Item 1. Business
Business Development - Formation and Reorganization
Molecular USA was incorporated in the state of Nevada on May 1, 2002 under the name "Blue Hawk Ventures, Inc." Molecular USA changed its name to "Molecular Pharmacology (USA) Limited" on August 29, 2005. At this same time Molecular USA completed a four for one forward split of its issued and outstanding share capital and altered its share capital to 300,000,000 shares of common stock with a par value of $0.001 per share.
Molecular USA has not been involved in any bankruptcy, receivership or similar proceeding nor has there been any material reclassification or merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of business other than as disclosed herein.
Up until the fall of 2005, Molecular USA was in the business of mineral exploration and development of a mineral property.
On October 13, 2005, Molecular USA entered into a distribution and supply agreement with Molecular Pharmacology Pty. Ltd. ("MPLA"). MPLA is incorporated under the laws of Australia and at the time was a wholly owned subsidiary company of PharmaNet Group Limited, an Australian company listed on the Australian Stock Exchange. Under the terms of the distribution and supply agreement, Molecular USA received the exclusive distribution rights to distribute, market, promote, detail, advertise and sell certain "Licensed Products", as defined in the agreement, with metallo-polypeptide analgesic as an active ingredient, in the United States (excluding its territories and possessions).
On May 9, 2006, Molecular USA announced that it has acquired 100% of the issued and outstanding share capital of MPLA. The transaction was originally announced by Molecular USA in a press release dated November 29, 2005, and was subsequently approved by a majority of the stockholders of the Corporation at a stockholders meeting held on April 21, 2005. As a result of the transaction, PharmaNet Group Limited ("PharmaNet"), the former parent corporation of MPLA, now controls approximately 79% of Molecular USA 's issued and outstanding share capital. The transaction between the parties closed in escrow with an effective closing date of May 8, 2006. The business of MPLA is now the business of Molecular USA.
Our Current Business
The acquisition of MPLA provided Molecular USA an immediate and solid international foundation which management believes will allow it to grow its business into all major geographical markets. The assets and resources of the Australian corporation and its existing teams and development programs has augmented Molecular USA's plan to develop safe and effective pain and inflammation management products.
Molecular USA through its wholly owned subsidiary MPLA is in the business of developing and commercializing a new analgesic and anti-inflammatory molecule known as Tripeptofen. Tripeptofen is likely to appear in a new group of products suitable for the treatment of common every-day pain. As an analgesic and anti-inflammatory drug, Tripeptofen is unusual due to its rapid speed of action and its topical or rub-on application.
The majority of over-the-counter anti-pain and anti-inflammatory products sold for the treatment of acute 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.
MPLA's business strategy is to exploit the fast and locally acting, low side effects, and recovery-enhancing properties of its new drug group and to market this as a new ingredient, enabling pharmaceutical companies to develop and market effective and safer products suited to a broad range of common everyday pain.
Licensed Products
Molecular USA has exclusive distribution rights to distribute, market, promote, detail, advertise and sell certain "Licensed Products", with metallo-polypeptide analgesic and anti-inflammatory activity as an active ingredient, in the United States (excluding its territories and possessions) from its wholly owned subsidiary corporation MPLA.
The Licensed Products include all products in all dosage forms, formulations, line extensions and package configurations using or otherwise incorporating any aspect or production method of metallo-polypeptide analgesic and anti-inflammatory activity as an active ingredient marketed by MPLA or its affiliates under the trade name 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 and MPLA for the topical application for human use only, and specifically excludes:
·dermatological or cosmetic use, or tissue repair or tissue regeneration effect;
·any use or application of the Licensed Product in non-human groups or species; and
·Thermalife cream, presently owned by PharmaNet, the holding corporation of MPLA.
All Licensed Products must first obtain regulatory clearance in the United States before they may be marketed and sold by Molecular USA in that territory. Clinical programs are currently planned by MPLA for Europe, USA and Australia. The clinical trial program is expected to be expanded with follow-up trials. Regulatory approval, commencement of the Master Drug File ("MDF") and market approval are the focus of an ongoing program expected to continue over the next 18 to 24 months.
MPLA has an exclusive license from Cambridge Scientific Pty. Ltd. ("Cambridge Scientific") of Australia. This license is restricted to a "field of use" defined in the license documentation. Cambridge Scientific may grant other licenses to third parties outside the "field of use" the subject of the licenses granted to MPLA.
Patents & Trademarks
Molecular USA and its subsidiary MPLA, regard their intellectual property rights, such as copyrights, trademarks, trade secrets, practices and tools, as important to the success of their corporation. To protect their intellectual property rights, Molecular USA relies on a combination of patent, trademark and copyright law, trade secret protection, confidentiality agreements and other contractual arrangements with their employees, affiliates, clients, strategic partners, acquisition targets and others. Effective patent, trademark, copyright and trade secret protection may not be available in every country in which the combined corporation intends to offer its products. The steps taken by Molecular USA and MPLA to protect their intellectual property rights may not be adequate. Third parties may infringe or misappropriate the combined corporation's intellectual property rights or the combined corporations may not be able to detect unauthorized use and take appropriate steps to enforce its rights. In addition, other parties may assert infringement claims against the combined corporations. Such claims, regardless of merit, could result in the expenditure of significant financial and managerial resources. Further, an increasing number of patents are being issued to third parties regarding these processes. Future patents may limit the combined corporation's ability to use processes covered by such patents or expose the combined corporation to claims of patent infringement or otherwise require the combined corporation to seek to obtain related licenses. Such licenses may not be available on acceptable terms. The failure to obtain such licenses on acceptable terms could have a negative effect on the combined corporation's business.
To protect their intellectual property rights, MPLA relies on a combination of license and patent applications held by Cambridge Scientific Pty. Ltd., namely "Analgesic and Anti-Inflammatory Composition" comprising USA patent application in completion plus PCT Provisional Specification having the same name designated as Serial No. 11/059580. These patent applications embody all the current Analgesic and Anti-inflammatory assets. MPLA will also rely on the exclusive nature of its license, trademark and copyright law, trade secret protection, confidentiality agreements and other contractual arrangements as it may execute from time to time.
Management of Molecular USA and MPLA believes that MPLA's products, trademarks, and other proprietary rights do not infringe on the proprietary rights of third parties.
Marketing
Molecular USA plans to market its Licensed Products, when approved, through existing pharmaceutical distributors and by collaborative dealings with major companies active in the United States and Europe.
In addition, Molecular USA plans to explore opportunities for direct sales, out-licensing and the integration of the Corporation's proprietary anti-inflammatory and analgesic components in products already distributed through various international markets.
Molecular USA expects that these activities may even help fund the development costs of the Licensed Products in the United States.
Manufacturing & Supply
Molecular USA and MPLA have no manufacturing facilities. MPLA is required to supply Molecular USA with all Licensed Products under the distribution and supply agreement entered into by the parties in October, 2005. It is likely MPLA will enter into arrangements with various Good Manufacturing Practice ("GMP") certified formulation and manufacturers of the Licensed Products for clinical trial and sales purposes. These formulations and the manufacturing facilities must comply with regulations and current good laboratory practices (or CGLPs), and current 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.
