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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

            |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the Fiscal Year ended December 31, 2002

                                       OR

          |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE

                         SECURITIES EXCHANGE ACT OF 1934

            For the Transition Period from ___________ to ___________

                        Commission File Number: 333-64430

                            MOLICHEM MEDICINES, INC.
             (Exact name of Registrant as specified in its charter)

            Delaware                                    33-0820923
 (State or other jurisdiction of           (I.R.S. Employer Identification No.)
 incorporation or organization)

                       300 St. Sacrement Street, Suite 414
                            Montreal, Quebec H2Y 1X4
          (Address of principal executive offices, including zip code)

                                      (514)
                             286-0909 (Registrant's
                                telephone number,
                              including area code)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

        SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. YES [ ] NO [X]

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  IIII of this  Form 10-K or any
amendment to this Form 10-K. [X]

         The  aggregate  market value of the  Registrant's  common stock held by
non-affiliates  of the  Registrant  on May 15, 2003  (based on the closing  sale
price of US $.02 per share of the  Registrant's  common  stock,  as  reported on
Over-The-Counter  Bulletin Board on that date) was  approximately  U.S. $93,600.
Common  stock held by each  officer and director and by each person known to the
Registrant to own 5% or more of the  outstanding  common stock has been excluded
in that those  persons may be deemed to be  affiliates.  This  determination  of
affiliate  status  is not  necessarily  a  conclusive  determination  for  other
purposes.

      The number of shares of the Registrant's common stock outstanding on
                          May 15, 2003 was 24,179,287.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None.

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<PAGE>

                                TABLE OF CONTENTS
                                                                            PAGE

Forward-Looking Information................................................    3

PART I

   Item 1.  Business.......................................................    3

   Item 2.  Property.......................................................    4

   Item 3.  Legal Proceedings..............................................    4

   Item 4.  Submission of Matters to a Vote of Security Holders............    5

PART II

   Item 5.  Market for Common Equity and Related Stockholder Matters.......    5

   Item 6.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations..........................    6

   Item 7.  Financial Statements...........................................   11

   Item 8.  Changes In and Disagreements With Accountants on Accounting
              and Financial Disclosure.....................................   11

PART III

   Item 9.  Directors, Executive Officers, Promoters and Control Persons;
              Compliance with Section 16(a) of the Exchange Act............   12

   Item 10. Executive Compensation.........................................   14

   Item 11. Security Ownership of Certain Beneficial Owners and Management.   16

   Item 12. Certain Relationships and Related Transactions.................   17

   Item 13. Exhibits and Reports on Form 8-K...............................   18

   Item 14. Controls and Procedures........................................   19


                                       2
<PAGE>

FORWARD-LOOKING INFORMATION

This report includes "forward-looking statements" as that term is defined in the
Private Securities  Litigation Reform Act. The words "anticipates,"  "believes,"
"estimates,"  "expects," "plans," "might," "intends" and similar expressions are
meant to identify these statements as forward-looking  statements,  but they are
not the exclusive  means of identifying  such  statements.  The  forward-looking
statements in this document and in documents we incorporate by reference reflect
the current views of our management;  however, various risks,  uncertainties and
contingencies  could cause our actual  results,  performance or  achievements to
differ materially from those expressed or implied by these statements.

                                     PART I

ITEM 1.        BUSINESS

OVERVIEW OF BUSINESS AND SIGNIFICANT RECENT DEVELOPMENTS

         Since our inception,  we have had no operating revenues. As of December
31,  2002  we had an  accumulated  deficit  of  $4,465,259.  We were  unable  to
adequately fund or complete the development of any of our proposed  products and
anticipated that we would continue to incur operating losses until such time, if
ever,  that our  compounds  were  fully  developed,  approved  and  successfully
marketed. Consequently,  subsequent to the period covered by this Report, in May
2003,  we  entered  into a  series  of  transactions  involving  changes  in our
management  and the  sale  of our  operating  subsidiary,  Molichem  R&D,  Inc.,
including all of our assets and  liabilities,  to a corporation  owned by former
officers,  directors and shareholders of ours. Effective May 5, 2003, we entered
into a Stock Purchase  Agreement (the "Stock  Purchase  Agreement")  with Gilles
Cloutier,  ("GC") Jean Guy Lambert  ("JGL") Group  Intercapital,  Inc.,  ("GIC")
Gestion CM 2000,  Inc.,  ("Gestion")  David Lambert,  ("DL") and Chantal Lambert
("CL"). In consideration of the Stock Purchase Agreement,  JGL, GIC, Gestion, DL
and CL (singly and collectively the  "Purchasers")  placed $100,000 in escrow to
fund  expenses  related to our  reorganization  including,  but not  limited to,
payments to our former auditors, former corporate securities counsel, patent and
trademark counsel,  new auditors,  and new corporate and securities counsel. The
Stock Purchase  Agreement  further  provided for the issuance of an aggregate of
5,500,000  restricted shares of our common stock to the Purchasers (the "Funding
Shares"),  the  resignation  of Luis Molina as our president and CEO and Richard
Martin as our CFO, and the  appointment of Gilles Cloutier as our sole executive
officer and as director. The Funding Shares were given anti-dilution rights with
respect to any reverse stock splits or  recapitalizations  effected by us before
May 5, 2004.  In the event any reverse  stock  splits or  recapitalizations  are
effected  by us before May 5, 2004,  the  Funding  Shares will not be reduced in
number by more than 50%,  such that as of May 5,  2004,  the  number of  Funding
Shares outstanding shall not have been reduced to less than 2,750,000.

         Effective May 6, 2003 we entered into a Stock  Exchange  Agreement (the
"Stock Exchange  Agreement")  with Molichem R&D, Inc.  ("MRD"),  our then wholly
owned  operating  subsidiary and Lantibio,  Inc., a corporation  owned by former
officers,  directors  and  principal  shareholder  of ours.  The Stock  Exchange
Agreement  provided  for  our  sale  of MRD to  Lantibio  in  exchange  for  the
13,379,282 shares of our common stock owned by Lantibio (the "Lantibio  Shares")
and the grant of a non-exclusive,  10 year US License from MRD to us relating to
products, to be used in the field of treating septic shock in non-human mammals,
containing the iron containing  compounds  Moli56A  (commonly known as DTPA iron
(III)) and Moli56B (commonly known as Ferrioxamine B).

         Immediately prior to the sale of MRD, all of our assets and liabilities
were assigned to and assumed by MRD.  Pursuant to the Stock  Exchange  Agreement
the Lantibio Shares were delivered to us for cancellation, the License Agreement
was executed,  and an aggregate of 1,637,114 of our then  outstanding  1,767,860
stock options were cancelled.  The cancelled stock options represented all stock
options owned by Luis Molina,  Terry Williams,  Richard Franco,  Richard Martin,
Ronald Keeney,  Jacques Gagne,  Vatche  Tchakmakian,  Gilles Cloutier,  Jean Guy
Lambert and Claude Gendron.  The Lantibio Shares have not yet been cancelled but
will be  cancelled  as soon  as  practicable  following  receipt  of  additional
documentation from Lantibio necessary to effect the cancellation. In furtherance
of the Stock  Exchange  Agreement,  we have also  agreed to change our name to a
name  that  does  not  include  the  words or  phrases  "Molichem",  "Moli",  or
"Lantibio".

         The License  Agreement  made as of May 6, 2003  between MRD as Licensor
and us as Licensee provided for the grant of a 10 year non-exclusive  license to
us to develop,  market and sell products  incorporating Moli56A and Moli56B with
respect to the treatment of septic shock in non-human mammals.  In consideration
of the grant of the license,  we are obligated to pay MRD (i) a licensing fee of
$1 per year (the "Licensing  Fee); (ii) an annual royalty equal to 6% of our net
sales  related  to  the  licensed  technology  (Royalties");  (iii)  a one  time
continuation payment of $500,000 payable on the first anniversary of the License
Agreement (the "Continuation Payment"); and (iv) a one time milestone payment of
$2,000,000  payable  within  60 days of a  product  incorporating  the  licensed
technology being approved in the field of use covered by the license,  but in no
event prior to the first  anniversary of the License  Agreement (the  "Milestone
Payment").  The License  Agreement  is subject to


                                       3
<PAGE>

cancellation in the event we become insolvent, our assets are placed in the
hands of a receiver, our assets are assigned for the benefit of creditors, we
become the subject of bankruptcy proceedings, we take actions that publicly
damage or reflect adversely on Licensor, or we fail to make payment of Licensing
Fees, Royalties, the Continuation Payment or the Milestone Payment when due.
Licensor's sole remedy for our failure to make the Continuation Payment or the
Milestone Payment shall be to cancel the License Agreement. We can offer no
assurance that we will be able to exploit the license, achieve revenues from the
License Agreement or that we will be able to make the Milestone Payment or
Continuation Payment when due.

