an active ingredient, in the United States
(excluding its territories and possessions) (Note 1). If, and when necessary,
the Company will obtain all necessary regulatory approvals for the Licensed
Products and incorporate the Licensed Products in the United States.
15
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
30 September 2014
Income tax expense differs from the amount that would result from applying the
federal income tax rate to earnings before income taxes. The differences result
from the following items:
|
|
For the three
month period
ended
30 September
2014 |
|
For the three
month period
ended
30 September
2013 |
|
|
$ |
|
$ |
|
|
|
|
|
Loss before income taxes |
|
(29,026) |
|
(40,773) |
|
|
|
|
|
Federal income tax rates |
|
35.0% |
|
35.0% |
|
|
|
|
|
Income tax recovery based on the above rates |
|
(10,159) |
|
(14,271) |
|
|
|
|
|
Increase (decrease) due to: |
|
|
|
|
Difference between U.S. and foreign tax rates |
|
961 |
|
1,271 |
Change in valuation allowance |
|
(21,198) |
|
20,671 |
Foreign exchange and other |
|
30,396 |
|
(7,671) |
|
|
|
|
|
Income tax expense |
|
- |
|
- |
The composition of the Company's deferred tax assets as at 30 September 2014 and
30 June 2014 are as follows:
|
|
As at
30 September
2014 |
|
As at
30 June
2014
(Audited) |
|
|
$ |
|
$ |
|
|
|
|
|
Net income tax operating loss carry-forward |
|
2,208,726 |
|
2,281,689 |
|
|
|
|
|
Deferred tax assets |
|
706,111 |
|
727,309 |
Less: Valuation allowance |
|
(706,111) |
|
(727,309) |
|
|
|
|
|
Net deferred tax asset |
|
- |
|
- |
16
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
30 September 2014
The Company has non-capital loss carry-forwards of approximately $2,208,726 that
may be available for tax purposes. The loss carry-forwards are all in respect to
U.S. and Australian operations and expire as follows:
|
$ |
|
|
2022 |
20,402 |
2023 |
46,992 |
2024 |
27,717 |
2025 |
14,187 |
2026 |
261,311 |
2027 |
111,155 |
2028 |
75,463 |
2029 |
57,882 |
2030 |
48,765 |
2031 |
43,836 |
2032 |
49,005 |
2033 |
47,415 |
2034 |
55,916 |
2035 |
9,811 |
No expiry |
1,338,869 |
|
|
|
2,208,726 |
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.
17
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
30 September 2014
11. |
Supplemental Disclosures with Respect to Cash Flows |
|
For the
period from
the date of inception on
14 July 2004
to 30 September
2014 |
For the
three month
ended
30 September
2014 |
For the
three month
ended
30 September
2013 |
|
$ |
$ |
$ |
|
|
|
|
Cash paid during the period for interest |
- |
- |
- |
Cash paid during the period for income taxes |
- |
- |
- |
Common shares issued on acquisition of MPLA |
16,236 |
- |
- |
Amounts receivable acquired on recapitalization of the Company |
2,226 |
- |
- |
Accounts payable assumed on recapitalization of the Company |
54,624 |
- |
- |
Due to related party assumed on recapitalization of the Company |
1,000 |
- |
- |
12. |
Financial Instruments |
A fair value hierarchy was established that prioritizes the inputs used to
measure fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (Level 1
measurement) and the lowest priority to unobservable inputs (Level 3
measurements).
The fair values of the financial instruments were determined using the following
input levels and valuation techniques:
Level 1: classification is applied to any asset or liability that has a readily
available quoted market price from an active market where there is significant
transparency in the executed/quoted price.
Level 2: classification is applied to assets and liabilities that have evaluated
prices where the data inputs to these valuations are observable either directly
or indirectly, but do not represent quoted market prices from an active market.
Level 3: classification is applied to assets and liabilities when prices are not
derived from existing market data and requires us to develop our own assumptions
about how market participants would price the asset or liability.
The carrying values of cash and cash equivalents, amounts receivable and
accounts payable approximate fair value due to the short term maturity of these
financial instruments.
18
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
30 September 2014
Credit Risk
Financial instruments that potentially subject the Company to credit risk
consists of cash and cash equivalents. The Company deposits cash and cash
equivalents with high credit quality financial institutions as determined by
rating agencies. As a result, credit risk is considered insignificant.