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.
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 Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934. Many of these new requirements will affect Molecular USA and its board of directors. For instance, under the SOA, Molecular USA is required to:
·form an audit committees in compliance with the SOA;
·have Molecular USA's chief executive officer and chief financial officer are required to certify its financial statements;
·ensure Molecular USA's directors and senior officers are required to forfeit all bonuses or other incentive-based compensation and profits received from the sale of Molecular USA's securities in the twelve month period following initial publication of any of Molecular USA's financial statements that later require restatement;
·disclose any off-balance sheet transactions as required by the SOA;
·prohibit all personal loans to directors and officers;
·insure directors, officers and 10% holders file their Forms 4's within two days of a transaction;
·adopt a code of ethics and file a Form 8-K whenever there is a change or waiver of this code; and
·insure Molecular USA's auditor is independent as defined by 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.
Environmental Compliance
The nature of Molecular USA's and MPLA's business does not require special environmental or local government approval. Molecular USA and MPLA are compliant with all environmental laws. The cost of such compliance is minimal for the Corporation.
Research & Development
In the year ended 2012, Molecular USA spent approximately $100,624 on research and development and $52,690 for the year ended 2011 through consultants.
Employees
In the year ended 2012, Molecular USA did not have any employees and does not intend to hire any employees in the upcoming year. We rely heavily on outside contractors to conduct our business.
Immediate Business Plans
The Corporation, through its subsidiary MPLA, plans to continue to pursue the various levels of the international regulatory approval processes. Applications and product opportunities for Tripeptofen are believed to be broad and cover a range of commercial fields, each with distinct pre-market requirements. The international drug development team, global resources and local know-how will allow MPLA to seek the most time and cost effective regulatory pathways for each product and market sector.
On commercial development, MPLA will focus on consolidating the regulatory pathway work in order to prioritize the path to market. Jeff Edwards will work to set-out the strategies designed to maximize the multi-jurisdictional capabilities of MPLA's development teams.
Reports to Securities Holders
We are required to file annual reports on Form 10-K and quarterly reports on Form 10-Q with the 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.
Item 1A.
Item 1A. Risk Factors
No disclosure is required hereunder as the Corporation is a "smaller reporting company," as defined in Item 10(f) of Regulation S-K.
Item 1B.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 2.
Item 2. Properties
Molecular USA's office space is located at Drug Discovery Centre, 28 Oxford Street, Leederville 6007 Perth, Western Australia. This office space was provided free of charge during the year ended June 30, 2012, from a corporation controlled by an officer of PharmaNet.
Item 3.
Item 3. Legal Proceedings
We know of no material, active or pending legal proceedings against our Corporation, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
Item 4.
Item 4. Mine Safety Disclosures
Not Applicable.
PART II
Item 5.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common shares are quoted on the PinkSheets under the symbol "MLPH". The following quotations reflect the high and low bids for our common stock based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. The high and low bid prices for our common shares (obtained from www.quotemedia.com) for each full financial quarter for the two most recent full fiscal years were as follows:
Holders of Common Stock
As of August 21, 2012, there were 19 registered shareholders of Molecular USA's common stock.
Dividends
Molecular USA has never declared nor paid any cash dividends on its capital stock and does not anticipate paying cash dividends in the foreseeable future. Molecular USA's current policy is to retain any earnings in order to finance the expansion of its operations. Molecular USA's board of directors will determine future declaration and payment of dividends, if any, in light of the then-current conditions they deem relevant and in accordance with the Nevada Revised Statutes.
Equity Compensation Plan
We do not have any securities authorized for issuance under any equity compensation plans.
Recent Sales of Unregistered Securities
None.
Item 6.
Item 6. Selected Financial Data
No disclosure is required hereunder as Molecular USA is a "smaller reporting company," as defined in Item 10(f) of Regulation S-K.
Item 7.
Item 7. Management Discussion and Analysis of Financial Condition and Results of Operations
THE FOLLOWING ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION OF THE CORPORATION FOR YEAR ENDING JUNE 30, 2012, SHOULD BE READ IN CONJUNCTION WITH THE CORPORATION'S CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO CONTAINED ELSEWHERE IN THE FORM 10-K.
Our consolidated financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
2012 Activities and Developments
For the year ended June 30, 2012, our net loss was $179,382 ($0.002 per share). The loss per share was based on an average of 111,553,740 common shares outstanding. For the year ended June 30, 2011, our net loss was $121,860 ($0.001 per share). The loss per share was based on an average of 111,553,740 common shares outstanding. For the year ended June 30, 2010, our net loss was $117,220 ($0.001 per share). The loss per share was based on a weighted average of 111,553,740 common shares outstanding. For the period from inception on July 14, 2004 to June 30, 2012, Molecular USA has an accumulated net loss of $1,852,048. Molecular has working capital deficit of $11,570 at June 30, 2012 (June 30, 2011 - $4,771). As a result our auditors have substantial doubt about our ability to continue as a going concern unless we are able to generate sufficient cash flows to meet our obligations and sustain our operations.
To achieve our goals and objectives for the next 12 months, we plan to raise additional capital through future private placements of our equity securities and/or future financing from our majority shareholder PharmaNet and, if available on satisfactory terms, or debt financing.
If we are unsuccessful in obtaining new capital, our ability to seek and consummate strategic acquisitions to build our Corporation internationally and to expand on our business development and marketing programs could be adversely affected.
Results of Operation
For the years ended June 30, 2012, June 30, 2011and June 30, 2010 and for the period from July 14, 2004 (inception) through to June 30, 2012.
REVENUES
REVENUE - Molecular has net loss of $179,382 for the year ended June 30, 2012 (June 30, 2011 - $121,860; June 30, 2010 - $117,220; cumulative - $1,852,048) and $1,852,048 for the period from inception to June 30, 2012. To date, we have generated no revenue from our business operations.
LOANS - As of June 30, 2012, PharmaNet has loaned Molecular USA a total of $2,036,760 for working capital (June 30, 2011 - $1,896,625). The advance does not carry an interest rate, is unsecured and has no fixed terms of repayment.
COMMON STOCK - Net cash provided by financing activities during the year ended June 30, 2012 was $Nil (June 30, 2011 - $Nil).
EXPENSES
SUMMARY - Total expenses were $179,382 for the year ended June 30, 2012. Total expenses were $121,860 for the year ended June 30, 2011 and total expenses were $117,220 for the year ended June 30, 2010. Expenses have increased in the year ended June 30, 2012, by $57,522. A total of $2,137,019 in expenses has been incurred by Molecular USA since inception on July 14, 2004, through to June 30, 2012. The increase in costs over the past year has occurred as the result of an increase in consulting fees over the year. The costs can be subdivided into the following categories.
Rent Expenses: Molecular USA incurred $Nil in rent expenses for the years ended June 30, 2012, June 30, 2011 and June 30, 2010, while a total of $27,759 was incurred in the period from inception on July 14, 2004 to June 30, 2012.
Consulting Expenses: Molecular USA relies on consultants and other third parties to conduct the majority of its research. For the year ended June 30, 2012, a total of $100,624 in consulting expenses was incurred as compared to $52,690 for the year ended June 30, 2011 and $41,920 for the year ended June 30, 2010. We have incurred a total of $1,290,141 in the period from inception on July 14, 2004 to June 30, 2012.