         Prior to the Stock  Exchange  Agreement,  we operated as an early stage
pharmaceutical  company  focused on the discovery,  development and marketing of
pharmaceutical  products for the  treatment of serious  respiratory  and related
conditions.  Our research  and  development  efforts were focused on  developing
several compounds as described below.

         Our lead product candidate, Moli1901 (commonly known as Duramycin), was
intended  for the  treatment  of mucus  plugging in airways.  This  condition is
present in many diseases in which the respiratory system airways are obstructed,
frequently referred to as obstructive respiratory diseases.  Among the causes of
these  diseases is the  inability of the tissues in the airways,  including  the
lungs,  to  maintain  proper  liquidity  of the mucus so that it can be  cleared
through normal respiratory system functions. Moli1901 might correct the cause of
the creation of mucus plugs by  activating an  alternative  pathway for chloride
and water  transport  through the cells lining the airways to facilitate  proper
hydration of the mucus. The chronic  formation of mucus plugs caused by abnormal
chloride and water transport causes the lung disease cystic  fibrosis.  Moli1901
has shown  significant  mobilization  of chloride in the cells  lining the nasal
passages,  referred to as the nasal  epithelium,  and has been well tolerated by
the patients.  During 2002 we completed  certain Phase I clinical  studies,  and
initiated Phase II clinical development activities.

         Our secondary  product  candidates were the  iron-containing  compounds
Moli56A and  Moli56B.  These  product  candidates  were also  covered  under our
patents,   and  were  indicated  for  use  in  conditions  that  are  caused  by
overproduction  of free  radicals.  Treatment  opportunities  may include  organ
damage caused by septic shock, and the reversal of nitric oxide  over-production
associated with a variety of additional human disorders.

         Our third  area of focus was the  creation  of a library  of  compounds
similar to Moli1901 with diverse therapeutic  potential in treating  respiratory
malfunctions  with  antibiotics.  We believe the  structure  of Moli1901  offers
potential  for the  creation of chemical  diversity as a member of the family of
compounds known as  lantibiotics.  Lantibiotics  are compounds  similar,  at the
molecular level, to Moli1901 that also have antibiotic properties and contain an
unusual amino acid known as lantionine. During 2002 we began to create a library
of  lantibiotic   compounds  with  diverse  therapeutic  potential  in  treating
respiratory infection with antibiotics.

         During  2002  a  significant  change  in  our  operations  occurred  as
described below.

TERMINATION OF INTERMUNE JOINT DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

            In the  second  quarter of 2001 we entered  into an  agreement  with
InterMune, Inc. for the joint development and commercialization of Moli1901 (the
"Agreement").  Under the terms of the Agreement,  we and InterMune,  Inc. shared
the rights to the Moli1901 technology,  and each party contributed 50 percent of
the research and  development  costs  related to Moli1901.  The  Agreement  also
provided for payments to us by InterMune,  Inc.  upon the  attainment of certain
milestones.  In  December  2002 the  Agreement  was  terminated  and we obtained
exclusive  rights to the  Moli1901  technology  in  exchange  for the release of
InterMune,  Inc. of all obligations under the Agreement. We also assumed certain
financial obligations that would have been shared under the Agreement.

ITEM 2.        PROPERTY

         We presently  utilize  approximately 300 square feet of office space at
300 St. Sacrement Street, Suite 414, Montreal,  Quebec H2Y 1X4 provided to us on
a rent free basis by Claude Gendron, a principal shareholder of ours.

ITEM 3.        LEGAL PROCEEDINGS

         We are not presently a party to any material legal proceedings.


                                       4
<PAGE>

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

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of the fiscal year covered by this report.

                                     PART II

ITEM 5.        MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Our common stock began trading on the  Over-the-Counter  Bulletin Board
in January 2002 under the symbol  "MLCM".  Prior to Bulletin  Board  trading our
stock was traded on the Pink  Sheets.  Prior to our trading on the Pink  Sheets,
there was no public market for our stock.

         As  of  March  31,  2003,  there  were   approximately  130  beneficial
stockholders of our common stock. We have never declared any cash dividends with
respect  to our  common  stock.  Future  payment  of  dividends  is  within  the
discretion of our board of directors  and will depend on our  earnings,  capital
requirements, financial condition and other relevant factors. Although there are
no material  restrictions  limiting, or that are likely to limit, our ability to
pay  dividends  on our  common  stock,  we  presently  intend to  retain  future
earnings,  if any,  for use in our  business  and have no  intention to pay cash
dividends on our common stock.

         The  following  table  presents the high and low closing bid prices for
our common stock for the periods  indicated.  The quotations  were obtained from
Pink  Sheets  LLC and  reflect  inter-dealer  prices,  without  retail  mark-up,
mark-down or commissions and may not represent actual transactions.

                                                        HIGH           LOW
            2002
            Fourth Quarter................             $ .30          $ .04
            Third Quarter.................             $1.30          $ .25
            Second Quarter................             $2.05          $1.30
            First Quarter.................             $2.95          $2.00

            2001
            Fourth Quarter................             $2.85          $1.40
            Third Quarter.................             $3.40          $1.90
            Second Quarter................             $4.75          $2.60
            First Quarter.................             $3.25          $ .87

ISSUANCE OF UNREGISTERED SECURITIES

         During  2001 we granted to seven  employees  and  directors  options to
purchase  a total of  1,760,000  shares of common  stock at a price of $1.50 per
share,  and granted to six  non-employees  options to purchase 268,000 shares of
common  stock at prices  ranging  from $1.50 per share to $3.50 per  share.  The
issuance was exempt from registration under Section 4(2) of the Securities Act.

         On May 14, 2001 a former  advisor to us  exercised  options to purchase
10,000  shares of common stock at a price of $.0013 per share,  providing  total
proceeds of $13.  Those  options  were granted  prior to 2001.  The issuance was
exempt from registration under Section 4(2) of the Securities Act.

         In January 2001, we issued 1,000,000 units, each unit consisting of one
share of  common  stock  and one  common  stock  purchase  warrant  in a private
placement for $1,500,000. Each warrant entitled the holder to purchase one share
of common  stock at an exercise  price of $1.50.  The  issuance  was exempt from
registration  under Section 4(2) of the Securities Act and Rule 506  promulgated
under the Securities Act. Neither we nor any person acting on our behalf offered
or sold the securities by means of any form of general  solicitation  or general
advertising.  All  purchasers  represented  in writing  that they  acquired  the
securities for their own accounts.  A legend was placed on the stock and warrant
certificates  stating that the  securities  have not been  registered  under the
Securities Act and cannot be sold or otherwise  transferred without an effective
registration or an exemption therefrom.  All 1,000,000 of the unit warrants were
exercised in January 2002.

         In connection with our acquisition of MRD in 2001, we issued 13,369,282
shares of common stock to the  stockholders of MRD. The issuance was exempt from
registration under Section 4(2) of the Securities Act. Neither we nor any person
acting on our  behalf  offered  or sold the  securities  by means of any form of
general  solicitation  or general  advertising.  All


                                       5
<PAGE>

purchasers represented in writing that they acquired the securities for their
own accounts. A legend was placed on the stock certificates stating that the
securities had not been registered under the Securities Act and could not be
sold or otherwise transferred unless registered or pursuant to exemption
therefrom.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

We have granted options to purchase shares of our common stock to our employees,
officers,  directors and consultants. The following table summarizes information
regarding our stock option plan as of May 14, 2003.

<TABLE>
<CAPTION>
--------------------------------------------- ------------------------------------------ -------------------------------------------
Plan category                                 Number of securities to be issued upon     Weighted-average exercise price of
                                              exercise of outstanding options,           outstanding options, warrants and rights
                                              warrants and rights


<S>                                           <C>                                        <C>
                                              (a)                                        (b)
--------------------------------------------- ------------------------------------------ -------------------------------------------
Equity   compensation   plans   approved  by               Not Applicable                                   N/A
security holders                                               ("N/A")
--------------------------------------------- ------------------------------------------ -------------------------------------------
Equity  compensation  plans not  approved by                   130,746                                      $.30
security holders
--------------------------------------------- ------------------------------------------ -------------------------------------------
Total                                                          130,746                                      $.30
--------------------------------------------- ------------------------------------------ -------------------------------------------

<CAPTION>

--------------------------------------------- ------------------------------------------
Plan category                                  Number of securities remaining available
                                               for future issuance under equity
                                               compensation plans (excluding securities
                                               reflected in column (a))
                                               (c)
<S>                                            <C>

---------------------------------------------  ------------------------------------------
Equity   compensation   plans   approved  by                      N/A
security holders
---------------------------------------------  ------------------------------------------
Equity  compensation  plans not  approved by                   2,559,254
security holders
---------------------------------------------  ------------------------------------------
Total                                                          2,559,254
---------------------------------------------  ------------------------------------------
</TABLE>

In  connection  with the sale of MRD in May 2003,  1,637,114 of the  outstanding
options were cancelled, leaving 130,746 outstanding at that date.