Currency Risk
The Company's subsidiary is located in Australia. As a result, a significant
portion of the Company's assets, liabilities and expenses were denominated in
the Australian dollar and were therefore subject to fluctuation in exchange
rates.
The Company's objective in managing its foreign currency risk is to minimize its
net exposures to foreign currency cash flows by holding most of its cash and
cash equivalents in Australian dollars. The Company monitors and forecasts the
values of net foreign currency cash flow and balance sheet exposures and from
time to time could authorize the use of derivative financial instruments such as
forward foreign exchange contracts to economically hedge a portion of foreign
currency fluctuations.
If the Australian dollar had weakened (strengthened) against the U.S. dollar,
with all other variables held constant, by 100 basis points (1%) at period end,
the impact on net loss and other comprehensive loss would have been $20,624
lower ($20,624 higher).
The Company has not, to the date of these interim consolidated financial
statements, entered into derivative instruments to offset the impact of foreign
currency fluctuations.
Interest Rate Risk
The Company has non-interest paying cash balances and no interest-bearing debt.
It is management's opinion that the Company is not exposed to significant
interest risk arising from these financial instruments.
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.
On 21 June 2013, the Company executed an agreement with a New York based
company, Dermatology Development Corporation, to develop and market a range of
therapeutic, cosmetic and cosmecutical products based on the ThermaLIFE product
range and its active ingredient in the United States.
There are no reportable events for the period from three month period ended 30
September 2014 to the date that the interim consolidated financial statements
were available to be issued.
19
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
THE FOLLOWING ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION OF
MOLECULAR USA FOR THE FIRST QUARTER PERIOD ENDED SEPTEMBER 30, 2014 AND SHOULD
BE READ IN CONJUNCTION WITH MOLECULAR USA'S INTERIM CONSOLIDATED FINANCIAL
STATEMENTS, INCLUDING THE NOTES THERETO CONTAINED ELSEWHERE IN THE FORM 10-Q.
Our interim consolidated financial statements are stated in United States
Dollars and are prepared in accordance with United States Generally Accepted
Accounting Principles ("U.S. GAAP").
Overview
We were incorporated in the state of Nevada on May 1, 2002. Up until the fall of
2005, Molecular USA was in the business of mineral exploration and development
of a mineral property.
On October 13, 2005, Molecular USA entered into a distribution and supply
agreement with Molecular Pharmacology Pty. Ltd. (formerly Molecular Pharmacology
Limited) ("MPLA"). MPLA is incorporated under the laws of Australia and
at the time was a wholly owned subsidiary company of PharmaNet Group Limited
("PharmaNet"), an Australian company listed on the Australian
Stock Exchange. Under the terms of the distribution and supply agreement,
Molecular USA received the exclusive distribution rights to distribute, market,
promote, detail, advertise and sell certain "Licensed Products", as
defined in the agreement, with metallo-polypeptide analgesic as an active
ingredient, in the United States (excluding its territories and possessions).
On May 9, 2006, Molecular USA announced that it has acquired 100% of the issued
and outstanding share capital of MPLA. The transaction was originally announced
by Molecular USA in a press release dated November 29, 2005 and was subsequently
approved by a majority of the stockholders of the Company at a stockholders
meeting held on April 21, 2006. As a result of the transaction, PharmaNet, the
former parent company of MPLA, now controls approximately 79% of Molecular USA's
issued and outstanding share capital. The transaction between the parties closed
in escrow with an effective closing date of May 8, 2006. The business of MPLA is
now the business of Molecular USA.
On July 19, 2013, Molecular USA announced its wholly-owned subsidiary, MPLA,
executed an agreement with a New York-based company, Dermatology Development
Corporation ("DDC") to develop and market a range of therapeutic,
cosmetic and cosmecutical products based on the ThermaLIFE product range and
its active ingredient in the United States.
Under the terms of the agreement, DDC is contracted to drive business
relationships with a number of third party entities to sell products
predominantly in the dermatology and cosmetic fields in the United States in
return for an establishment fee and royalties on the agreements executed as a
result of DDC's services, paid for a fixed period net of MPLA's costs of sales.
The engagement of DDC is limited to the provision of the services in the United
States, and is for an initial one year period which may be extended by mutual
agreement between MPLA and DDC.
Our Current Business
Molecular USA through its wholly owned subsidiary MPLA is in the business of
developing and commercializing a new analgesic and anti-inflammatory molecule
known as Tripeptofen. Tripeptofen is likely to appear in a new group of products
suitable for the treatment of common every-day pain. As an analgesic and
anti-inflammatory drug, Tripeptofen is unusual due to its rapid speed of action
and its topical or rub-on application.