Analysis Costs: Molecular USA incurred $Nil in analysis costs for the years ended June 30, 2012, June 30, 2011 and June 30, 2010 while a total of $33,947 was incurred in the period from inception on July 14, 2004 to June 30, 2012.
Advertising and Promotion Fees: Molecular USA has spent a nominal amount in this area. During the years ended June 30, 2012, June 30, 2011 and June 30, 2010, we spent $Nil on advertising and promotional fees. We have incurred a total of $23,739 in the period from inception on July 14, 2004 to June 30, 2012.
Professional Fees: Molecular USA incurred $48,607 in professional fees for the year ended June 30, 2012, as compared to $42,142 for the year ended June 30, 2011 and $44,766 for the year ended June 30, 2010. From inception to June 30, 2012, we have incurred a total of $359,583 in professional fees mainly spent on legal and accounting matters.
Public Relations: Molecular USA incurred $Nil for the years ended June 30, 2012, June 30, 2011 and June 30, 2010, while a total of $3,656 was incurred in the period from inception on July 14, 2004 to June 30, 2012.
Travel Costs: Molecular USA incurred $7,085 in travel costs for the year ended on June 30, 2012 as compared to $Nil in travel costs for the years ended June 30, 2011 and June 30, 2010. We have incurred a total of $111,334 in the period from inception on July 14, 2004 to June 30, 2012. This increase can largely be attributed to our attendance at a limited number of pharmacology trade shows and restricting the expense of visiting various research facilities we have ongoing trials or research projects.
Salaries and Benefit Costs: Molecular USA and its subsidiary rely primarily on outside consultants and not salaried employees. As a result, Molecular USA incurred $Nil in salaries and benefits for the years ended June 30, 2012, June 30, 2011 and June 30, 2010. For the period July 14, 2004 (inception) through June 30, 2012, Molecular USA has spent a total of $44,464 on salaries and benefits.
Molecular USA continues to carefully control its expenses and overall costs as it moves forward with the development of its new business plan. Molecular USA does not have any employees and engages personnel through outside consulting contracts or agreements or other such arrangements.
INCOME TAX PROVISION: We have losses carried forward for income tax purpose to June 30, 2012. There are no current or deferred tax expenses for the year ended June 30, 2012, 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 year ended June 30, 2012, Molecular USA satisfied its working capital needs by borrowing cash from its parent company PharmaNet. As of June 30, 2012, the Company had cash and cash equivalents on hand in the amount of $2,572 ($8,675- June 30, 2011) and current payable and accrued liabilities of $19,252 ($20,052 - June 30, 2011). As of June 30, 2012, Molecular USA currently owes its parent company PharmaNet, $2,036,760, an additional $32,688 to other related parties. Given the proposed business activities of Molecular USA and its subsidiary, management does not expect that the current level of cash on hand will be sufficient to fund its operation for the next twelve month period.
To achieve our goals and objectives for the next 12 months, we plan to raise additional capital through private placements of our equity securities and 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 June 30, 2012, we have had no off-balance sheet arrangements.
Research and Development
Since the acquisition of MPLA, Molecular USA has adopted MPLA's research and development program to:
Refine and prove-up its proprietary active ingredients and to commence the processes that will lead to the issue of a Master Drug File registration of its products;
Define the mode of action and potential of Tripeptofen in both in vitro, animal and human studies;
Gain Australian regulatory and marketing approval;
Gain European regulatory approval; and
Commence application for American regulatory approval.
MPLA is in the business of developing and commercializing a new analgesic and anti-inflammatory molecule known as Tripeptofen. Tripeptofen is likely to appear in a new group of products suitable for the treatment of common every-day pain. As an analgesic and anti-inflammatory drug, Tripeptofen is unusual due to its rapid speed of action and its topical or rub-on application.
On April 19, 2006, Molecular USA announced the filing of a new patent, Tissue Disruption Treatment and Composition for Use (US Patent number 11218382). The patent describes a proprietary process for the manufacture of topical biological secondary injury mediators (B-SIMs) that should have local, rather than systemic, effects and may be significantly less expensive to manufacture than conventional B-SIMs. MPLA is developing its B-SIMs to stop the tissue disruption that occurs after injury by suppressing the body's reactions, such as inflammation and damage/death of otherwise uninjured cells that are triggered in response to primary injury.
The first conditions targeted by MPLA will be the musculoskeletal injuries. The use of a B-SIM in these markets represents a new approach to one of the world's largest over the counter drug markets and includes indications such as joint inflammation, musculoskeletal pain, overuse and strain injuries, burns and even surgical and cosmetic procedures. MPLA's proprietary, industrially scalable peptide-ligand bond exchange (PLBE) B-SIMs manufacturing process involves the disassociation of proteins, rather than the far more costly process of assembling B-SIMs one sequence at a time. The patent was lodged in the name of Cambridge Scientific Pty. Ltd.; however, Molecular USA holds the worldwide exclusive license to manufacture, commercialize, market and distribute topical anti-inflammatory and analgesic products based on the proprietary MPL-TL compound.
Molecular USA is still working on the projections regarding the necessary expenditure and time frame involved in pursuing this research and development program. Any such program will also be subject to Molecular USA raising the necessary funds to advance such a program.
Capital Expenditure Commitments
Capital expenditures during the year ended June 30, 2012, amounted to $Nil ($Nil for the years ended June 30, 2011 and June 30, 2010). Molecular USA does not anticipate any significant purchase or sale of equipment over the next 12 months.
Strategic Acquisitions
On November 25, 2005, Molecular USA entered into a share purchase agreement dated November 25, 2005 with PharmaNet to acquire 100% of the issued and outstanding shares of MPLA. Molecular USA issued a total of 88,000,000 shares of its common stock to PharmaNet the parent corporation of MPLA. Accordingly, PharmaNet controls approximately 79% of Molecular USA's issued and outstanding shares of common stock.
Recent Accounting Pronouncements
In December 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-12, "Comprehensive Income". This ASU effectively defers the changes in ASU No. 2011-05, "Presentation of Comprehensive Income" that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income. ASU No. 2011-12 should be applied retrospectively and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. As ASU No. 2011-12 relates only to the presentation of Comprehensive Income, the adoption of this update will not have a material effect on Molecular USA's consolidated financial statements.
In June 2011, the FASB issued ASU No. 2011-05, "Presentation of Comprehensive Income". This ASU presents an entity with the option to present the total of comprehensive income, the components of net income, and the component of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This update eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity/deficit. The amendments in this update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU No. 2011-05 should be applied retrospectively and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. As ASU No. 2011-05 relates only to the presentation of Comprehensive Income, the adoption of this update will not have a material effect on Molecular USA's consolidated financial statements.