The material features of our stock plan are described in Note 7 to our financial
statements included with this report.

ITEM 6.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
               RESULTS OF OPERATIONS

         The  following  discussion  of our  financial  condition and results of
operations  should be read in conjunction with the financial  statements and the
notes to those  statements  included  elsewhere in this  report.  In May 2003 we
exchanged all of the stock of our  subsidiary  Molichem R&D, Inc. for 13,379,282
shares of our stock  owned by  Lantibio,  Inc.,  a company  owned by the  former
president  and  certain  former   shareholders  of  ours.  We  also  received  a
non-execlusive   license  to  develop,   market,   and  sell  certain   products
incorporating  Molichem, R&D, Inc.'s compounds Moli56A and Moli56B. Prior to the
exchange,  all of the assets and  liabilities of Molichem  Medicines,  Inc. were
transferred to Molichem R&D, Inc. This sale of our operating  subsidiary brought
to an end our proposed business as a pharmaceutical  company.  Accordingly,  the
discussion below is primarily of historical significance only.

BACKGROUND

         We were  incorporated  in the state of  Delaware on July 20, 1998 under
the name of  Cortez  Development,  Ltd.  ("Cortez").  Our name  was  changed  to
MoliChem  Medicines,  Inc.  on February  21,  2001,  following a reverse  merger
effected on January 18,  2001.  On January 18, 2001,  MRD  acquired  Cortez in a
reverse merger in which MRD was the accounting acquirer and Cortez was the legal
acquirer.  MRD was  incorporated  in the state of North Carolina on December 21,
1995 under the name of MoliChem Medicines, Inc. Its name was changed to MoliChem
R&D, Inc. on April 6, 2001.

         MoliChem  Medicines,  Inc. has had no operations or revenues  since its
inception and, since the acquisition of MRD, MoliChem Medicines, Inc. has been a
holding company only. All of MoliChem Medicines, Inc.'s research and development
activities  have been  conducted by MoliChem R&D.  Accordingly,  the terms "we",
"us",  "our", and similar terms refer to the entities MoliChem  Medicines,  Inc.
and MoliChem  R&D, Inc. on a  consolidated  basis,  unless the context  requires
otherwise.

SIGNIFICANT DEVELOPMENTS IMPACTING OPERATIONS

TERMINATION OF INTERMUNE JOINT DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

            In the  second  quarter of 2001 we entered  into an  agreement  with
InterMune, Inc. for the joint development and


                                       6
<PAGE>

commercialization  of  Moli1901  (the  "Agreement").  Under  the  terms  of  the
Agreement we and  InterMune  shared the rights to the Moli1901  technology,  and
each party  contributed  50 percent of the of  research  and  development  costs
related to Moli1901. The Agreement also provided for payments to us by InterMune
upon the  attainment of certain  milestones.  In December 2002 the agreement was
terminated  and we  obtained  exclusive  rights to the  Moli1901  technology  in
exchange  for  the  release  of  InterMune  of all  obligations  related  to the
Agreement.  We also assumed certain  financial  obligations that would have been
shared under the Agreement.

RESEARCH AND DEVELOPMENT ACTIVITIES

         Since we began  operations  in  December  1995,  through MRD we devoted
substantially  all  of  our  resources  to  the  discovery  and  development  of
pharmaceutical products for the treatment of pulmonary diseases and generated no
revenues from product sales. In addition,  we engaged in development  activities
for a product for the treatment of sepsis based on our two compounds Moli56A and
Moli56B.  We had one product candidate,  Moli1901 (commonly known as Duramycin),
in Phase I clinical  trials,  while Moli56A and Moli56B were in the pre-clinical
trials  stage of  development.  We also began  research  to  develop  additional
products  based on the structure of Moli1901,  but no  additional  products were
ever developed by us.

DEVELOPMENT OF MOLI1901

         The majority of our resources were used in the development of Moli1901.
Moli1901 is currently in Phase I of clinical  development to determine safe dose
levels in healthy patients.  We initiated Phase II clinical studies to determine
the  effectiveness  of safe dose levels in patients with cystic  fibrosis during
the fourth quarter of 2002.  Prior to the assignment of the Moli 1901 technology
to MRD, we estimate that  approximately $10 million was spent on its preclinical
development.  During  the two  year  period  ended  December  31,  2002 we spent
approximately $4,800,000 in developing Moli1901. The majority of the development
costs incurred during 2001 and 2002 were shared with  InterMune,  Inc. under the
joint development and commercialization  agreement until the termination of that
agreement during the fourth quarter of 2002.

DEVELOPMENT OF MOLI56A AND MOLI56B

         During 2002 we  initiated  development  activities  for Moli56A for the
treatment  of  sepsis.  Both  Moli56A  and  Moli56B  are in the early  stages of
development,  with positive  results  having been  demonstrated  in  preclinical
studies in animal models.  Additional preclinical studies,  including toxicology
studies,  were initiated for Moli56A during the second quarter of 2002.  Further
development  of that compound was stopped  during the fourth  quarter of 2002 to
conserve financial and other resources for the development of Moli1901.

         Prior to the sale of MRD, we estimate that approximately $1 million was
spent on the  preclinical  development  of Moli56A and Moli56B.  During the year
ended  December  31,  2002  we  spent  approximately  $495,000  related  to  the
development of Moli56A and Moli56B.

SIGNIFICANT SOURCES OF REVENUE

GRANT REVENUE

         Prior to 2001,  our  revenues  were derived from grants from the Cystic
Fibrosis  Foundation and the National  Institutes of Health to develop  Moli1901
for the treatment of cystic  fibrosis.  Grant revenue was $0 in 2002 compared to
$265,872 in 2001 and $759,575 in 2000.  Through December 31, 2002, we received a
total of  approximately  $1,717,000 in revenue  under these grants.  Our primary
source of revenue was derived from payments from InterMune, Inc. for the sharing
of development costs related to Moli1901.

REVENUE FROM JOINT DEVELOPMENT AGREEMENT

         In the  second  quarter  of 2001 we  entered  into  an  agreement  with
InterMune,  Inc. for the joint  development  and  commercialization  of Moli1901
under which we received $1,450,000 as an up-front  non-refundable  payment. This
payment  provided  InterMune  with a  worldwide  co-exclusive  license  for  the
Moli1901  technology,  including  all  information  related to Moli1901  and its
patents.  . Under this agreement,  we and InterMune,  Inc. agreed to share costs
incurred  subsequent  to the date of the  agreement  related to  furthering  the
clinical  development  and  commercialization  of Moli1901.  The agreement  also
provided for additional payments to us by InterMune, Inc. for the achievement of
certain milestones, and the sharing of revenues from product sales. Prior to the
termination of the Agreement in December 2002, the up-front  payments under this
agreement of $1,450,000 and a payment from InterMune,  Inc.  received in 2000 in
connection  with our  agreement  not to seek  another  development  partner  for
Moli1901 of $50,000 were being  recognized as revenue ratably over the estimated
fifty-month period from the effective date of the Agreement through the expected
date our first product was approved for sale.


                                       7
<PAGE>

Upon  termination  of  the  Agreement,   the  remaining   deferred  revenue  was
recognized.

         Under the Agreement, we and InterMune, Inc. shared equally the costs of
developing Moli1901. Those costs included agreed-upon costs incurred internally,
such as personnel costs, and amounts paid to external organizations with whom we
or  InterMune,   Inc.  had  contracted  to  perform   research  and  development
activities.  We  recognized  revenue  attributable  to the  amortization  of the
upfront payments and shared product development costs as follows:

                                                               INCEPTION TO
                                                               DECEMBER 31,
                                       2002          2001         2002

Amortization of up front payments   $1,260,000   $  240,000   $1,500,000
Shared product development costs     1,364,385      435,500    1,799,885
                                    ----------   ----------   ----------
Total                               $2,624,385   $  675,500   $3,299,885
                                    ==========   ==========   ==========

MILESTONE PAYMENTS AND PRODUCT REVENUES

         We were entitled to receive additional revenues related to each product
developed under the agreement with InterMune,  Inc. as certain milestones in the
development of Moli1901 were achieved. No milestone payments were ever earned or
received.

SIGNIFICANT ELEMENTS OF COST

         Through  December  31, 2002 our expenses  consisted  primarily of costs
incurred  in  research  and  development  related to  Moli1901,  and general and
administrative costs associated with our operations.