The majority of over-the-counter anti-pain and anti-inflammatory products sold
for the treatment of acute localized 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.
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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,
advertise and sell certain Licensed Products, with metallo-polypeptide analgesic
and anti-inflammatory activity as an active ingredient, in the United States
(excluding its territories and possessions) from its wholly owned subsidiary
company MPLA.
The Licensed Products include all products in all dosage forms, formulations,
line extensions and package configurations using or otherwise incorporating any
aspect or production method of metallo-polypeptide analgesic and
anti-inflammatory activity as an active ingredient marketed by MPLA or its
affiliates under the trade name Tripeptofen or any other trade names or
trademarks used by MPLA relating to the product and any improvements to such
formulations or dosages as may hereafter be distributed by MPLA or its
affiliates in the territory during the term of the distribution and supply
agreement between Molecular USA and MPLA for the topical application for human
use only, and specifically excludes:
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dermatological or cosmetic use, or tissue
repair or tissue regeneration effect; |
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any use or application of the Licensed
Product in non-human groups or species; and |
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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.
Patents & Trademarks
Molecular USA and its subsidiary MPLA, regard their intellectual property
rights, such as copyrights, trademarks, trade secrets, practices and tools, as
important to the success of their company. To protect their intellectual
property rights, Molecular USA relies on a combination of patent, trademark and
copyright law, trade secret protection, confidentiality agreements and other
contractual arrangements with their employees, affiliates, clients, strategic
partners, acquisition targets and others. Effective patent, trademark, copyright
and trade secret protection may not be available in every country in which the
combined company intends to offer its products. The steps taken by Molecular USA
and MPLA to protect their intellectual property rights may not be adequate.
Third parties may infringe or misappropriate the combined company's intellectual
property rights or the combined company may not be able to detect unauthorized
use and take appropriate steps to enforce its rights. In addition, other parties
may assert infringement claims against the combined company. Such claims,
regardless of merit, could result in the expenditure of significant financial
and managerial resources. Further, an increasing number of patents are being
issued to third parties regarding these processes. Future patents may limit the
combined company's ability to use processes covered by such patents or expose
the combined company to claims of patent infringement or otherwise require the
combined company to seek to obtain related licenses. Such licenses may not be
available on acceptable terms. The failure to obtain such licenses on acceptable
terms could have a negative effect on the combined company's business.
To protect their intellectual property rights, MPLA relies on a combination of
license and patent applications held by Cambridge Scientific which
includes "Analgesic and Anti-Inflammatory Composition" comprising USA patent
application in completion plus PCT Provisional Specification having the same
name designated as Serial No. 11/059580. 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.
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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 company's proprietary anti-inflammatory
and analgesic components in products already distributed through various
international markets.
Molecular USA expects that these activities may even help fund the development
costs of the Licensed Products in the United States.
Manufacturing & Supply
Molecular USA and MPLA have no manufacturing facilities. MPLA is required to
supply Molecular USA with all Licensed Products under the distribution and
supply agreement entered into by the parties in October 2005. It is likely MPLA
will enter into arrangements with various 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 ("CGLP"),
and current 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 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.
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Governmental Regulation
FDA Regulation. Pharmaceutical products are subject to extensive
pre- and post-marketing regulation by the FDA, including regulations that govern
the testing, manufacturing, safety, efficacy, labeling, storage, record-keeping,
advertising and promotion of the products under the Federal Food, Drug and
Cosmetic Act and the Public Health Services Act, and by comparable
agencies in most foreign countries. The process required by the FDA before a new
drug may be marketed in the U.S. generally involves the following: completion of
pre-clinical laboratory and animal testing; submission of an investigational new
drug application ("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 ("NDA").
The activities required before a pharmaceutical agent may be marketed in the
United States begin with pre-clinical testing. Pre-clinical tests include
laboratory evaluation of potential products and animal studies to assess the
potential safety and efficacy of the product and its formulations. The results
of these studies and other information must be submitted to the FDA as part of
an IND application, which must be reviewed and approved by the FDA before
proposed clinical testing can begin. Clinical trials involve the administration
of the investigational new drug to healthy volunteers or to patients under the
supervision of a qualified principal investigator. Clinical trials are conducted
in accordance with Good Clinical Practices under protocols that detail the
objectives of the study, the parameters to be used to monitor safety and the
efficacy criteria to be evaluated. Each protocol must be submitted to the FDA as
part of the IND application. Further, each clinical study must be conducted
under the auspices of an independent institutional review board. The
institutional review board will consider, among other things, ethical factors
and the safety of human subjects.