In May 2011, the FASB issued ASU No. 2011-04, "Fair Value Measurement" to amend the accounting and disclosure requirements on fair value measurements. This ASU limits the highest-and-best-use measure to nonfinancial assets, permits certain financial assets and liabilities with off-setting positions in market or counterparty credit risks to be measured at a net basis, and provides guidance on the applicability of premiums and discounts. Additionally, this update expands the disclosure on Level 3 inputs by requiring quantitative disclosure of the unobservable inputs and assumptions, as well as description of the valuation processes and the sensitivity of the fair value to changes in unobservable inputs. ASU No. 2011-04 is to be applied prospectively and is effective during interim and annual periods beginning after December 15, 2011. The adoption of this update will not have a material effect on Molecular USA's consolidated financial statements.
Critical Accounting Policies and Estimates
Our audited consolidated financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles used in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our consolidated financial statements is critical to an understanding of our financials.
Stock-based Compensation
Effective January 1, 2006, the Corporation adopted the provisions of ASC 718, "Compensation - Stock Compensation", which establishes accounting for equity instruments exchanged for employee services. Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employees' requisite service period (generally the vesting period of the equity grant). The Corporation adopted ASC 718 using the modified prospective method, which requires the Corporation to record compensation expense over the vesting period for all awards granted after the date of adoption, and for the unvested portion of previously granted awards that remain outstanding at the date of adoption. Accordingly, the financial statements for the periods prior to January 1, 2006 have not been restated to reflect the fair value method of expensing share-based compensation. The adoption of ASC 718 does not change the way the Corporation accounts for share-based payments to non-employees, with guidance provided by ASC 505-50, "Equity-Based Payments to Non-Employees".
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
No disclosure is required hereunder as the Corporation is a "smaller reporting company," as defined in Item 10(f) of Regulation S-K.
Item 8.
Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm dated August 7, 2012.
Consolidated Balance Sheets as at June 30, 2012 and June 30, 2011.
Consolidated Statements of Operations for the years ended June 30, 2012, June 30, 2011 and June 30, 2010 and for the period from the date of inception on July 14, 2004 to June 30, 2012.
Consolidated Statements of Cash Flows for the years ended June 30, 2012, June 30, 2011 and June 30, 2010 and for the period from the date of inception on July 14, 2004 to June 30, 2012.
Consolidated Statement of Stockholders' Deficiency for the years ended June 30, 2012, June 30, 2011 and June 30, 2010 and for the period from the date of inception on July 14, 2004 to June 30, 2012.
Notes to Consolidated Financial Statements.
James Stafford
James Stafford, Inc.
Chartered Accountants
Suite 350 - 1111 Melville Street
Vancouver, British Columbia
Canada V6E 3V6
Telephone +1 604 669 0711
Facsimile +1 604 669 0754
www.jamesstafford.ca
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
We have audited the accompanying consolidated balance sheets of Molecular Pharmacology (USA) Limited (A Development Stage Company) (the "Company") as of 30 June 2012 and 2011 and the related consolidated statements of operations, cash flows and changes in stockholders' deficiency for each of the years in the three-year period ended 30 June 2012. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of 30 June 2012 and 2011 and the results of its operations and its cash flows for each of the years in the three-year period ended 30 June 2012 in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, conditions exist which raise substantial doubt about the Company's ability to continue as a going concern unless it is able to generate sufficient cash flows to meet its obligations and sustain its operations. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ James Stafford
Chartered Accountants
Vancouver, Canada
7 August 2012
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2012
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Consolidated Balance Sheets
(Expressed in U.S. Dollars)
As at
30 June
As at
30 June
$
$
Assets
Current
Cash and cash equivalents
2,572
8,675
Amounts receivable
5,110
6,606
7,682
15,281
Equipment (Note 4)
1,159
1,608
8,841
16,889
Liabilities
Current
Accounts payable and accrued liabilities (Note 5)
19,252
20,052
Due to related parties (Note 6)
2,069,448
1,963,529
2,088,700
1,983,581
Stockholders' deficiency
Capital stock (Note 7)
Authorized
300,000,000 common shares, par value $0.001
Issued and outstanding
30 June 2012 - 111,553,740 common shares, par value $0.001
30 June 2011 - 111,553,740 common shares, par value $0.001
111,554
111,554
Additional paid-in capital
106,707
106,707
Cumulative translation adjustment
(446,072)
(512,287)
Deficit, accumulated during the development stage
(1,852,048)
(1,672,666)
(2,079,859)
(1,966,692)
8,841
16,889
Nature and Continuance of Operations (Note 1)
On behalf of the Board:
/s/ Jeffery Edwards Director	
Jeffery Edwards
The accompanying notes are an integral part of these consolidated financial statements.
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Consolidated Statements of Operations
(Expressed in U.S. Dollars)
The accompanying notes are an integral part of these consolidated financial statements.
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)
Supplemental Disclosures with Respect to Cash Flows (Note 10)
The accompanying notes are an integral part of these consolidated financial statements.
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Consolidated Statements of Changes in Stockholders' Deficiency
(Expressed in U.S. Dollars)
The accompanying notes are an integral part of these consolidated financial statements.
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2012
1.Nature and Continuance of Operations
Molecular Pharmacology (USA) Limited (the "Company") was incorporated in the state of Nevada on 1 May 2002 under the name Blue Hawk Ventures, Inc. The Company changed its name to Molecular Pharmacology (USA) Limited on 29 August 2005. At the same time, the Company completed a four for one forward split of its issued and outstanding share capital and altered its authorized share capital to 300,000,000 shares of common stock with a par value of $0.001 per share.
The Company is a development stage enterprise, as defined in Accounting Standards Codification (the "Codification" or "ASC") 915-10, "Development Stage Entities". The Company is devoting all of its present efforts to securing and establishing a new business and its current planned principle operations have not commenced. Accordingly, no revenue has been derived during the organization period.
Up until the fall of 2005, the Company was in the business of mineral exploration and development of a mineral property. The Company allowed the option on its mineral claim to lapse in the fall of 2005.
On 13 October 2005, the Company acquired the exclusive distribution rights to distribute, market, promote, detail, advertise and sell certain "Licensed Products" through Molecular Pharmacology Pty. Ltd. (formerly Molecular Pharmacology Limited) ("MPLA") (Note 9). MPLA was incorporated under the laws of Australia and converted to a proprietary company on 29 October 2009. MPLA is a wholly owned subsidiary company of PharmaNet Group Limited ("PharmaNet"), an Australian company listed on the Australian Stock Exchange.
Since then, the Company has engaged in organizational and start up activities, including developing a new business plan, recruiting new directors, scientific advisors and key scientists, making arrangements for laboratory facilities and office space and raising additional capital. The Company has generated no revenue from product sales. The Company does not have any pharmaceutical products currently available for sale, and none are expected to be commercially available for some time, if at all. The Licensed Products must first undergo pre-clinical and human clinical testing in the United States before they may be sold commercially.
The Company completed a share purchase agreement on 8 May 2006 with PharmaNet (the "Purchase Agreement"). Under the terms of the Purchase Agreement the Company acquired 100% of the issued and outstanding shares of MPLA. The Company, in exchange for 100% of the issued and outstanding shares of MPLA, issued PharmaNet an aggregate total of 88,000,000 common shares of the Company on the closing of the transaction. The issuance of 88,000,000 common shares of the Company constituted an acquisition of control of the Company by PharmaNet. The transaction has been accounted for as a recapitalization of the Company (Note 2).
