10QSB

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 July 31, 2007

Or

[  ]  Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

MERA PHARMACEUTICALS, INC.

(Exact name of registrant as specified in charter)

Delaware	333-107716	04-3683628
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer  Identification No.)

73-4460 Queen Ka'ahumanu Highway, Suite 110
Kailua-Kona, Hawaii  96740

(Address of principal executive offices)

(808) 326-9301

(Registrant’s Telephone Number, including Area Code)

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  [  ]

510,369,915 shares of $0.0001 par value common stock outstanding as of July 31, 2007

80 shares of $0.0001 par value Series A preferred stock outstanding as of July 31, 2007

974 shares of $0.0001 par value Series B preferred stock outstanding as of July 31, 2007

Mera Pharmaceuticals, Inc.

Form 10-QSB
For the Quarter Ended July 31, 2007

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

PART I – FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

MERA PHARMACEUTICALS, INC.

CONDENSED BALANCE SHEETS

	July 31, 2007
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	18,779
Accounts receivable, net		7,409
Prepaid expenses and other current assets		37,251
TOTAL CURRENT ASSETS		63,439
PROPERTY, PLANT, AND EQUIPMENT, NET		2,176,802
OTHER ASSETS, NET OF ACCUMULATED AMORTIZATION OF $53,040		9,360
TOTAL ASSETS	$	2,249,601
LIABILITIES AND SHARHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable, accrued expenses and accrued liabilities	$	343,234
Notes payable - related party		77,336
TOTAL CURRENT LIABILITIES		420,570
SHAREHOLDERS' EQUITY
Convertible preffered 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: 750,000,000 shares authorized, 510,369,915 shares issued and outstanding		51,037
Additional paid-in capital		7,736,743
Accumulated deficit		(5,958,751)
TOTAL SHAREHOLDERS' EQUITY		1,829,031
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	2,249,601

The accompanying notes are an integral part of these financial statements.

3

MERA PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF OPERATIONS

	Three Months Ended July, 31, 2007		Three Months Ended July, 31, 2006		Nine Months Ended July, 31, 2007		Nine Months Ended July, 31, 2006
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
NET SALES	$	131,608	$	72,792	$	338,102	$	294,636
Cost of goods sold		17,670		19,161		42,019		49,807
GROSS PROFIT		113,938		53,631		296,083		244,829
Operating Expenses
Selling and administrative expenses		83,165		81,659		252,453		303,585
Research and development costs		45,979		26,464		145,954		131,930
Depreciation and amortization		70,864		70,687		212,591		215,209
Total operating expenses		200,008	178,810			610,998		650,724
Operating loss		(86,070)		(125,179)		(314,915)		(405,895)
Other income (expense)
Interest		126		43		469		924
Other income		-		-		-		2,179
Interest expense		(2,452)		(667)		(6,857)		(5,193)
Total other income (expense)		(2,326)		(624)		(6,388)		(2,090)
Net loss before tax provision		(88,396)		(125,803)		(321,303)		(407,985)
Provision for income taxes		-		-		-		-
Refundable tax credit		4,473		2,069		15,069		10,145
NET LOSS		(83,923)		(123,734)		(306,234)		(397,840)
Net loss per common share		(0.0002)		(0.0003)		(0.0006)		(0.0008)
Weighted Average Shares Outstanding		510,369,915		480,037,506		478,191,349		478,191,349

The accompanying notes are an integral part of these financial statements.

4

MERA PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

			Nine Months Ended July 31, 2007		Nine Months Ended July 31, 2006
			(Unaudited)		(Unaudited)
Cash Flows from Operating Activities
	Net Income (loss)		$	(306,234)	$	(397,840)
	Adjustments to reconcile net loss to net
	cash used in operating activities:
		Accumulated depreciation and amortization		212,591		215,209
		Expenses paid with common stock		0		0
	Changes in current assets and liabilities:
		Accounts receivable		(20,502)		1,108
		Prepaid expenses and other current assets		(1,101)		(30,686)
		Accounts payable, accrued expenses, and accrued		63,132		30,971
		liabilities
Net Cash Used in Operating Activities				(52,114)		(181,237)
Cash Flows from Investing Activities
	Purchases of fixed assets			(7,666)		-
Net Cash Uded in Investing Activities				(7,666)		-
Cash flows From Financing Activities
	Proceeds from issuance of stock			60,000		250,000
	Proceeds from related party notes payable			51,000
	Payment of related party notes payable			(39,000)		(14,523)
Net Cash Provided by Financing Activities				72,000		235,477
Net increase (decrease) in cash and cash equivalents				12,220		54,240
Cash and cash equivalents - beginning of period				6,559		539
Cash and cash equivalents - end of period			$	18,779	$	54,779
Non-Cash Investing and Financing Activities
	Conversion of accounts payable to common stock		$	81,218	$	-
Supplemental Cash Flow Information
	Interest Paid		$	2,107	$	-
	Taxes Paid		$	-	$	-

The accompanying notes are an integral part of these financial statements.

