-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NgOi5XmJH7Kc57VAKBWcTIZbHnMkmallZxSQN8vJs/EwfUhavjskFRr8w/Q85CjG ajTF/3N73QnCIvXBwEXbwQ== 0000909012-06-000714.txt : 20060620 0000909012-06-000714.hdr.sgml : 20060620 20060620105830 ACCESSION NUMBER: 0000909012-06-000714 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20060430 FILED AS OF DATE: 20060620 DATE AS OF CHANGE: 20060620 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERA PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000837490 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 043683628 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 033-23460 FILM NUMBER: 06914530 BUSINESS ADDRESS: STREET 1: 73-4460 QUEEN KA'AHUMANU HWY. STREET 2: SUITE 110 CITY: KAILUA-KONA STATE: HI ZIP: 96740 BUSINESS PHONE: (808) 326-9301 MAIL ADDRESS: STREET 1: 73-4460 QUEEN KA'AHUMANU HWY. STREET 2: SUITE 110 CITY: KAILUA-KONA STATE: HI ZIP: 96740 FORMER COMPANY: FORMER CONFORMED NAME: AQUASEARCH INC DATE OF NAME CHANGE: 19920703 10QSB 1 t302645.txt QUARTERLY REPORT ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark one) [X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2006 Or [ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 COMMISSION FILE NUMBER: 333-107716 -------------------- MERA PHARMACEUTICALS, INC. (Exact name of Registrant as specified in its charter) DELAWARE 04-3683628 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 73-4460 QUEEN KA'AHUMANU HIGHWAY, SUITE 110 KAILUA-KONA, HAWAII 96740 (808) 326-9301 (Address and telephone number of principal executive offices) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods as the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Check whether the registrant filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. YES [X] NO [ ] 479,175,623 shares of $0.0001 par value common stock outstanding as of April 30, 2006 80 shares of $0.0001 par value Series A preferred stock outstanding as of April 30, 2006 974 shares of $0.0001 par value Series B preferred stock outstanding as of April 30, 2006 ================================================================================ MERA PHARMACEUTICALS, INC. FORM 10-QSB FOR THE QUARTER ENDED APRIL 30, 2006 CONTENTS PAGE PART I - FINANCIAL INFORMATION Item 1: Financial Statements Condensed Balance Sheet 3 Condensed Statements of Operations 4 Condensed Statements of Cash Flows 5 Notes to Condensed Financial Statements 6 Item 2: Management's Plan of Operation Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Item 3. Controls and Procedures 9 PART II - OTHER INFORMATION Item 1: Legal Proceedings 9 Item 2: Changes In Securities 9 Item 3. Defaults Upon Senior Securities 9 Item 4: Submission of Matters to a Vote of Security Holders 9 Item 5: Other Information 9 Item 6: Exhibits and Reports on Form 8-K 9 Signature 10 Certifications 11 Mera Pharmaceuticals, Inc. Condensed Balance Sheet April 30, 2006 -------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 13,052 Prepaid expenses and other current assets 61,761 -------------- Total current assets 74,813 Plant and equipment, net 2,424,489 Other assets, net of accumulated amortization of $37,440 24,960 -------------- Total Assets $ 2,524,262 ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable, accrued expenses and customer credits $ 347,154 Notes payable - related parties 65,336 -------------- Total Current Liabilities 412,490 -------------- Stockholders' equity: Convertible preferred stock, $.0001 par value, 10,000 shares authorized, 80 Series A shares issued and outstanding and 974 Series B shares issued and outstanding 2 Common stock, $.0001 par value: 500,000,000 shares authorized, 479,175,623 shares issued and outstanding 47,918 Additional paid-in capital 7,481,423 Accumulated deficit (5,417,571) -------------- Total stockholders' equity 2,111,772 -------------- Total Liabilities and Stockholders' Equity $ 2,524,262 ============== See the accompanying notes to the financial statements 3 Mera Pharmaceuticals, Inc. Condensed Statements of Operations
Three Months Three Months Six Months Six Months Ended Ended Ended Ended April 30, April 30, April 30, April 30, 2006 2005 2006 2006 -------------------------------------------------------------------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) NET SALES $ 69,450 $ 108,706 $ 221,844 $ 241,047 Cost of goods sold 11,129 68,076 30,646 158,465 -------------------------------------------------------------------- GROSS PROFIT 58,321 40,630 191,198 82,582 -------------------------------------------------------------------- Operating Expenses Selling and administrative expenses 112,808 164,549 221,925 296,546 Cost of subcontract services -- 37,873 -- 112,620 Research and development costs 36,831 23,243 105,466 44,815 Depreciation and amortization 72,261 50,914 144,522 88,674 Provision for excess inventory -- -- -- 25,000 -------------------------------------------------------------------- Total operating expenses 221,900 