RESEARCH AND DEVELOPMENT COSTS

         Research and development costs included  primarily costs related to the
development of Moli1901, Moli56A and development costs related to our library of
stable polypeptides.  These costs consisted primarily of amounts paid to outside
contractors for the manufacture and testing of the Moli1901 compound, toxicology
studies, consultation regarding regulatory and other matters, and the conduct of
clinical research studies. Research and development costs also included the cost
of our  personnel  involved  in product  development,  the legal and other costs
incurred to secure and maintain our  intellectual  property,  and indirect costs
associated  with  our  research  activities.  We did  not  operate  research  or
manufacturing  facilities,  and thus internal facility costs associated with our
product development efforts were historically immaterial.

GENERAL AND ADMINISTRATIVE COSTS

         The major components of general and administrative costs were personnel
costs,  infrastructure costs such as rent and utilities,  legal and professional
fees related to general  corporate  matters,  accounting fees, and travel costs.
The largest single component of general and administrative costs during 2001 was
compensation  expense  related to the granting of stock options to employees and
others, many of which were fully vested at the grant date. Compensation expenses
related to stock  options was a minor  component  of general and  administrative
costs during 2002.  During 2002,  general and  administrative  costs were mainly
attributable  to salaries and  professional  services  for legal and  accounting
activities.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         The preparation of financial statements requires our management to make
estimates and assumptions in a number of areas,  including  revenue  recognition
and reporting of research and  development  costs.  Those judgments are based on
historical  experience  and various  other factors that are relevant at the time
that those judgments are made.  Management evaluates the reasonableness of those
judgments on an on-going  basis,  and makes changes to  underlying  estimate and
assumptions  when  deemed  appropriate.  Actual  results  may differ  from these
estimates as conditions change.

         Management  believes that the following critical  accounting  policies,
among others,  are affected by assumptions and estimates used in the preparation
of financial statements.

REVENUE RECOGNITION

         Our  largest  source of  revenue  was  generated  from a  collaborative
development  arrangement  with  InterMune,  Inc. for the


                                       8
<PAGE>

joint  development and  commercialization  of Moli1901,  under which we received
up-front payments and cost-sharing payments for research and development.  Prior
to the termination of the InterMune,  Inc. agreement, the up-front payments were
recognized as revenue ratably over the expected product development period. Upon
termination of the Agreement  during 2002, all deferred  revenue  related to the
agreement  were  recognized.  Revenue from cost sharing  payments due to us were
recognized as the costs covered by the agreement were incurred.

         Revenue from grants was recognized as costs qualified for reimbursement
under the grant were  incurred and requests for  reimbursement  were made to the
grantor.

RESEARCH AND DEVELOPMENT COSTS

         Research  and  development   costs  included  the  cost  of  personnel,
supplies,  contracted services,  and the cost of infrastructure  associated with
research and development activities. These costs were expensed as incurred.

STOCK-BASED COMPENSATION

         We grant stock options to employees and non-employees for services. The
expense  associated  with employee and board of director grants have been valued
based on an intrinsic  value  method and  non-employee  grants  valued using the
Black-Scholes  option pricing model. The Black-Scholes  pricing model takes into
account  several  significant  assumptions,  such as  volatility  and  risk-free
interest  rates.  Options  associated  with future services are revalued at each
balance sheet date until vested.

VALUATION ALLOWANCE FOR DEFERRED TAX ASSETS

         Income  taxes  have been  accounted  for under the asset and  liability
method.  Deferred tax assets and liabilities have been 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  operating  loss and tax credit carry  forwards.  Deferred  income tax
assets and  liabilities  have been measured  using enacted tax rates expected to
apply to taxable income in the years in which those temporary  differences  were
expected to be  recovered or settled.  The effect on deferred  income tax assets
and  liabilities  of a change in tax rates has been  recognized in income in the
period that includes the enactment date. A valuation allowance is established to
the  extent  that it is more  likely  than not that we will be unable to utilize
deferred income tax assets in the future.  We provided a valuation  allowance of
$2,715,000  and $1,143,000  against  deferred tax assets as of December 31, 2002
and 2001,  respectively.  We considered all of the available  evidence in making
our  determination  of the  appropriate  carrying amount of the net deferred tax
asset.

FINANCIAL POSITION

         Our financial position changed  significantly from December 31, 2001 to
December  31,  2002.  In January 2002 we received  $1,500,000  when  warrants to
acquire 1,000,000 shares of our stock at $1.50 per share were exercised.  During
2002 we also received  cash payments of $1,799,885 in connection  with the joint
development  agreement  with  InterMune,  of  which  $435,500  was  in  accounts
receivable at December 31, 2001. We invested heavily in research and development
during 2002, with research and development  costs  increasing from $1,338,729 in
2001 to $3,984,196 in 2002. Our operating  activities used cash of $2,662,046 in
2002,  compared to  providing  cash of $145,612 in 2001.  The  increase in these
expenses  resulted in cash  equaling  $304,178 at December 31, 2002  compared to
$1,481,881 at December 31, 2001.

         Accounts  payable and accrued  liabilities  exclusive  of income  taxes
increased  from  $380,373 at December 31, 2001 to $839,392 at December 30, 2002,
reflecting   increased   levels  of  product   development   and   general   and
administrative spending.

         Deferred  revenue  in  connection  with our  agreement  with  InterMune
totaling  $1,260,000 is presented within the liabilities  section of our balance
sheet  at  December  31,  2001.  Deferred  revenue  was  fully  recognized  upon
termination of the agreement with InterMune  during 2002,  eliminating  deferred
revenue from the 2002 balance sheet.

         The  cash  related  to  the   exercise  of  warrants   along  with  the
amortization  of deferred stock  compensation  of $272,033  during 2002 were the
primary  factors that increased  additional  paid in capital from  $2,873,709 at
December 31, 2001 to $4,043,243 at December 31, 2002.

RESULTS OF OPERATIONS

COMPARISON OF YEARS ENDED DECEMBER 31, 2002 AND 2001


                                       9
<PAGE>

REVENUE

         Revenue  totaled  $2,624,385  during 2002 and $941,372  during 2001. We
recognized no grant revenue  during 2002 compared to $265,872  during 2001,  the
result of the  completion  of  activities  under  existing  grants.  Revenue  of
$2,624,385  was  recognized  during 2002 in  connection  with the  collaborative
agreement with InterMune, Inc., comprised of $1,364,385 in cost sharing payments
related to the  development of Moli1901 and the recognition of $1,260,000 of the
$1,500,000 in up-front payments received from InterMune.  Because this Agreement
was terminated and because of the acquisition subsequent to year end of MRD, our
operating  subsidiary,  we currently have no revenue producing  activities,  and
thus cannot anticipate the amount or source of future revenue in the near term.

RESEARCH AND DEVELOPMENT COSTS

         Research and  development  costs were $3,984,196 in 2002 and $1,338,729
during 2001. These expenses consisted primarily of payments to contract research
organizations,   consultants,   and  personnel  costs.   These  costs  increased
consistent with the level of activity  related to clinical trials and production
and testing of Moli1901.  Research and development costs increased significantly
as we continued development of Moli1901, as well as Moli56A, and the development
of our library of stable  polypeptides.  These costs will be very limited in the
future until we raise  additional  funds,  implement a development  plan for the
license  agreement  executed  in  connection  with the sale of MRD,  or  acquire
additional technologies for development.

GENERAL AND ADMINISTRATIVE COSTS

         General and  administrative  costs were $911,541 in 2002 and $1,842,699
in 2001.  In 2001,  the largest  component  of this  category of costs was stock
compensation  expense,  with  $1,118,481  of the  total  stock  compensation  of
$1,234,114 being allocated to general and  administrative  costs.  There were no
options  granted  during  2002 and  $5,499  of stock  compensation  expense  was
recognized during that period. Excluding stock compensation,  salaries increased
by  approximately  $115,000  to  $287,286  and  accounting  costs  increased  by
approximately $97,000 to $224,223. The 2002 salary costs represented a full year
of expense compared to approximately six months of expense in 2001. The increase
in  accounting  costs were  related to a full year  expense in 2002 for contract
accounting  and finance  professionals  compared to six months of those costs in
2001, as well as increased audit fees related to a public reporting entity.

      General  and  administrative  costs  increased  with  the  growth  of  our
activities,  and the costs inherent in the  administration of a public reporting
entity.

DEPRECIATION AND AMORTIZATION

         Depreciation and amortization costs remained minimal at $10,070 in 2002
and $4,547 in 2001.  We had minor  investments  in property  and  equipment  and
intangible assets.

LOSS FROM OPERATIONS

         Loss from operations increased from $2,244,603 in 2001 to $2,281,422 in
2002.  The increased  research and  development  and general and  administrative
costs experienced during 2002 was offset by increased revenue, in particular the
recognition $1,260,000 of deferred revenue resulting from the termination of the
InterMune, Inc. agreement.