Typically, human clinical trials are conducted in three phases that may overlap.
In Phase 1, clinical trials are conducted with a small number of subjects to
determine the early safety profile and pharmacology of the new therapy. In Phase
2, clinical trials are conducted with groups of patients afflicted with a
specific disease in order to determine preliminary efficacy, optimal dosages and
expanded evidence of safety. In Phase 3, large scale, multicenter, comparative
clinical trials are conducted with patients afflicted with a target disease in
order to provide enough data for the statistical proof of efficacy and safety
required by the FDA and others.
The results of the pre-clinical and clinical testing, together with chemistry
and manufacturing information, are submitted to the FDA in the form of an NDA
for a pharmaceutical product in order to obtain approval to commence commercial
sales. In responding to an NDA, the FDA may grant marketing approvals, request
additional information or further research, or deny the application if it
determines that the application does not satisfy its regulatory approval
criteria. Patient-specific therapies may be subject to additional risk with
respect to the regulatory review process. FDA approval for a pharmaceutical
product may not be granted on a timely basis, if at all, or if granted may not
cover all the clinical indications for which approval is sought or may contain
significant limitations in the form of warnings, precautions or
contraindications with respect to conditions of use.
Satisfaction of FDA premarket approval requirements for new drugs typically
takes several years, and the actual time required may vary substantially based
upon the type, complexity and novelty of the product or targeted disease.
Government regulation may delay or prevent marketing of potential products for a
considerable period of time and impose costly procedures upon our activities.
Success in early stage clinical trials or with prior versions of products does
not assure success in later stage clinical trials. Data obtained from clinical
activities are not always conclusive and may be susceptible to varying
interpretations that could delay, limit or prevent regulatory approval.
Once approved, the FDA may withdraw the product approval if compliance with pre-
and post-marketing regulatory standards is not maintained or if problems occur
after the product reaches the marketplace. In addition, the FDA may require
post-marketing studies, referred to as Phase 4 studies, to monitor the effect of
an approved product, and may limit further marketing of the product based on the
results of these post-market studies. The FDA has broad post-market regulatory
and enforcement powers, including the ability to levy fines and civil penalties,
suspend or delay issuance of approvals, seize or recall products, or withdraw
approvals.
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.
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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 ("SOA"). The 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 SEC under the Securities
Exchange Act of 1934 ("Exchange Act"). Many of these new requirements
will affect Molecular USA and its board of directors. For instance, under the
SOA, Molecular USA is required to:
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form an audit committee in compliance with
the SOA; |
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ensure Molecular USA's chief executive
officer and chief financial officer are required to certify its financial
statements; |
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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; |
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disclose any off-balance sheet transactions
as required by the SOA; |
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prohibit all personal loans to directors and
officers; |
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ensure directors, officers and 10% holders
file their Forms 4's within two days of a transaction; |
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adopt a code of ethics and file a Form 8-K
whenever there is a change or waiver of this code; and |
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ensure Molecular USA's auditor is
independent as defined by the SOA. |
The 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.
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Environmental Compliance
The nature of Molecular USA's and MPLA's business does not require special
environmental or local government approval. Molecular USA and MPLA are compliant
with all environmental laws. The cost of such compliance is minimal for the
company.
Employees
In the period ended September 30, 2014, 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 Company, through its subsidiary MPLA, plans to continue to pursue the
various levels of the international regulatory approval processes. Applications
and product opportunities for Tripeptofen are believed to be broad and cover a
range of commercial fields, each with distinct pre-market requirements. The
international drug development team, global resources and local know-how will
allow MPLA to seek the most time and cost effective regulatory pathways for each
product and market sector.
On commercial development, MPLA will focus on consolidating the regulatory
pathway work in order to prioritize the path to market. Jeffrey Edwards will
work to set-out the strategies designed to maximize the multi-jurisdictional
capabilities of MPLA's development teams.
Reports to Security Holders
We are required to file annual reports on Form 10-K and quarterly reports on
Form 10-Q with the SEC 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 SEC 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.
Results of Operation
For the quarter ended September 30, 2014.