MPLA was incorporated on 14 July 2004 under the laws of Australia. The accompanying 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.
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2012
The Company's consolidated financial statements as at 30 June 2012 and for the year then ended have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. The Company has a net loss of $179,382 for the year ended 30 June 2012 (30 June 2011 - $121,860) and has a working capital deficit of $11,570 at 30 June 2012 (30 June 2011 - $4,771).
Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management believes that the Company's capital resources should be adequate to continue operating and maintaining its business strategy during the fiscal year ending 30 June 2013. However, if the Company is unable to raise additional capital in the near future, due to the Company's liquidity problems, management expects that the Company will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures. These consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
At 30 June 2012, the Company has suffered losses from development stage activities to date. Although management is currently attempting to implement its business plan, and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The 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 consolidated financial statements.
Basis of presentation
These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") applicable for a development stage company for financial information and are expressed in U.S. dollars.
Principles of consolidation
These consolidated financial statements include the accounts of MPLA since its incorporation on 14 July 2004 and the Company since the reverse acquisition on 8 May 2006 (Note 1). All intercompany balances and transactions have been eliminated.
Cash and cash equivalents
Cash and cash equivalents include highly liquid investments with original maturities of three months or less.
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2012
Segments of an enterprise and related information
ASC 280, "Segment Reporting" establishes guidance for the way that public companies report information about operating segments in annual financial statements and requires reporting of selected information about operating segments in interim financial statements issued to the public. It also establishes standards for disclosures regarding products and services, geographic areas and major customers. ASC 280 defines operating segments as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
Foreign currency translation
The Company's functional and reporting currency is U.S. dollars. The consolidated financial statements of the Company are translated to U.S. dollars in accordance with ASC 830, "Foreign Currency Matters". Assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to Other Comprehensive Income. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
Equipment
Equipment is recorded at cost and amortization is provided over its estimated economic life at the rate of 15% declining balance.
Income taxes
Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with ASC 740, "Income Taxes", which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax losses and credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not.
Comprehensive income (loss)
ASC 220, "Comprehensive Income", establishes standards for the reporting and disclosure of comprehensive income (loss) and its components in the financial statements. As at 30 June 2012, the Company has items that represent a comprehensive loss and, therefore, has included a schedule of comprehensive loss in the consolidated financial statements.
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2012
Basic and diluted net income (loss) per share
The Company computes net income (loss) per share in accordance with ASC 260, "Earnings per Share". ASC 260 requires presentation of both basic and diluted earnings per share ("EPS") on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive.
Stock-based compensation
Effective 1 January 2006, the Company adopted the provisions of ASC 718, "Compensation - Stock Compensation", which establishes accounting for equity instruments exchanged for employee services. Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employees' requisite service period (generally the vesting period of the equity grant). The Company adopted ASC 718 using the modified prospective method, which requires the Company to record compensation expense over the vesting period for all awards granted after the date of adoption, and for the unvested portion of previously granted awards that remain outstanding at the date of adoption. Accordingly, the financial statements for the periods prior to 1 January 2006 have not been restated to reflect the fair value method of expensing share-based compensation. The adoption of ASC 718 does not change the way the Company accounts for share-based payments to non-employees, with guidance provided by ASC 505-50, "Equity-Based Payments to Non-Employees".
Comparative figures
Certain comparative figures have been adjusted to conform to the current year's presentation.
3.Recent Accounting Pronouncements
In December 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-12, "Comprehensive Income". This ASU effectively defers the changes in ASU No. 2011-05, "Presentation of Comprehensive Income" that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income. ASU No. 2011-12 should be applied retrospectively and is effective for fiscal years, and interim periods within those years, beginning after 15 December 2011. As ASU No. 2011-12 relates only to the presentation of Comprehensive Income, the adoption of this update will not have a material effect on the Company's consolidated financial statements.
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2012
In June 2011, the FASB issued ASU No. 2011-05, "Presentation of Comprehensive Income". This ASU presents an entity with the option to present the total of comprehensive income, the components of net income, and the component of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This update eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity (deficiency). The amendments in this update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU No. 2011-05 should be applied retrospectively and is effective for fiscal years, and interim periods within those years, beginning after 15 December 2011. As ASU No. 2011-05 relates only to the presentation of Comprehensive Income, the adoption of this update will not have a material effect on the Company's consolidated financial statements.
In May 2011, the FASB issued ASU No. 2011-04, "Fair Value Measurement" to amend the accounting and disclosure requirements on fair value measurements. This ASU limits the highest-and-best-use measure to nonfinancial assets, permits certain financial assets and liabilities with offsetting positions in market or counterparty credit risks to be measured at a net basis, and provides guidance on the applicability of premiums and discounts. Additionally, this update expands the disclosure on Level 3 inputs by requiring quantitative disclosure of the unobservable inputs and assumptions, as well as description of the valuation processes and the sensitivity of the fair value to changes in unobservable inputs. ASU No. 2011-04 is to be applied prospectively and is effective during interim and annual periods beginning after 15 December 2011. The adoption of this update will not have a material effect on the Company's consolidated financial statements.
4. Equipment
During the year ended 30 June 2012, the total additions to equipment were $Nil (30 June 2011 - $Nil).
5. Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities are non-interest bearing, unsecured and have settlement dates within one year.
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2012
6. Due to Related Parties and Related Party Transactions
As at 30 June 2012, the amount due to related parties includes $1,000 payable to a director of the Company (30 June 2011 - $1,000). This balance is non-interest bearing, unsecured and has no fixed terms of repayment.
As at 30 June 2012, the amount due to related parties includes $22,846 payable to a company owned by a director of the Company or an officer of PharmaNet (30 June 2011 - $65,231). This balance is non-interest bearing, unsecured and has no fixed terms of repayment.
As at 30 June 2012, the amount due to related parties includes $1,101 payable to a company owned by a director of the Company or an officer of PharmaNet (30 June 2011 - $673). This balance is non-interest bearing, unsecured and has no fixed terms of repayment.
As at 30 June 2012, the amount due to related parties includes $7,741 payable to a company owned by a director of the Company or an officer of Pharmanet (30 June 2011 - $Nil). This balance is non-interest bearing, unsecured and has no fixed terms of repayment.
As at 30 June 2012, the amount due to related parties includes $2,036,760 payable to PharmaNet (30 June 2011 - $1,896,625). This balance is non-interest bearing, unsecured and has no fixed terms of repayment.
During the year ended 30 June 2012, a director of the Company or an officer of PharmaNet, and their controlled entities were paid or accrued consulting fees of $46,316 (30 June 2011 - $43,786; 30 June 2010 - $41,920; cumulative - $862,596) by the Company.
During the year ended 30 June 2012, a director of the Company or an officer of PharmaNet, and their controlled entities were paid or accrued consulting and/or administrative fees of $20,449 (30 June 2011 - $22,897; 30 June 2010 - $Nil; cumulative - $43,346) by the Company.
During the year ended 30 June 2012, a director of the Company or an officer of PharmaNet, and their controlling entities were paid or accrued consulting fees of $21,285 (30 June 2011 - $Nil; 30 June 2010 - $Nil; cumulative - $21,285) by the Company.