INTEREST EXPENSE

         Interest expense  decreased to $2,088 in 2002 from $6,341 in 2001. This
decrease was the result of the repayment  during 2001 of the loan from the North
Carolina Biotechnology Center.

INTEREST INCOME

         Interest income decreased from $64,821 in 2001 to $17,374 in 2002. This
decrease  resulted from the lower  interest-bearing  deposit  balances and lower
short-term interest rates.

INCOME TAXES

         We recognized an income tax benefit  totaling  $26,500 during 2002 from
the recognition of the benefit of Federal loss carry backs, and the reduction of
estimated  accrual for state  income tax  liability.  Income taxes of $39,500 in
2001 represented


                                       10
<PAGE>

estimated  federal and state income taxes incurred  primarily as a result of the
receipt of  up-front  payments  from  InterMune,  Inc.  We  reported  income and
expenses on the cash basis for income tax purposes,  and filed separate  returns
for MoliChem Medicines, Inc. and MRD for state income tax purposes, and combined
returns for federal income tax purposes.

         LIQUIDITY AND CAPITAL RESOURCES

         As  discussed  above,  the  sale of MRD  subsequent  to year  end,  the
resulting  license  agreement,  and the  termination  of our  joint  development
agreement with InterMune,  Inc. has significantly changed our business strategy.
Currently,  the  scope  of  our  operations  is  significantly  reduced,  and we
anticipate   significantly   reduced  costs  of  operations  given  our  current
structure.  However,  we anticipate the need to raise additional  capital during
2003 to maintain our status as a public  reporting  company,  and to develop and
execute  a  business  plan  that  may  include  the  acquisition  of  additional
technologies  or  entities.  This  may  involve  sales  of our  equity  or  debt
securities in merger or acquisition transactions.

         We  incurred a net loss of  $2,239,636  in 2002,  and we have  incurred
losses since our inception of $4,906,003.  We currently have no planned  sources
of revenue and expect to continue to incur losses in the future.

         At  December  31,  2002  we  had  certain  commercial  commitments  and
contractual  obligations  that  required  us to incur  expenses  in the  future.
Subsequent to December 31, 2002 these  commitments were transferred to Lantibio,
Inc. in connection with its acquisition of MRD.

RECENTLY ISSUED ACCOUNTING STANDARDS

         In July  2002,  the FASB  issued  SFAS No.  146,  Accounting  for Costs
Associated with Exit or Disposal  Activities.  In November 2002, the FASB issued
Interpretation  No.  45  ("FIN  45"),   Guarantor's  Accounting  and  Disclosure
Requirements for Guarantees,  Including  Indirect  Guarantees of Indebtedness of
Others. In January 2003, the FASB issued FASB  Interpretation No. 46 ("FIN 46"),
Consolidation of Variable  Interest  Entities,  an Interpretation of ARB No. 51.
The Company has evaluated the impact of the adoption of these standards and does
not believe that their  adoption will have an impact on its  financial  position
and results of operations.

         In  December  2002,  the FASB  issued  SFAS  No.  148,  Accounting  for
Stock-Based  Compensation,  Transition  and  Disclosure.  SFAS No. 148  provides
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based  employee  compensation,  and also requires
that  disclosures  of the pro forma  effect of using  the fair  value  method of
accounting for stock-based  employee  compensation be displayed more prominently
and in a tabular format.  The  transaction  and disclosure  requirements of this
statement are effective  for the  Company's  fiscal year 2002,  and the required
disclosures  are  presented  in the  notes  to  the  financial  statements  that
accompany this report.

         This statement was effective for the Company beginning January 1, 2002.
The  adoption  of this  statement  had no impact on its  consolidated  financial
statements.

ITEM 7.        FINANCIAL STATEMENTS

         The  financial  statements  and  reports of  independent  auditors  are
included  herein  immediately  following the signature page to this report.  See
Item 13 for a list of the financial statements included.

ITEM 8.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
               FINANCIAL DISCLOSURE

         Deloitte & Touche,  LLP was our independent  certifying  accountant for
the fiscal year ended  December 31, 2001. On April 4, 2003,  they were dismissed
by us and we  subsequently  engaged Rogoff & Company,  275 Madison  Avenue,  New
York, New York 10017,  as our  certifying  accountant for the fiscal year ending
December 31,  2002.  Rogoff & Company had served as our  independent  certifying
accountant  for the fiscal  year ended  December  31,  2000.  The  dismissal  of
Deloitte & Touche, LLP and appointment of Rogoff & Company, P.C. was approved by
our board of directors.  The change in auditors was made in conjunction with our
reorganization.

         The report of Deloitte & Touche,  LLP on our financial  statements  for
the year ended December 31, 2001  contained no adverse  opinion or disclaimer of
opinion,  nor was it  qualified  or modified as to  uncertainty,  audit scope or
accounting  principle  except  that such  report  was  modified  to  include  an
explanatory  paragraph  with respect to our ability to complete our  development
programs and,  ultimately,  the  attainment of  profitable  operations  which is
dependent upon future events,  including obtaining adequate financing to fulfill
our development activities, obtaining regulatory approval, and achieving a level
of revenue adequate to support our cost structure.


                                       11
<PAGE>

         In connection with the audit of the fiscal year ended December 31, 2001
and during the subsequent  interim  period through April 4, 2003,  there were no
disagreements  between us and Deloitte & Touche, LLP on any matter of accounting
principles or practices,  financial statement  disclosure,  or auditing scope or
procedures,  which disagreements,  if not resolved to their satisfaction,  would
have caused  Deloitte & Touche,  LLP to make  reference to the subject matter of
disagreement in connection with their reports.

         In connection with the audit of the fiscal year ended December 31, 2001
and during the  subsequent  interim  period  through  April 4, 2003,  Deloitte &
Touche, LLP did not advise us that:

          o    Internal controls  necessary for us to develop reliable financial
               statements did not exist;

          o    Information  had  come to  their  attention  that  led them to no
               longer  be able to rely on our  management's  representations  or
               made  them   unwilling  to  be  associated   with  the  financial
               statements prepared by our management;

          o    There  was a need to  expand  significantly  the  scope  of their
               audit, or that  information  had come to their  attention  during
               such time periods that if further  investigated  might materially
               impact the fairness or reliability of either a previously  issued
               audit  report  or  the  underlying  financial  statement;  or the
               financial  statements  issued or to be issued covering the fiscal
               periods  subsequent  to the  date of the  most  recent  financial
               statements covered by an audit report;

          o    Information  had come to their  attention that they had concluded
               materially  impacted the fairness or  reliability of either (i) a
               previously  issued  audit  report  or  the  underlying  financial
               statements,  or (ii) the  financial  statements  issued  or to be
               issued covering the fiscal periods  subsequent to the date of the
               most recent financial statements covered by an audit report.

         On February 6, 2002, we dismissed our auditor,  Rogoff & Company, P.C.,
275 Madison Avenue,  New York, New York 10016, and appointed  Deloitte & Touche,
LLP, Raleigh, North Carolina, as our new auditor. The principal reports prepared
by Rogoff & Company,  P.C. on our financial  statements  for the two years ended
December 31, 2000 did not contain any adverse  opinion or disclaimer of opinion,
nor were they qualified or modified as to uncertainty, audit scope or accounting
principles.

         The Audit Committee of our Board of Directors recommended the change in
auditors.  The  chief  criterion  for the  change in  auditors  was to engage an
auditor with offices in North Carolina, where we were located, and such decision
was not based upon any disagreements with Rogoff & Company, regarding accounting
principles, financial statement disclosure, or auditing scope or procedures.

         There were no  disagreements  between us, our  management  and Rogoff &
Company  during the two fiscal years ended  December 31, 2000 and any subsequent
interim period preceding the engagement of Deloitte & Touche,  LLP on any matter
of accounting  principles  or  practices,  financial  statement  disclosure,  or
auditing  scope  or  procedure  of a  nature  which,  if  not  resolved  to  the
satisfaction  of Rogoff & Company,  would have  caused  Rogoff & Company to make
reference  in  connection   with  its  report  to  the  subject  matter  of  the
disagreements.

         During the two fiscal  years  ended  December  31, 2000 and the interim
period through February 6, 2002,  neither we, our management,  any member of our
Board of  Directors,  nor any other party  acting on our behalf  consulted  with
Deloitte & Touche  regarding  the  application  of  accounting  principles  to a
specified  transaction,  either completed or proposed; the type of audit opinion
that might be rendered on our financial statements; or any other matter that was
the subject of a disagreement with Rogoff & Company, or any reportable event (as
defined in Item  304(a) (1) (v) of  Regulation  S-K)  reported to us by Rogoff &
Company.

                                    PART III

ITEM 9.        DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
               COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

         Directors  serve  until the next  annual  meeting of the  stockholders;
until their  successors are elected or appointed and


                                       12
<PAGE>

qualified, or until their prior resignation or removal.  Officers serve for such
terms as determined  by our board of directors.  Each officer holds office until
such  officer's  successor is elected or appointed  and  qualified or until such
officer's earlier resignation or removal.