276,579 471,913 567,655 -------------------------------------------------------------------- Operating loss (163,579) (235,949) (280,715) (485,073) Other income (expense) Interest income 639 -- 881 -- Other income 2,179 -- 2,179 -- Interest expense (2,364) (129) (4,526) (901) -------------------------------------------------------------------- Total other income (expense) 454 (129) (1,466) (901) -------------------------------------------------------------------- Net income (loss) before provision for income taxes (163,125) (236,078) (282,181) (485,974) Provision for income taxes -- -- -- -- Refundable tax credit 2,608 1,555 8,076 3,305 -------------------------------------------------------------------- NET INCOME (LOSS) $ (160,517) $ (234,523) $ (274,105) $ (482,669) ==================================================================== Net income (loss) per common share $ (0.0003) $ (0.0005) $ (0.0006) $ (0.0011) ==================================================================== Weighted Average Shares Outstanding 479,175,623 442,783,332 477,263,170 436,579,495 ====================================================================
4 Mera Pharmaceuticals, Inc. Condensed Statements of Cash Flows
Six Months Six Months Ended Ended April 30, April 30, 2006 2005 ---------------------------- (Unaudited) (Unaudited) Cash Flows from Operating Activities Net Income (loss) $ (274,105) $ (482,669) ---------------------------- Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization expense 144,522 126,979 Expenses paid with common stock -- 14,992 Changes in current assets and liabilities: Accounts receivable 7,422 (46) Inventories -- 25,000 Prepaid expenses and other current assets (49,334) (37,202) Accounts payable, accrued expenses, and customer credits 46,008 28,017 ---------------------------- Net Cash Used in Operating Activities (125,487) (324,929) ---------------------------- Cash flows From Financing Activities Proceeds from issuance of stock 150,000 397,643 Payment of notes payable (12,000) (20,000) ---------------------------- Net Cash Provided by Financing Activities 138,000 377,643 ---------------------------- Net increase in cash and cash equivalents 12,513 52,714 Cash and cash equivalents - beginning of period 539 4,401 ---------------------------- Cash and cash equivalents - end of period $ 13,052 $ 57,115 ============================ Non-Cash Investing and Financing Activities Conversion of accounts payable to common stock $ -- $ 19,576 ============================ Supplemental Cash Flow Information Interst Paid $ -- $ -- ============================ Taxes Paid $ -- $ -- ============================
5 MERA PHARMACEUTICALS, INC. NOTES TO CONDESED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED APRIL 30, 2005 AND 2006 1. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three-month and six-month periods ended April 30, 2006 are not necessarily indicative of the results that may be expected for the year ending October 31, 2006. For further information, refer to the condensed financial statements and footnotes thereto for the year ended October 31, 2005, included in Form 10-KSB filed with the Securities and Exchange Commission The preparation of the Company's Condensed Financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the Condensed Financial Statements and the reported amounts of revenues and expenses during the reporting period. The more significant areas requiring the use of management's estimates and assumptions relate to depreciation and amortization calculations; inventory valuations; asset impairments (including impairments of goodwill, long-lived assets, and investments); valuation allowances for deferred tax assets; reserves for contingencies and litigation; and the fair value and accounting treatment of financial instruments. The Company bases its estimates on the Company's historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Report contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including statements that include the words "believes," "expects," "estimates," "anticipates" or similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from those expressed or implied by such forward-looking statements. Risk factors include, but are not limited to, our ability to raise or generate additional capital; our ability to cost-effectively manufacture our products on a commercial scale; the concentration of our current customer base; competition; our ability to comply with applicable regulatory requirements; potential need for expansion of our production facility; the potential loss of a strategic relationship; inability to attract and retain key personnel; management's ability to effectively manage our growth; difficulties and resource constraints in developing new products; protection and enforcement of our intellectual property; compliance with environmental laws; climate uncertainty; currency fluctuations; exposure to product liability lawsuits; and control