During the year ended 30 June 2012, a director of the Company or an officer of PharmaNet, and their controlled entities were paid or accrued consulting fees of $33,024 (30 June 2011 - $8,904; 30 June 2010 - $Nil; cumulative - $41,928) by the Company.
During the year ended 30 June 2012, a director of the Company or an officer of PharmaNet, and their controlled entities were paid or accrued office and miscellaneous expenses of $Nil (30 June 2011 - $Nil; 30 June 2010 - $17,352; cumulative - $80,468) by the Company.
During the year ended 30 June 2012, a director of the Company or an officer of PharmaNet, and their controlled entities were paid or accrued office and miscellaneous expenses of $Nil (30 June 2011 - $Nil, 30 June 2010 - $4,481, cumulative - $4,481) by the Company.
During the year ended 30 June 2012, a director of the Company or an officer of PharmaNet, and their controlled entities were paid or accrued rental fees of $Nil (30 June 2011 - $Nil; 30 June 2010 - $Nil; cumulative - $12,987) by the Company.
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2012
Transactions comprising the amount due to PharmaNet are as follows:
For the
year
ended
30 June
For the
year
ended
30 June
$
$
Opening balance, beginning of year
1,896,625
1,465,002
Funds transferred to the Company by PharmaNet
170,790
70,947
Expenses paid by PharmaNet on behalf of the Company
33,852
9,894
Foreign currency translation adjustment
(64,507)
350,782
Balances, end of year
2,036,760
1,896,625
The average amount due to PharmaNet for the year ended 30 June 2012 was $1,816,134 (30 June 2011 - $1,660,885; 30 June 2010 - $1,540,053).
7. Capital Stock
Authorized
The total authorized capital is 300,000,000 common shares with a par value of $0.001 per common share.
Issued and outstanding
The total issued and outstanding capital stock is 111,553,740 common shares with a par value of $0.001 per common share.
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2012
8. Income Taxes
Income tax expense differs from the amount that would result from applying the federal income tax rate to earnings before income taxes. These differences result from the following items:
For the
year
ended
30 June
For the
year
ended
30 June
For the
year
ended
30 June
$
$
$
Loss before income taxes
(179,382)
(121,860)
(117,220)
Federal income tax rates
34.0%
34.0%
34.0%
Income tax recovery based on the above rates
(60,990)
(41,432)
(39,855)
Increase (decrease) due to:
Difference between U.S. and foreign tax rates
5,215
3,121
2,738
Change in valuation allowance
39,496
99,383
53,228
Foreign exchange and other
16,279
(61,072)
(16,111)
Income tax expense
-
-
-
The composition of the Company's deferred tax assets as at 30 June 2012 and 2011 are as follows:
As at
30 June
As at
30 June
$
$
Net income tax operating loss carryforward
2,101,601
1,976,478
Deferred tax assets
660,748
621,252
Less: Valuation allowance
(660,748)
(621,252)
Net deferred tax asset
-
-
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2012
The Company has non-capital loss carry-forwards of approximately $2,101,601 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:
$
20,402
46,992
27,717
14,187
261,311
111,155
75,463
57,882
48,765
43,836
49,005
No expiry 1,344,886
2,101,601
A full valuation allowance has been recorded against the potential deferred tax assets associated with all the loss carry-forwards as their utilization is not considered more likely than not at this time.
9. Distribution Agreement
The Company has the exclusive distribution rights, through MPLA, to distribute, market, promote, detail, advertise and sell certain Licensed Products, with metallo-polypeptide analgesic as an active ingredient, in the United States (excluding its territories and possessions) (Note 1). If, and when necessary, the Company will obtain all necessary regulatory approvals for the Licensed Products and incorporate the Licensed Products in the United States.
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2012
10. Supplemental Disclosures with Respect to Cash Flows
11. Segmented Information
Details on a geographic basis as at and for the year ended 30 June 2012 are as follows:
Australia
U.S.A.
Total
$
$
$
Assets
8,841
-
8,841
Loss for the year
(130,377)
(49,005)
(179,382)
Details on a geographic basis as at and for the year ended 30 June 2011 are as follows:
Australia
U.S.A.
Total
$
$
$
Assets
16,889
-
16,889
Loss for the year
(78,024)
(43,836)
(121,860)
Molecular Pharmacology (USA) Limited
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2012
Details on a geographic basis as at and for the year ended 30 June 2010 are as follows:
Australia
U.S.A.
Total
$
$
$
Assets
11,652
-
11,652
Loss for the year
(68,454)
(48,766)
(117,220)
12. Financial Instruments
The carrying values of cash and cash equivalents and accounts payable approximate fair value due to the short term maturity of these financial instruments.
Credit Risk
Financial instruments that potentially subject the Company to credit risk consists of cash and cash equivalents and amounts receivable. 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.
If the Australian dollar had weakened (strengthened) against the U.S. dollar, with all other variables held constant, by 100 basis points (1%) at year end, the impact on net loss and other comprehensive loss would have been $20,608 higher ($20,608 lower).
The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
Interest Rate Risk
The Company has non-interest paying cash balances and no interest-bearing debt. It is management's opinion that the Company is not exposed to significant interest risk arising from these financial instruments.
Liquidity Risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with its financial liabilities. The Company is reliant upon PharmaNet as its sole source of cash. The Company has received financing from PharmaNet in the past; however, there is no assurance that it will be able to do so in the future.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Molecular USA had no disagreements on accounting or financial disclosure matters with its independent accountants to report under this Item 8.
Item 9A.
Item 9A. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
Disclosure controls are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a corporation in the reports that it files or submits under the Exchange Act is accumulated and communicated to the corporation's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Our management carried out an evaluation (with the participation of our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") ), of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, the Corporation's CEO and CFO have concluded that the Company's disclosure controls and procedures were effective as of June 30, 2012.
(b) Internal control over financial reporting
Management's annual report on internal control over financial reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting should include those policies and procedures that:
·pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
·provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with applicable GAAP, and that receipts and expenditures are being made only in accordance with authorizations of Management and the Board of Directors; and
·provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As required by Rule 13a-15(c) promulgated under the Exchange Act, Management, with the participation of our CEO and CFO, evaluated the effectiveness of our internal control over financial reporting as of June 30, 2012. Management's assessment took into consideration the size and complexity of the corporation and was based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control over Financial Reporting -Guidance for Smaller Public Companies. In performing the assessment, Management has concluded that our internal control over financial reporting was effective as of June 30, 2012.
Attestation report of the registered public accounting firm
This annual report does not include an attestation report of the Corporation's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Corporation's registered public accounting firm pursuant to temporary rules of the SEC that permit the Corporation to provide only management's report in this annual report.
Changes in internal control over financial reporting
Based on the evaluation as of June 30, 2012, Jeff Edwards, our President and CEO, and our 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.
Item 9A(T). Controls and Procedures
See Item 9A - Controls and Procedures above.
Item 9B.
Item 9B. Other Information
None.
PART III
Item 10.
Item 10. Directors and Executive Officers and Corporate Governance
Identification of Directors and Executive Officers
The following table sets forth the names of all directors and executive officers of the Molecular USA as of August 21, 2012 and June 30, 2012. These persons will serve until the next annual meeting of the stockholders or until their successors are elected or appointed and qualified, or their prior resignation or termination.