         In  an  effort  to  manage  costs,  all  employment  arrangements  were
terminated  effective December 20, 2002.  Thereafter our operations were managed
by certain  members of our Board of Directors  under the authority of the Board.
During  December  2002,  Gilles  Cloutier  resigned  his  positions as our Chief
Business  Officer and Chairman of the Board, and Luis Molina assumed the role of
Chairman.  Jacques Gagne  resigned from the board in December  2002,  and Vatche
Tchakmakian resigned from the board in February 2003.

         In connection  with the sale of MRD,  Inc. in May 2003 Gilles  Cloutier
was  appointed  as our  President,  Chief  Executive  Officer,  Chief  Financial
Officer,  Secretary,  Treasurer  and a  Director,  Luis  Molina  resigned as our
President, Chief Executive Officer and as a Director, Richard Martin resigned as
our Chief  Financial  Officer and Ronald Keeney  resigned as a Director.  At the
present time, Mr. Cloutier is our sole employee.

         The members of our Board of Directors and executive  officers as of May
14,  2003,  together  with  their  respective  ages  and  certain   biographical
information, are set forth below.

         NAME                    AGE                     POSITION
         ----                    ---                     --------
         Gilles Cloutier         58           President, Treasurer, Secretary,
                                              and Director

         Gilles  Cloutier,  Ph.D.  Dr.  Cloutier  served as our  Chief  Business
Officer, Chairman of the Board and a director of MoliChem Medicines and MRD from
January 2001 until  December  2002.  As of May 5, 2003 he is serving as our sole
officer  and  director.   He  was  the  Executive  Vice  President  of  Business
Development  of United  Therapeutics  Corporation,  and one of its founders from
1997  to  2001.  Dr.  Cloutier  has  over  thirty  years  of  experience  in the
pharmaceutical  industry and contract research organizations providing strategic
support to the biotechnology and pharmaceutical industries. As Vice President of
Cato Research  (1992-1997),  Dr. Cloutier founded Cato Pharma Canada and led his
team  to the  successful  preparation  of  numerous  orphan  drug  applications,
investigational  new drug applications,  new drug  applications,  and a new drug
study. At Quintiles,  Inc. (1990-1992),  he served as Vice President of Clinical
Operations.  During his 13 years at  Burroughs  Wellcome  Co.  (1976-1990),  Dr.
Cloutier  headed  the  Department  of  Medical   Services,   after  leading  the
Neurology/Anesthesiology  Section.  He has  served  as  Professor  at  both  the
University of Montreal,  the University of North Carolina, and the University of
Colorado Medical Center. Dr. Cloutier has served as President and Trustee of the
Associates  of Clinical  Pharmacology  and is on the Board of  Directors  of the
Epilepsy  Foundation of America.  Dr. Cloutier  graduated from the University of
Montreal with a Ph.D. in Pharmacology  and has made numerous  presentations  and
has 33 publications.


                                       13
<PAGE>

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

            Our common  stock is not  registered  pursuant  to Section 12 of the
Exchange  Act of  1934,  as  amended  (the  "Exchange  Act").  Accordingly,  our
officers, directors and principal shareholders are not subject to the beneficial
ownership reporting requirements of Section 16(a) of the Exchange Act.

ITEM 10.       EXECUTIVE COMPENSATION

         The  following  table  sets  forth  information  concerning  the  total
compensation  paid or accrued by us during the three fiscal years ended December
31, 2002 to (i) all individuals  that served as our chief  executive  officer or
acted in a similar  capacity  for us at any time  during the  fiscal  year ended
December 31, 2002 and (ii) all individuals that served as executive  officers of
ours at any time during the fiscal year ended  December  31, 2002 that  received
annual  compensation during the fiscal year ended December 31, 2002 in excess of
$100,000.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                 ANNUAL COMPENSATION                  AWARDS                   PAYOUTS
                                                                                    LONG TERM   COMPENSATION
                                                                                    RESTRICTED   SECURITIES
                                                                       OTHER ANNUAL   STOCK      UNDERLYING      LTIP    ALL OTHER
NAME AND                                                     BONUS     COMPENSATION   AWARDS      OPTIONS/      PAYOUTS    COMPEN-
PRINCIPAL POSITIONS                       YEAR  SALARY ($)    ($)          ($)          ($)        SARS (#)       ($)    SATION ($)
-------------------                       ----  ----------    ---          ---          ---        --------       ---    ----------
<S>                                       <C>   <C>         <C>             <C>          <C>       <C>             <C>        <C>
Luis Molina, President and                2002  151,864         0           0            0            0            0          0
Chief Executive Officer................   2001  146,125     7,306           0            0         350,000         0          0
                                          2000   96,102         0           0            0            0            0          0
Terry Williams, Secretary..............   2002  101,242         0           0            0            0            0          0
                                          2001   99,167     4,958           0            0         400,000         0          0
                                          2000   81,450         0           0            0            0            0          0
Ronald E. Keeney                          2002  126,553         0           0            0            0            0          0
Executive V.P., Chief Medical Officer...  2001   46,459     2,232           0            0         200,000         0          0
Gilles Cloutier, Chief                    2002  142,632         0           0            0            0            0          0
Business Officer....                      2001   80,625     4,031           0            0         550,000         0          0
</TABLE>

OPTION/SAR GRANTS IN LAST FISCAL YEAR

         No stock options or stock appreciation rights were granted to the named
executives during the fiscal year ended December 31, 2002.

STOCK APPRECIATION RIGHTS

            The named executives did not receive any stock  appreciation  rights
from us during the fiscal year ended December 31, 2002.

AGGREGATED  OPTION/SAR  EXERCISES  IN LAST  FISCAL  YEAR  AND  FISCAL  YEAR  END
OPTION/SAR VALUES

<TABLE>
<CAPTION>
                                                              Number of Securities Underlying
                                                                  Unexercised Options/SARs       Value of Unexercised In-the-Money
                         Shares Acquired                           at Fiscal Year End (#)                  Options/SARs
                           On Exercise       Value Realized             Exercisable/            at Fiscal Year End ($) Exercisable/
NAME                           (#)                 ($)                 UNEXERCISABLE                       UNEXERCISABLE
---------------------     -------------       -------------            -------------                       -------------
<S>                      <C>                       <C>             <C>                                          <C>
Luis Molina              Not Applicable            N/A              220,000 Exercisable                         N/A
                             ("N/A")
Terry Willams                  N/A                 N/A              214,445 Exercisable                         N/A
                                                                   185,555 Unexercisable                        N/A
Ronald E. Keeney               N/A                 N/A              161,805 Exercisable                         N/A
Gilles Cloutier                N/A                 N/A              550,000 Exercisable                         N/A
</TABLE>


                                       14
<PAGE>

LONG TERM INCENTIVE PLAN AWARDS

         We made no  long-term  incentive  plan  awards to the  named  executive
officers during the fiscal year ended December 31, 2002.

EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT,
AND CHANGE-IN-CONTROL ARRANGEMENTS

         On January 30, 2001 MoliChem Medicines, Inc. and MRD, Inc. entered into
an employment  agreement with Luis Molina employing him as MRD's Chief Executive
Officer and President for three years. This agreement provided for (a) an annual
base salary of $150,000  (which was increased to $156,000 in January 2002),  and
(b) incentive compensation at our Board of Director's  discretion,  including an
annual bonus of 20% of his annual base salary.  This agreement also provided for
the grant of a stock  option to Mr.  Molina to  purchase  350,000  shares of our
common stock at $1.50 per share.  Effective  December 20, 2002,  the  employment
agreement was  terminated.  Effective May 6, 2003, the 220,000 then  exercisable
options issued under the employment  agreement were  terminated  pursuant to the
May 6, 2003 Stock Exchange Agreement.

         On January 30, 2001, MoliChem  Medicines,  Inc. and MRD entered into an
employment  agreement  with Terry  Williams  employing her as MRD's  Director of
Development  for three years.  This agreement  provided Ms. Williams with (a) an
annual  base  salary of  $100,000  (which was  increased  to $104,000 in January
2002),  and (b) incentive  compensation  at our Board of Director's  discretion,
including  an annual  bonus of 20% of Ms.  William's  annual base  salary.  This
agreement  also  provided  for the grant of a stock  option to Ms.  William's to
purchase  400,000  shares of our common  stock at $ 1.50 per share.  . Effective
December 20, 2002, the  employment  agreement was  terminated.  Effective May 6,
2003, the 214,445 then exercisable options issued under the employment agreement
were terminated pursuant to the May 6, 2003 Stock Exchange Agreement.