Revenues
REVENUE - Molecular USA has not generated any revenues for the
quarter ended September 30, 2014, or since inception.
COMMON STOCK - Molecular USA has not issued any shares during the
most recent quarter. As of the date of November 13, 2014, Molecular USA has
111,553,740 common shares issued and outstanding.
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Expenses
SUMMARY - Total expenses were $29,026 for the three month period
ended September 30, 2014. Expenses had decreased during this past three month
period as compared to the three month period ended September 30, 2013 - $40,773.
A total of $2,207,902 in expenses has been incurred by Molecular USA since
inception on July 14, 2004 through to September 30,
2014. The decrease in costs over this three month period has occurred as the
result of Molecular USA's wholly owned subsidiary decreasing its consulting
fees. The costs can be subdivided into the following categories.
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1. |
Office Expenses and Rent: $12,717 in office expenses (for
administrative costs) were incurred for the three month period ended
September 30, 2014, as compared to
$10,120 for the three month period ended September 30, 2013, while a total of
$290,045 was incurred in the period from inception on
July 14, 2004 to September 30, 2014.
All contributed expenses are reported as contributed costs with a
corresponding credit to additional paid-in capital. |
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2. |
Consulting and Analysis Costs: Molecular USA relies on
consultants and other third parties to conduct the majority of its research.
For the three month period ended September 30, 2014, $6,933 in consulting and
analysis expenses were incurred as compared to $15,285 during the three month
period ended September 30, 2013. We
have incurred a total of $1,468,453 in consulting and analyst fees since our
inception on July 14, 2004 to
September 30, 2014. |
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3. |
Advertising and Promotion Fees: Molecular USA has spent no money
in this area this year. During the three month period ended
September 30, 2014, we spent $Nil on
advertising and public relations and $Nil for three month period ended
September 30, 2013. A total of $23,739 has been incurred in this area during
the period from inception on July 14, 2004
to September 30, 2014. |
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4. |
Professional Fees: Molecular USA incurred $7,515 in professional
fees for the three month period ended on September 30,
2014, as compared to $13,697 for the three month period ended September
30, 2013. From inception on July 14, 2004 to
September 30, 2014, we have incurred a total of $455,482 professional
fees mainly spent on legal and accounting matters. |
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5. |
Travel Costs: Molecular USA incurred $Nil in travel costs for
the three month period ended September 30, 2014, as compared to $Nil for the
three month period ended September 30, 2013
and $111,710 has been incurred in the period from inception on
July 14, 2004 to
September 30, 2014. |
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6. |
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 three month
period ended September 30, 2014 and $Nil in salaries and benefits during the
three month period ended September 30, 2013. For the period
July
14, 2004 (inception) through September
30, 2014, Molecular USA has spent a total of $44,464 on salaries and
benefits. |
Molecular USA continues to carefully control its expenses and overall costs as
it moves forward with the development of its new business plan. Molecular USA
does not have any employees and engages personnel through outside consulting
contracts or agreements
or other such arrangements.
Income Tax Provision: We have losses carried forward for income
tax purpose to September 30, 2014. There are no current or deferred tax expenses
for the three month period ended September 30, 2014, due to our loss position.
We have fully reserved for any benefits of these losses. The deferred tax
consequences of temporary differences in reporting items for financial statement
and income tax purposes are recognized as appropriate.
Liquidity and Capital Resources
During the three month period ended September 30, 2014, Molecular USA satisfied
its working capital needs by borrowing cash from its parent company PharmaNet.
As of September 30, 2014, the Company had cash and cash equivalents on hand in
the amount of $1,517 (June 30, 2014 - $2,378) and current payable and accrued
liabilities of $32,008 (June 30, 2014 - $34,526). As of September 30, 2014,
Molecular USA currently owes its parent company PharmaNet, $1,980,760, an
additional $94,950 to other related parties, and $32,008 to non-related parties.
Given the proposed business activities of Molecular USA and its subsidiary,
management does not expect that the current level of cash on hand will be
sufficient to fund its operation for the next twelve month period.
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To achieve our goals and objectives for the next 12 months, we plan to raise
additional capital through private placements of our equity securities and
future financing from our majority shareholder PharmaNet.
We plan to use any additional funds that we might be successful in raising for
development, as well as for strategic acquisition of existing businesses that
complement our market niche, and general working capital purposes.
If we are unsuccessful in obtaining new capital, our ability to seek and
consummate strategic acquisitions to build our company internationally and to
expand of our business development and marketing programs could be adversely
affected.