Name Age Position Date Position
First Held
Jeffery D. Edwards President and Chief Executive Officer, Chief Financial Officer and Director October 28, 2005
Mr. Jeffery D. Edwards. Mr. Edwards has over twenty years of experience in managing new technological innovations in the medical device and pharmaceutical industry. From 2002 to 2005, Mr. Edwards, as president and shareholder of International Scientific Pty Ltd., managed a variety of medical and technology projects. In 2002 and 2003, Mr. Edwards was actively involved with Colltech Australia Limited ("Colltech"), a corporation involved in the production and sale of collagen. Colltech is listed on the Australian Stock Exchange ("CAU"). From its inception in 1995 to 2001, Mr. Edwards was the executive director of Genesis Biomedical Limited ("Genesis"), a pharmaceuticals and biotechnology listed on the Australian Stock Exchange ("GBL"). While at Genesis, Mr. Edwards was responsible for all medical and clinical activities of the corporation as well as all day to day management of staff and corporate activities. Mr. Edwards currently serves as a director of: OBJ Limited, a drug delivery corporation listed on the Australian Stock Exchange ("OBJ") (2005) and Global Energy Medicine Pty Ltd., a private therapeutic device corporation (2005). He also holds the office of Chief Operations Officer of Molecular Pharmacology Limited, a wholly owned subsidiary of Molecular USA.
Family relationships
Not applicable.
Significant Employees
We have no employees who are not executive officers, but who are expected to make a significant contribution to the Corporation's business.
Involvement in Certain Legal Proceedings
During the past five years, none of our directors, or persons nominated to become a director, or executive officer, promoter or control person:
·was a general partner or executive officer of any business against which any bankruptcy petition was filed, either at the time of the bankruptcy or two years prior to that time;
·was convicted in a criminal proceeding or named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
·was subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
·as found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
Audit Committee Financial Expert
We do not have a member on our Board of Directors that has been designated as an audit committee "financial expert." We do not believe that the addition of such an expert would add anything meaningful to the Corporation at this time. It is also unlikely we would be able to attract an independent financial expert to serve on our Board of Directors at this stage of our development. In order to entice such a director to join our Board of Directors we would probably need to acquire directors' errors and omission liability insurance and provide some form of meaningful compensation to such a director; two things we are unable to afford at this time.
Under the applicable SEC standards, an audit committee financial expert means a person who has the following attributes:
·understanding of generally accepted accounting principles and financial statements;
·ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves;
·experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the registrant's financial statements, or experience actively supervising one or more persons engaged in such activities;
·understanding of internal controls and procedures for financial reporting; and
·understanding of audit committee functions.
Audit Committee
Molecular USA has a designated audit committee consisting of solely of Mr. Edwards. Mr. Edwards does not meet the independent requirements for an audit committee member. Molecular USA's audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee. Molecular USA has adopted an audit committee charter.
Disclosure Committee and Charter
Molecular USA has a disclosure committee and disclosure committee charter. Molecular USA's disclosure committee is comprised of all of its officers and directors. The purpose of the committee is to provide assistance to the CEO and CFO in fulfilling their responsibilities regarding the identification and disclosure of material information about Molecular USA and the accuracy, completeness and timeliness of Molecular USA's financial reports.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that our executive officers and directors and persons who own more than 10% of a registered class of our equity securities file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file.
To the best of our knowledge, during the fiscal year ended June 30, 2012, all executive officers, directors and greater than 10% shareholders filed the required reports in a timely manner.
Code of Ethics
Molecular USA has adopted a code of ethics that applies to all its executive officers and employees, including its CEO and CFO. A copy of Molecular USA's adopted code of ethics is attached to this annual report. Molecular USA undertakes to provide any person with a copy of its code of ethics free of charge. Please contact Molecular USA at 011-61-8-9443-3011 to request a copy of Molecular USA's code of ethics. Management believes Molecular USA's code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code.
Item 11.
Item 11. Executive Compensation
Summary of Compensation of Executive Officers
The following table summarizes the compensation paid to our President and CEO during the last three complete fiscal years. No other officer or director received annual compensation in excess of $100,000 during the last three complete fiscal years.
As of the date of this annual report, we have no compensatory plan or arrangement with respect to any officer that results or will result in the payment of compensation in any form from the resignation, retirement or any other termination of employment of such officer's employment with our Corporation, from a change in control of our Corporation or a change in such officer's responsibilities following a change in control.
Board of Directors Report on Executive Compensation
The Board of Directors of Molecular USA is responsible for reviewing and determining the annual salary and other compensation of the executive officers and key employees of Molecular USA. The goals of Molecular USA are to align compensation with business objectives and performance and to enable Molecular USA to attract, retain and reward executive officers and other key employees who contribute to the long-term success of Molecular USA. Molecular USA will provide base salaries to its executive officers and key employees sufficient to provide motivation to achieve certain operating goals. Although salaries are not specifically tied to performance, incentive bonuses are available to certain executive officers and key employees. In the future, executive compensation may include without limitation cash bonuses, stock option grants and stock reward grants. In addition, Molecular USA may set up a pension plan or similar retirement plans.
Molecular USA has no pension, health, annuity, insurance, profit sharing or similar benefit plans.	
Stock Options/SAR Grants
During the fiscal years ended June 30, 2012 and June 30, 2011, we did not grant any stock options or stock appreciation rights to any of our directors or officers. There were no stock options exercised during the fiscal years ended June 30, 2012 or June 30, 2011, and there were no stock options or stock appreciation rights outstanding on June 30, 2012 or June 30, 2011.
Long-Term Incentive Plans/Equity Compensation Plan
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers, except that our directors and executive officers may receive stock options at the discretion of our Board of Directors. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our Board of Directors.
We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.
Compensation of Directors
No cash compensation was paid to any of our directors for the director's services as a director during the year ended June 30, 2012 or since our inception. We have no standard arrangement pursuant to which our directors are compensated for their services in their capacity as directors except for the granting from time to time of incentive stock options. The Board of Directors may award special remuneration to any director undertaking any special services on behalf of our Corporation other than services ordinarily required of a director. Other than indicated below, no director received and/or accrued any compensation for his services as a director, including committee participation and/or special assignments.
Stock Option Plans
Molecular USA has not adopted a stock option plan or long-term incentive plans at this time.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as at August 21, 2012, certain information with respect to the beneficial ownership of our common stock by each shareholder known by us to be the beneficial owner of more than five percent (5%) of our common stock, and by each of our current directors and executive officers.
Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.
Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership(1) Percentage of Class(1)
Pharmanet Group Limited
Level 1
284 Oxford Street
Leederville,
Western Australia 6007
78.89% 78.89%
Jeffery Edwards
10 Koeppe Road, Claremont
Perth, Australia 6010
0%
Directors and Executive Officers as a Group 0%
Notes:
(1) Based on 111,553,740 shares of common stock issued and outstanding as of August 21, 2012. Except as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage ownership of the person holding such option or warrants, but are not deemed outstanding for purposes of computing the percentage ownership of any other person.