            On April 15, 2001,  MRD entered into an  employment  agreement  with
Gilles  Cloutier  employing him as MRD's Chief  Business  Officer on a part-time
basis for two years.  This  agreement  provided Dr.  Cloutier with (a) an annual
base salary of $90,000 (which was increased to $147,780 in February  2002),  and
(b) incentive compensation at our Board of Director's  discretion,  including an
annual bonus of 20% of Dr.  Cloutier's  annual base salary.  This agreement also
provided  for the grant of a stock  option to Dr.  Cloutier to purchase  350,000
shares of our  common  stock at $1.50  per  share.  All  350,000  shares  became
exercisable  on June 22,  2001.  Effective  December 20,  2002,  the  employment
agreement was  terminated.  Effective  May 6, 2003 the 350,000 then  exercisable
options issued under the employment  agreement were  terminated  pursuant to the
May 6, 2003 Stock Exchange Agreement.

            On September 17, 2001, MRD entered into an employment agreement with
Ronald Keeney employing him as MoliChem R&D's Executive Vice President and Chief
Medical  Officer.  This  agreement  provided Dr.  Keeney with (a) an annual base
salary of $125,000  (which was  increased  to $130,000 in January  2002),  (b) a
signing bonus in the amount of $30,000,  and (c) incentive  compensation  at our
Board of Director's discretion, including an annual bonus of 20% of Dr. Keeney's
annual base salary. This agreement also provided for the grant of a stock option
to Dr. Keeney to purchase  100,000 shares of our common stock at$1.50 per share.
Effective December 20, 2002, the employment agreement was terminated.  Effective
May 6, 2003,  the 41,667 then  exercisable  options  issued under the employment
agreement were terminated pursuant to the May 6, 2003 Stock Exchange Agreement.

DIRECTORS' COMPENSATION

         We have not paid and do not presently  propose to pay  compensation  to
any  director for acting in such  capacity,  except for the grant of options and
reimbursement  for  reasonable  out-of-pocket  expenses in  attending  meetings.
During  2001 we  granted  options  to  purchase  shares of  common  stock to two
directors  that are not employees.  Vatche  Tchakmakian  was granted  options to
purchase 150,000 shares at $1.50 per share,  those options being fully vested at
the date of grant.  Jacques Gagne was granted options to purchase 100,000 shares
of common stock at $1.50 per share, those options being fully vested at the date
of grant. No option grants were made to directors during 2002.

REPORT ON REPRICING OF OPTIONS/SARS

         During the fiscal  year ended  December  31,  2002 we did not adjust or
amend the exercise price of any stock options or SARs.


                                       15
<PAGE>

ITEM 11.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following  table sets forth  information  regarding the  beneficial
ownership of our common stock as of May 14, 2003. The  information in this table
provides the ownership information for:

         o        each  person  known by us to be the  beneficial  owner of more
                  than 5% of our common stock;

         o        each of our directors;

         o        each of our executive officers; and

         o        our executive  officers,  directors and director nominees as a
                  group.

         The  percentages  in the  table  have been  calculated  on the basis of
treating as outstanding for a particular  person, all shares of our common stock
outstanding  on such date and all shares of our common  stock  issuable  to such
holder in the event of  exercise of  outstanding  options,  warrants,  rights or
conversion  privileges  owned by such person at said date which are  exercisable
within 60 days of such date. Except as otherwise  indicated,  the persons listed
below have sole voting and  investment  power with  respect to all shares of our
common stock owned by them, except to the extent such power may be shared with a
spouse.


                                       16
<PAGE>

<TABLE>
<CAPTION>
NAME AND ADDRESS                                                                          NUMBER OF SHARES         PERCENTAGE
OF BENEFICIAL OWNER                                        TITLE OF CLASS                 BENEFICIALLY OWNED      OUTSTANDING(1)
<S>                                                  <C>                                     <C>                     <C>
Claude Gendron (2)                                   Common Stock, $.001 par value            3,750,000               15.51%
300 St. Sacrement Street
Suite 414
Montreal, Quebec, H241X4

Jean-Guy Lambert (3)                                 Common Stock, $.001 par value            2,250,000                9.31%
1801 McGill College Avenue
Suite 1260
Montreal, Quebec H3A2N4

Group Intercapital, Inc. (2)                         Common Stock, $.001 par value            2,750,000               11.37%
300 St. Sacrement Street
Suite 414
Montreal, Quebec, H241X4

Lantibio, Inc.                                       Common Stock, $.001 par value           13,379,282(4)            55.33%
100 Europa Drive, Suite 421
Chapel Hill, NC 27517

Gilles Cloutier                                      Common Stock, $.001 par value              120,000(5)               .5%
100 Chestnut Road
Chapel Hill, North Carolina 27514

All Executive Officers and Directors as a Group      Common Stock, $.001 par value              120,000                  .5%
(1 person)
</TABLE>

(1)      The  percentages  computed  in this  column of the table are based upon
         24,179,287  shares of common  stock issued and  outstanding  on May 15,
         2003.  The  13,379,282  shares  presently  owned by Lantibio,  Inc. are
         expected  to be  cancelled  shortly  pursuant  to the May 6, 2003 Stock
         Exchange  Agreement  following which we will have 10,800,005  shares of
         common stock issued and outstanding.

(2)      Claude Gendron is the  beneficial  owner of Multivox  Marketing,  Inc.,
         which owns 1,000,000 shares of our common stock and Group  Intercapital
         Inc.

(3)      Jean-Guy  Lambert is the  President  and a director  of Dacha  Capital,
         Inc.,  which  owns  1,000,000  shares of our  common  stock and has the
         investment power over the securities held by Dacha Capital.

(4)      The shareholders of Lantibio,  Inc. are Luis Molina,  Robert J. Harvey,
         W. Lowry Caudill,  Alfred G.  Childers,  Richard  Franco,  and John and
         Cynthia  Shackles.  Luis Molina owns 57.7% of Lantibio,  Inc. Alfred G.
         Childers and W. Lowry Caudill each own 15.7% of Lantibio,  Inc.  Robert
         J. Harvey owns 9.8% of Lantibio,  Inc. Accordingly,  until the Lantibio
         Shares are cancelled, each of Luis Molina, Alfred G. Childers, W. Lowry
         Caudill  and  Robert  J.  Harvey  is  deemed to own more than 5% of our
         outstanding common stock.

(5)      Includes  100,000 shares held by COPD which is controlled by the spouse
         and children of Gilles Cloutier.

ITEM 12.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

            In May 2003 we  exchanged  all of the  stock  of our then  operating
subsidiary  MRD for  13,379,282  shares of our common  stock owned by  Lantibio,
Inc., a company owned by our former president and certain former shareholders of
ours.  We also received a  non-exclusive  license to develop,  market,  and sell
certain  products  incorporating  compounds  Moli56A and  Moli56B.  Luis Molina,
former President,  Chief Executive  Officer,  and Chairman of ours owns 57.7% of
Lantibio.  Alfred G.  Childers and W. Lowry  Caudill each own 15.7% of Lantibio.
Robert J. Harvey owns 9.8% of Lantibio.


                                       17
<PAGE>

            In May 2003 we issued  2,750,000 and 1,250,000  shares of our common
stock,  respectively,  to Group Intercapital Inc., a corporation owned by Claude
Gendron  and to Jean  Guy  Lambert  in  connection  with the May 5,  2003  Stock
Purchase Agreement.

ITEM 13.       EXHIBITS LIST, AND REPORTS ON FORM 8-K

(a)      Exhibits

FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                             PAGE
<S>                                                                                          <C>
            Independent Auditors Report - Rogoff & Company, P.C..............................F-2

            Independent Auditors' Report - Deloitte & Touche LLP.............................F-3

            Consolidated Balance Sheets as of December 31, 2002 and December 31, 2001........F-4

            Consolidated  Statements of Operations  for the years ended December
            31, 2002 and December 31, 2001 and for the period from  December 22,
            1995 (date of inception) to December 31, 2002....................................F-5

            Consolidated  Statement of Stockholders' Equity (Deficiency) for the
            Period from December 22, 1995 (date of inception) to December 31, 2002...........F-6

            Consolidated  Statements of Cash Flows for the years ended  December
            31, 2002 and December 31, 2001 and for the period from  December 22,
            1995 (date of inception) to December 31, 2002....................................F-7

            Notes to Consolidated Financial Statements.......................................F-8
</TABLE>

FINANCIAL STATEMENT SCHEDULES

All financial statement schedules are omitted because they are not applicable or
the required information is shown in the financial statements or notes thereto.