Off-Balance Sheet Arrangement
As of September 30, 2014, Molecular USA did not have any off-balance sheet
arrangements.
Research and Development
Since the acquisition of MPLA, Molecular USA has maintained MPLA's research and
development program to:
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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; |
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Define the mode of action and potential of Tripeptofen in both in vitro,
animal and human studies; |
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Gain Australian regulatory and marketing approval; |
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Gain European regulatory approval; and |
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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; however, Molecular USA holds the worldwide exclusive
license to manufacture, commercialize, market and distribute topical
anti-inflammatory and analgesic products based on the proprietary MPL-TL
compound.
Molecular USA is still working on the projections regarding the necessary
expenditure and time frame involved in pursuing this research and development
program. Any such program will also be subject to Molecular USA raising the
necessary funds to advance such a program.
Capital Expenditure Commitments
Capital expenditures for the three month period ended September 30, 2014,
amounted to $Nil. Molecular USA does not anticipate any significant purchase or
sale of equipment over the next 12 months.
Recent Accounting Pronouncements
Certain new standards, interpretations, amendments and improvements to existing
standards were issued by Financial Accounting Standards Board ("FASB").
The new standards, amendments to standards and interpretations that have been
issued and that are applicable to the Company but not effective during the three
month period ended September 30, 2014 are as follows:
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In July 2013, the FASB issued ASU 2013-11, "Income Taxes (Topic 740):
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss
Carry-forward, a Similar Tax Loss, or a Tax Credit Carry-forward Exist".
These amendments require that an unrecognized tax benefit, or a portion of an
unrecognized tax benefit, should be presented in the financial statements as a
reduction to a deferred tax asset for a net operating loss carry-forward, a
similar tax loss, or a tax credit carry-forward except as follows. To the extent
a net operating loss carry-forward, a similar tax loss, or a tax credit
carry-forward is not available at the reporting date under the tax law of the
applicable jurisdiction to settle any additional income taxes that would result
from a disallowance of a tax position or the tax law of the applicable
jurisdiction does not require the entity to use, and the entity does not intend
to use, the deferred tax asset for such purpose, the unrecognized tax benefit
should be presented in the financial statements as a liability and should not be
combined with deferred tax assets. These amendments are effective for fiscal
years, and interim periods within those years, beginning after July 1, 2014. The
amendments should be applied prospectively to all unrecognized tax benefits that
exist at the effective date. Retrospective application and early adoption is
permitted. The adoption is not expected to have a material impact on the
Company's interim consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with
Customers". The update is intended to improve the financial reporting
requirements for revenue from contracts with customers by providing a principle
based approach. The core principal of the standard is that revenue should be
recognized when the transfer of promised goods or services is made in an amount
that the entity expects to be entitled to in exchange for the transfer of goods
and services. ASU 2014-09 also requires disclosures enabling users of financial
statements to understand the nature, amount, timing and uncertainty of revenue
and cash flows arising from contracts with customers. This standard will be
effective for financial statements issued by public companies for annual
reporting periods beginning after December 15, 2016. Early adoption is not
permitted. The adoption is not expected to have a material impact on the
Company's interim consolidated financial statements.
Critical Accounting Policies and Estimates
Our quarterly interim consolidated financial statements and accompanying notes
are prepared in accordance with U.S. GAAP used in the United States. Preparing
financial statements requires Management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenue, and expenses. These
estimates and assumptions are affected by Management's application of accounting
policies. We believe that understanding the basis and nature of the estimates
and assumptions involved with the following aspects of our interim consolidated
financial statements is critical to an understanding of our financials.
Stock-based compensation
Effective 1 January 2006, 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 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 Company
accounts for share-based payments to non-employees, with guidance provided by
ASC 505-50, "Equity-Based Payments to Non-Employees".
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk
Due to the short-term nature of our interest bearing assets, which consist
primarily of cash and cash equivalents and no restricted cash, we believe that
our exposure to interest rate market risk will not significantly affect our
operations.
28
Foreign Currency Risk
Our head office and lab operations are based in Australia. Accordingly, we have
been subject to exposure from adverse movements in foreign currency exchange
rates. To date, the effect of changes in foreign currency exchange rates on
revenue and operating expenses has not been material as we have had no revenue
and limited operations. Operating expenses incurred by our foreign subsidiaries
were denominated in local currencies. We have not used financial instruments to
hedge these operating expenses.