5

MERA PHARMACEUTICALS, INC.

NOTES TO CONDESED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED JULY 31, 2007 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 nine-month periods ended July 31, 2007 are not necessarily indicative of the results that may be expected for the year ending October 31, 2007. For further information, refer to the condensed financial statements and footnotes thereto for the year ended October 31, 2006, 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.

2. Notes Payable – Related Parties

Notes payable – related parties consists of the following as of July 31, 2007:

Unsecured demand notes payable – shareholder notes bearing an annual interest rate of 10% due on March 31, 2004. Notes are currently past maturity, however no demand for payment has been made.	$        41,936
Unsecured demand notes payable – shareholder notes bearing an annual interest rate of 8% due on various dates. Certain of these notes are currently past maturity, however no demand for payment has been made.	35,400
Total notes payable, related parties	$         77,336

Total interest expense on notes payable – related parties was $1,676 and $667 for the three months ended July 31, 2007 and 2006, respectively, and $6,081 and $4,547 for the nine months ended July 31, 2007 and 2006, respectively.

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 requ irements; 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 July 31, 2007 we had an accumulated deficit of $5,958,751. 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.

Results of Operations

Revenues.  Revenues for the quarter ended July 31, 2007 were $131,608 as compared to $72,792 for the equivalent period in 2006, an increase of 81%.

The increase was due primarily to a technical service contract project we completed for another entity. This project is expected to run through October 2007, at which time a review will be completed as to feasibility.  If the project is deemed successful, the project may be extended for a additional 12-18 months.

Cost of Sales.  Cost of goods sold was $17,670 for the quarter ending July 31, 2007 versus $19,161 in the same quarter in 2006, a decrease of 8%. Gross profit margins for the quarter were approximately 86%, versus 73% for the same period in 2006. 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 $45,979 for the quarter ending July 31, 2007. This was an increase if approximately 74% over the $26,464 that was incurred for the same period in the prior year. The increase was primarily due to the above mentioned technical service contract mentioned above and preliminary expenses incurred for a new product launch expected by the end of September.   

7

Selling, General and Administrative Expenses.   In the quarter ended July 31, 2007 as compared to the same period during the prior year, selling, general and administrative costs increased from $81,659 to $83,165, or approximately 2%. The increase was due to merit raises to key employees. It is expected that such expenses will continue to rise in future periods as the Company begins to institute a new marketing plan.

Interest Expense.  For the quarters ended July 31, 2007 and 2006, interest expense was $2,452 and $667, respectively. This increase was due to a higher level of borrowing by the Company during the third quarter of 2007 compared to the same period in 2006.

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.

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.

8

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

None.

ITEM 2.  CHANGES IN SECURITIES

In March 2007 the Company issued a total of 8,100,000 shares of common stock to a vendor in satisfaction of amounts payable at a price of $0.01 per share.  This issuance was exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(2).

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5.  OTHER INFORMATION

None.

9

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).

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.

10

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:  September 14, 2007	By:	/s/ Gregory F. Kowal
		Gregory F. Kowal
		Chief Executive Officer

EX-31

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:  September 14, 2007

/s/Gregory F. Kowal

Gregory F. Kowal

Chief Executive Officer

EX-31

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:

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:   September 14, 2007

/s/ANTHONY E. APPLEBAUM

Anthony E. Applebaum

Principal Financial and Accounting Officer

EX-32

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 July 31, 2007 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 July 31, 2007 fairly presents, in all material respects, the financial condition and the results of operations of Mera Pharmaceuticals, Inc.

Date:   September 14, 2007

/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

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 September 14, 2007 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 September 14, 2007 fairly presents, in all material respects, the financial condition and the results of operations of Mera Pharmaceuticals, Inc.

Date:   September 14, 2007

/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.