Changes in Control
There are no present arrangements or pledges of the Corporation's securities which may result in a change in control of the Corporation.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Directors Independence
Certain Relationships and Related Transactions
Other than as noted below, none of the following parties has, during the fiscal year ended June 30, 2012, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:
·Any of our directors or officers;
·Any person proposed as a nominee for election as a director;
·Any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our outstanding shares of common stock;
·Any of our promoters; or
·Any relative or spouse of any of the foregoing persons who has the same house as such person.
As at June 30, 2012, we owe $1,000 to Jeff Edwards, a director and officer of Molecular USA, for monies advanced by him to us (June 30, 2011 - $1,000). The advances do not carry an interest rate, are unsecured and are due on demand.
As at June 30, 2012 we owe $22,846 to a corporation owned by a director of Molecular USA or an officer of PharmaNet (June 30, 2011 - $65,231).
As at June 30, 2012, the amount due to related parties includes $1,101 payable to a corporation owned by a director of Molecular USA or an officer of PharmaNet (June 30, 2011 - $673). This balance is non-interest bearing, unsecured and has no fixed terms of repayment.
As at June 30, 2012, the amount due to related parties includes $7,741 payable to a corporation owned by a director of Molecular USA or an officer of PharmaNet (June 30, 2011 - $Nil). This balance is non-interest bearing, unsecured and has no fixed terms of repayment.
As at June 30, 2012 we owed $2,036,760 to PharmaNet for loans advanced to us (June 30, 2011- $1,896,625). PharmaNet owns approximately 78.89% of the common stock of Molecular USA. This balance is non-interest bearing, unsecured and has no fixed terms of repayment.
During the fiscal year ended June 30, 2012, a director of the Corporation or an officer of PharmaNet and their controlled entities were paid or accrued consulting fees of $46,316 (June 30, 2011 - $43,786; June 30, 2010 - $41,920; cumulative - $862,586) by the Corporation.
During the year ended June 30, 2012, a director of the Corporation or an officer of PharmaNet, and their controlled entities were paid or accrued consulting and/or administration fees of $20,449 (June 30, 2011 - $22,897; June 30, 2010 - $Nil; cumulative - $43,346) by the Corporation.
During the year ended 30 June 2012, a director of the Corporation or an officer of PharmaNet, and their controlled entities were paid or accrued consulting fees of $21,285 (30 June 2011 - $Nil; 30 June 2010 - $Nil; cumulative - $21,285) by the Corporation.
During the year ended June 30, 2012, a director of the Corporation or an officer of PharmaNet and their controlled entities were paid or accrued consulting fees of $33,024 (2011 - 8,904; 2010 - $Nil; cumulative - $41,928) by the Corporation.
During the year ended June 30, 2012, a director of Molecular USA or an officer of PharmaNet, and their controlled entities were paid or accrued office and miscellaneous expenses of $Nil (June 30, 2011 - $Nil; June 30, 2010 - $17,352; cumulative - $80,468) by the Corporation.
During the year ended June 30, 2012, a director of Molecular USA or an officer of PharmaNet, and their controlled entities were paid or accrued office and miscellaneous expenses of $Nil (June 30, 2011 - $Nil; June 30, 2010 - $4,481; cumulative - $4,481) by the Corporation.
During the fiscal year ended June 30, 2012, a director of Molecular USA or an officer of PharmaNet, and their controlled entities were paid or accrued rental fees of $Nil (June 30, 2011 - $Nil; June 30, 2010 - $Nil; cumulative - $12,987).
As at the date of this annual report, we do not have any policies in place with respect to whether we will enter into agreements with related parties in the future.
Director Independence	
We currently do not have any independent directors, as the term "independent" is defined by the rules of the NASDAQ Stock Market (Note: Our shares of common stock are not listed on NASDAQ or any other national securities exchange and this reference is used for definition purposes only).
Item 14.
Item 14. Principal Accounting Fees and Services
Fees and Services
Our principal accountant, James Stafford, Chartered Accountants billed an aggregate of $22,752.66 for the fiscal year ended June 30, 2012 and for professional services rendered for the audit of the Corporation's annual consolidated financial statements and review of the consolidated financial statements for the included in its quarterly reports.
The following is an aggregate of fees billed for each of the fiscal years ended June 30, 2012 and June 30, 2011 for professional services rendered by our principal accountants:
Fiscal
year
ended
June 30,
Fiscal
year
ended
June 30,
Audit fees* $22,752.66 $11,228
Audit-related fees - 4,765
Tax fees - -
All other fees - 3,701
Total fees paid or accrued to our principal accountants $22,752.66 $19,694
* Audit fees consist of fees related to professional services rendered in connection with the audit of our annual consolidated financial statements, and the review of the consolidated financial statements included in each of our quarterly reports on Form 10-Q.
Pre-Approval Policies and Procedures
Our policy is to pre-approve all audit and permissible non-audit services performed by the independent accountants. These services may include audit services, audit-related services, tax services and other services. Under our audit committee's policy, pre-approval is generally provided for particular services or categories of services, including planned services, project based services and routine consultations. In addition, the audit committee may also pre-approve particular services on a case-by-case basis. We approved all services that our independent accountants provided to us in the past two fiscal years.
PART IV
Item 15.
Item 15. Exhibits, Financial Statement Schedules
Exhibit Number and Exhibit Title
2.1 Share Purchase Agreement dated November 25, 2005 to acquire Molecular Pharmacology Limited (incorporated by reference from our Form 10-KSB Registration Statement, filed January 31, 2006)
3.1 Articles of Incorporation as Amended (incorporated by reference from our Form 10-SB Registration Statement, filed January 23, 2003)
3.2 Certificate of Amendment to Articles of Incorporation, dated July 15, 2002 (incorporated by reference from our Form 10-SB, filed January 23, 2003)
3.3 Certificate of Amendment to Articles of Incorporation, dated August 29, 2005
3.4 Bylaws (incorporated by reference from our Form 10-SB Registration Statement, filed May 2002
14.1 Code of Ethics (incorporated by reference from our Form 10-KSB Registration Statement, filed January 31, 2006)
Subsidiaries of Molecular USA (incorporated by reference from our Form 10-KSB Registration Statement, filed January 31, 2006)
31.1 Certificate of CEO as Required by Rule 13a-14(a)/15d-14
31.2 Certificate of CFO as Required by Rule 13a-14(a)/15d-14
Certificate of CEO and CFO as Required by Rule Rule 13a-14(b) and Rule 15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code
99.1 Disclosure Committee Charter (incorporated by reference from our Form 10-KSB Registration Statement, filed January 31, 2006)
99.2 Audit Committee Charter (incorporated by reference from our Form 10-KSB Registration Statement, filed January 31, 2006)
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MOLECULAR PHARMACOLOGY (USA) LIMITED
BY: /s/ Jeffery D. Edwards
Jeffery D. Edwards, President and Chief Executive Officer, Chief Financial Officer and Member of the Board of Directors
Date: August 22, 2012
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
BY: /s/ Jeffery D. Edwards
Jeffery D. Edwards, President and Chief Executive Officer, Chief Financial Officer and Member of the Board of Directors
Date: August 22, 2012