Item 4. Controls and Procedures.
(a) Evaluation of disclosure controls and procedures
Disclosure controls are controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed under the Exchange Act
is recorded, processed, summarized and reported, within the time periods
specified in the SEC's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by a company in the reports that it files
or submits under the Exchange Act is accumulated and communicated to the
company's Management, including its principal executive and principal financial
officers, or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure.
Management carried out an evaluation (with the participation of our Chief
Executive Officer ("CEO") and Chief Financial Officer ("CFO") ),
of the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Rules 13a-15(e) and 15d-15(e) under 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 September 30,
2014.
(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:
|
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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 U.S. 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, Management,
with the participation of our CEO and CFO, evaluated the effectiveness of our
internal control over financial reporting as of September 30, 2014. Management's
assessment took into consideration the size and complexity of the company and
was based on criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission in Internal Control over Financial Reporting - Guidance
for Smaller Public Companies. In performing the assessment, Management has
concluded that our internal control over financial reporting was effective as of
September 30, 2014.
29
Attestation report of the registered public accounting firm
This quarterly report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the SEC that
permit the Company to provide only Management's report in this quarterly report.
Changes in internal control over financial reporting
Based on the evaluation as of September 30, 2014, Jeffrey Edwards, our
President, CEO and CFO 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.
30
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
We know of no material, active or pending legal proceedings against our company,
nor are we involved as a plaintiff in any material proceeding or pending
litigation. There are no proceedings in which any of our directors, officers or
affiliates, or any registered or beneficial shareholder, is an adverse party or
has a material interest adverse to our interest.
Item 1A. Risk Factors.
As a "smaller reporting company" as defined by Item 10(f) of Regulation S-K, the
Company is not required to provide information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Recent Sale of Unregistered Securities
Not Applicable.
Use of Proceeds from Unregistered Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities.
Not Applicable.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
No items to disclose.
31
Item 6. Exhibits.
Exhibit
Number |
Exhibit Title |
3.1 |
Articles of Incorporation as Amended (incorporated by reference to exhibit
3.1 to our Form 10-SB Registration Statement filed on January 23, 2003). |
3.2 |
Article of Amendment dated August 29, 2005. |
3.3 |
Bylaws as Amended (incorporated by reference to exhibit 3.2 to our Form
10-SB Registration Statement filed on January 23, 2003). |
31.1 |
Certificate of CEO as Required by Rule 13a-14(a)/15d-14. |
31.2 |
Certificate of CFO as Required by Rule 13a-14(a)/15d-14. |
32.1 |
Certificate of CEO and CFO as Required by Rule 13a-14(b) and Rule 15d-14(b)
(17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the
United States Code. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
November 13, 2014.
|
MOLECULAR PHARMACOLOGY (USA) LIMITED |
|
BY:
|
/s/ Jeffrey Edwards |
|
|
Jeffrey Edwards, President, Chief Executive Officer, Chief Financial Officer
and a Member of the Board of Directors |
|
|
|
|
32
EXHIBIT 31.1
CERTIFICATIONS
I, Jeffrey Edwards, certify that:
1. I have reviewed this Form 10-Q of Molecular Pharmacology (USA) Limited;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over
financial reporting.
Date: November 13, 2014
|
/s/ Jeffrey Edwards
|
|
Jeffrey Edwards, Chief Executive Officer
|
EXHIBIT 31.2
CERTIFICATIONS
I, Jeffrey Edwards, certify that:
1. I have reviewed this Form 10-Q of Molecular Pharmacology (USA) Limited;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over
financial reporting.
Date: November 13, 2014
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/s/ Jeffrey Edwards
|
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Jeffrey Edwards, Chief Financial Officer
|
Exhibit 32
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States
Code)
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of
the undersigned officers of MOLECULAR PHARMACOLOGY (USA) LIMITED, a Nevada corporation (the "Company"), does hereby certify, [to such officer's knowledge],
that:
The Form 10-Q for the quarter ended September 30, 2014 (the "Form 10-Q") of the Company fully complies with the requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Dated: November 13, 2014
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/s/ Jeffrey Edwards
|
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Jeffrey Edwards, Chief Executive Officer
|
Dated: November 13, 2014
|
/s/ Jeffrey Edwards
|
|
Jeffrey Edwards, Chief Financial Officer
|
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to
the Securities and Exchange Commission or its staff upon request.
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