of our management and affairs by principal stockholders. The reader should carefully consider, together with the other matters referred to herein, the information contained under the caption "Risk Factors" in our Annual Report on Form 10-KSB for a more detailed description of these significant risks and uncertainties. We caution the reader, however, that these factors may not be exhaustive. Since inception, our primary operating activities have consisted of basic research and development and production process development, recruiting personnel, purchasing operating assets, raising capital and sales of product. From September 16, 2002, the effective date of our plan of reorganization, through April 30, 2006 we had an accumulated deficit of $5,417,571. Our losses to date have resulted primarily from costs incurred in research and development, production costs and from general and administrative expenses associated with operations. We expect to continue to incur operating losses through the current fiscal year. We expect to have quarter-to-quarter and year-to-year fluctuations in revenues, expenses and losses, some of which could be significant. We have a limited operating history. An assessment of our prospects should include the technology risks, market risks, expenses and other difficulties frequently encountered by early-stage operating companies, and particularly companies attempting to enter competitive industries with significant technology risks and barriers to entry. We have attempted to address these risks by, among other things, hiring and retaining highly qualified persons, diversifying our customer base and expanding revenue sources, e.g., by performing other contract services and increasing efforts to sell raw materials to other product formulators. However, our best efforts cannot guarantee that we will overcome these risks in a timely manner, if at all. 7 RESULTS OF OPERATIONS REVENUES. Revenues for the quarter ended April 30, 2006 were $69,450 as compared to $108,706 for the equivalent period in 2005, a decline of 36%. The decrease was due primarily to two factors: Sales for the second quarter of 2005 included approximately $23,000 in revenues earned from a contract related a project for the United States Department of Energy. That contract has now ended. In addition, in the second quarter of 2005 the Company earned approximately $30,000 in one large transaction with a wholesale distributor. No similar transactions occurred during the same period of 2006. COST OF SALES. Cost of goods sold was $11,129 for the quarter ending April 30, 2006 versus $68,076 in the same quarter in 2005, a decrease of 84%. Gross profit margins from sales of product for the quarter were approximately 84%, versus 37% for the same period in 2005. The decrease in cost of goods sold, and the corresponding increase in gross profit margin, was due primarily to a greater percentage of in direct retail sales, which carry greater profit margins as compared to wholesale revenues. RESEARCH AND DEVELOPMENT COSTS. Research and development costs were $36,831 for the quarter ending April 30, 2006. This was an increase if approximately 58% over the $23,243 that was incurred for the same period in the prior year. The increase was primarily due to the ending of our research reimbursement contract with the Department of Energy. This contract covered approximately $22,000 of research expenses in the second quarter of 2005, but was no longer in effect during the same period in 2006. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. In the quarter ended April 30, 2006 as compared to the same period during the prior year, selling, general and administrative costs declined from $164,549 to $112,808, or approximately 31%. The reduction was due to general cost cutting measures, primarily in the area of salaries. It is expected that such expenses will rise in future periods as the Company begins to institute a new marketing plan. INTEREST EXPENSE. For the quarters ended April 30, 2006 and 2005, interest expense was $2,364 and $129, respectively. This increase was due to a higher level of borrowing by the Company during the second quarter of 2006 compared to the same period in 2005. Additionally, interest expense increased because the Company began interest accrual on a promissory note due to a related party. The interest in question was previously halted. While the Company believes that such interest may ultimately be forgiven, there is no definitive agreement in place to that effect. As such, the Company accrued interest on the note as a contingency. 8 ITEM 3. CONTROLS AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our chief executive officer, we conducted an evaluation of our disclosure controls and procedures, as such terms are defined in Rule 13a-14(c) promulgated under the Exchange Act, within the 90 day period prior to the filing date of this quarterly report. Based on this evaluation, our Chief Executive Officer and Principal Financial and Accounting Officer concluded that our disclosure controls and procedures were effective as of that date. (b) There have been no significant changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation referenced in paragraph (a) above. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. EXHIBITS 31.1 Certification of Chief Executive Officer pursuant to Rule 13a - 14 (a) of the Securities Exchange Act of 1934 (filed herewith electronically). 31.2 Certification of Principal Financial and Accounting Officer pursuant to Rule 13a - 14 (a) of the Securities Exchange Act of 1934 (filed herewith electronically). 9 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith electronically). 32.2 Certification of Principal Financial and Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002 (filed herewith electronically) b. REPORTS ON FORM 8-K None. SIGNATURES Pursuant to the requirements of the Exchange Act, the Registrant has duly caused this Quarterly Report on Form 10-QSB to be signed on its behalf by the undersigned thereunto duly authorized. MERA PHARMACEUTICALS, INC. Dated: June 19, 2006 By: /s/ Gregory F. Kowal -------------------------- Gregory F. Kowal Chief Executive Officer 10 EX-31.1 2 exh31-1.txt RULE 13A-14(A)/15D-14(A) CERTIFICATIONS CERTIFICATIONS Exhibit 31.1 I, Gregory F. Kowal, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Mera Pharmaceuticals, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the Company's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The Company's other certifying officers and I have disclosed, based on our most recent evaluation, to the Company's auditors and the audit committee of Company's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the Company's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls; and 6. The Company's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: June 19, 2006 /s/ Gregory F. Kowal - ----------------------- Gregory F. Kowal Chief Executive Officer EX-31.2 3 exh31-2.txt RULE 13A-14(A)/15D-14(A) CERTIFICATIONS Exhibit 31.2 I, Anthony E. Applebaum, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Mera Pharmaceuticals, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: d) designed such disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; e) evaluated the effectiveness of the Company's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and f) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The Company's other certifying officers and I have disclosed, based on our most recent evaluation, to the Company's auditors and the audit committee of Company's board of directors (or persons performing the equivalent functions): c) all significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the Company's auditors any material weaknesses in internal controls; and d) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls; and 6. The Company's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: June 19, 2006 /s/ ANTHONY E. APPLEBAUM - ------------------------ Anthony E. Applebaum Principal Financial and Accounting Officer EX-32.1 4 exh32-1.txt SECTION 1350 CERTIFICATIONS Exhibit 32.1 CERTIFICATION PURSUANT TO 18 UNITED STATES CODE SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Gregory F. Kowal, Chief Executive Officer of Mera Pharmaceuticals, certify that (1) Mera Pharmaceuticals, Inc.'s Form 10-QSB for the quarter ended April 30, 2006 fully complies with the requirements of Section 3 (a) or 15 (d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-QSB for the quarter ended April 30, 2006 fairly presents, in all material respects, the financial condition and the results of operations of Mera Pharmaceuticals, Inc. Date: June 19, 2006 /s/ Gregory F. Kowal - -------------------- Gregory F. Kowal Chief Executive Officer A signed original of this written statement required by Section 906 has been provided to Mera Pharmaceuticals, Inc. and will be retained by Mera Pharmaceuticals, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. EX-32.2 5 exh32-2.txt SECTION 1350 CERTIFICATIONS Exhibit 32.2 CERTIFICATION PURSUANT TO 18 UNITED STATES CODE SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Anthony E. Applebaum, Chief Executive Officer of Mera Pharmaceuticals, certify that (1) Mera Pharmaceuticals, Inc.'s Form 10-QSB for the quarter ended April 30, 2006 fully complies with the requirements of Section 3 (a) or 15 (d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-QSB for the quarter ended April 30, 2006 fairly presents, in all material respects, the financial condition and the results of operations of Mera Pharmaceuticals, Inc. Date: June 19, 2006 /s/ ANTHONY E. APPLEBAUM - ------------------------ Anthony E. Applebaum Principal Financial and Accounting Officer A signed original of this written statement required by Section 906 has been provided to Mera Pharmaceuticals, Inc. and will be retained by Mera Pharmaceuticals, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----