               The  following  exhibits  filed  as a part  of this  Form  10-KSB
               include  both  exhibits  submitted  with  this  Report  and those
               incorporated by reference to other filings:

EXHIBIT NO.                      DESCRIPTION

3(i)     Certificate of Incorporation of the Registrant*
3(ii)    Amended and Restated By-Laws of the Registrant*
4        Form of common stock Certificate of MoliChem Medicines, Inc.*
9        Stockholders  Voting Agreement and Irrevocable  Proxy dated January 18,
         2001 among Alfred G. Childers,  Robert J. Harvey, Luis Molina, W. Lowry
         Caudill, John E. & Cynthia M. Shackles, and Dacha Capital, Inc.*
10.1     Employment  Agreement dated January 30, 2001 between MoliChem Medicines
         and Luis  Molina*  10.2  Employment  Agreement  date  January  30, 2001
         between MoliChem Medicines and Terry Williams*
10.3     Technology  Transfer and Custom Services Agreement dated March 23, 2001
         between Apotex Fermentation Inc. and MoliChem R&D, Inc.*
10.4     Exclusive  Development  and  Commercialization  Agreement dated May 11,
         2001 among InterMune, Inc. and MoliChem R&D, Inc.*
10.5     Form of Option Agreement*
10.6     Employment  Agreement  dated as of April 1, 2001 between  MoliChem R&D,
         Inc. and Gilles Cloutier*
10.7     Employment  Agreement  dated as of September 17, 2001 between  MoliChem
         R&D, Inc. and Ronald Keeney*
10.8     Europa  Center Office Lease dated July 2, 2001 between  Europa  Center,
         LLC and MoliChem R&D, Inc.*
10.9     MoliChem Medicines, Inc. 2001 Stock Award Plan*
10.10    Amendment  No. 1 to the  Exclusive  Development  and  Commercialization
         Agreement with Intermune, Inc. dated as of May 11, 2001***
10.11    Stock Purchase Agreement dated as of May 5, 2003


                                       18
<PAGE>

10.12    Stock  Exchange  Agreement  dated as of May 6, 2003  among  Registrant,
         Molichem R&D, Inc. and Lantibio, Inc.
10.13.   License  Agreement  dated  as of May 6,  2003  between  Registrant  and
         Molichem R&D, Inc.
11       Statement of Computation of Per Share Earnings**
99.1     Certificate of Chief Executive and Financial Officer
*        Incorporated by reference to  Registration  Statement on Form SB-2, No.
         333-64430
**       Included in financial statements filed herewith
***      Incorporated  by reference  to  Quarterly  Report on Form 10QSB for the
         quarterly period ended June 30, 2002

(b) Reports on Form 8-K

On October 9, 2002, we filed a Form 8-K dated September 26, 2002. Item 5 thereof
referred  to a press  release  contained  therein  as Item 7. The press  release
announced the  presentation  of clinical trial data on Moli1901 at the Sixteenth
Annual North American Cystic Fibrosis Foundation Conference.

On November  13,  2002,  we filed a Form 8-K dated  November  12,  2002.  Item 5
thereof  referred  to a press  release  contained  therein  as Item 7. The press
release  announced  the issuance to us of a United States patent for a Method of
Treating Septic Shock.

On December  27,  2002,  we filed a Form 8-K dated  December  27,  2002.  Item 5
thereof  referred  to a press  release  contained  therein  as Item 7. The press
release announced our re-acquisition from InterMune, Inc., the exclusive license
for the development of Moli1901.

ITEM 14.      CONTROLS AND PROCEDURES

            Our  principal  executive  officer and principal  financial  officer
evaluated the  effectiveness  of our disclosure  controls and procedures as of a
date  within  90  days  prior  to the  filing  of  this  report.  Based  on this
evaluation, our principal executive officer and principal financial officer have
concluded that our controls and procedures are effective in providing reasonable
assurance  that the  information  required  to be  disclosed  in this  report is
accurate and complete and has been recorded, processed,  summarized and reported
within the time period required for the filing of this report. Subsequent to the
date of this  evaluation,  there  have not been any  significant  changes in our
internal   controls  or,  to  our   knowledge,   in  other  factors  that  could
significantly affect our internal controls.

            Consistent with Section 10A(i)(2) of the Securities  Exchange Act of
1934,  as  added  by  Section  202 of the  Sarbanes-Oxley  Act of  2002,  we are
responsible  for  listing  the  non-audit  services  approved  by our  Board  of
Directors  to be  performed by Rogoff & Company,  P.C.,  our  external  auditor.
Non-audit  services  are  defined  as  services  other than  those  provided  in
connection with an audit or a review of our financial  statements.  Our Board of
Directors currently has not approved the engagement of Rogoff & Company, P.C. to
perform any non-audit services in 2003.


                                       19
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange  Act of 1934,  the  Registrant  has duly  caused this Form 10-KSB to be
signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 19, 2003                            Molichem Medicines, Inc.

                                               By:/s/ Gilles Cloutier
                                               ---------------------------------
                                               Gilles Cloutier
                                               President

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated on this 19th day of May 2003.

/s/ Gilles Cloutier
----------------------------------------------------------
Gilles Cloutier, President, Chief Executive Officer, Chief
Financial and Accounting Officer, Director


                                       20
<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S>                                                                                            <C>
Independent Auditors' Reports..........................................................                     F-2

Consolidated Balance Sheets as of December 31, 2002 and December 31, 2001..............                     F-4

ConsolidatedStatements of Operations  for the years ended  December 31, 2002 and
            2001,  and for the period from December 22, 1995 (date of inception)
            to December 31, 2002.......................................................                     F-5

Consolidated Statements of Stockholders' Equity (Deficiency) for the period from
            December 22,1995 (date of inception) to December 31, 2002..................                     F-6

ConsolidatedStatements  of Cash Flows for the years ended  December 31, 2002 and
            2001,  and for the period from December 22, 1995 (date of inception)
            to December 31, 2002.......................................................                     F-7

Notes to Consolidated Financial Statements.............................................        F-8 through F-15
</TABLE>


                                       F-1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Molichem Medicines, Inc.
Chapel Hill, North Carolina

Gentlemen:

         We have audited the accompanying  balance sheet of Molichem  Medicines,
Inc.  and  subsidiary  as of December  31,  2002,  and the related  consolidated
statements of operations,  stockholders'  equity (deficiency) and cash flows for
the year  then  ended,  and for the  period  from  December  22,  1995  (date of
inception)  to December 31, 2000,  and the year ended  December 31, 2002.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.  The Company's  consolidated  financial  statements as of and for the
year ended December 31, 2001 were audited by other auditors whose report,  dated
March 26, 2002, expressed an unqualified opinion on those statements.

         We conducted our audit in accordance with auditing standards  generally
accepted in the 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 includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statements  presentation.  We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

            In our opinion, based on our audit and the report of other auditors,
such  financial  statements  present  fairly,  in  all  material  respects,  the
financial position of Molichem Medicines,  Inc. as of December 31, 2002, and the
results of its  operations  and its cash flows for the year then ended,  and for
the period from December 22, 1995 (date of inception) through December 31, 2002,
in conformity with accounting principles generally accepted in the United States
of America.

            The  Company is in the development stage as of December 31, 2002. As
discussed in Note 1 to the financial  statements,  successful  completion of the
Company's  development programs,  and, ultimately,  the attainment of profitable
operations  is  dependent  upon  future  events,  including  obtaining  adequate
financing to fulfill its development activities,  obtaining regulatory approval,
and  achieving  a level of  revenue  adequate  to  support  the  Company's  cost
structure.

            The  accompanying  financial  statements have been prepared assuming
the Company  will  continue as a going  concern.  As  discussed in Note 2 to the
financial  statements,  the  Company  has  incurred  losses  of  $2,239,636  and
$2,225,623 for the years ended December 31, 2002 and 2001, respectively,  has an
accumulated deficit of $4,465,259 and negative working capital of $465,683 as of
December 31, 2002.  These  factors raise  substantial  doubt about the Company's
ability to continue  as a going  concern.  Management's  plans  regarding  these
matters  are   discussed  in  Note  13  in   connection   with  the   subsequent
reorganization  of the Company on May 6, 2003.  The financial  statements do not
include any adjustments that might result from the outcome of this matter.

New York, New York
Date:  April 8, 2003

                                                        /S/ROGOFF & COMPANY,P.C.
                                                        ------------------------


                                      F-2
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
   Molichem Medicines, Inc.

We  have  audited  the  accompanying  consolidated  balance  sheet  of  Molichem
Medicines,  Inc. and subsidiary (a development stage company) (the "Company") as
of December  31, 2001 and the related  consolidated  statements  of  operations,
stockholders' equity (deficiency),  and cash flows for the year then ended These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  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 includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our  opinion  such  financial  statements  present  fairly,  in all  material
respects, the financial position of the Company as of December 31, 2001, and the
results  of its  operations  and its  cash  flows  for the  year  then  ended in
conformity with accounting principles generally accepted in the United States of
America.

The Company is in the development stage as of December 31, 2001. As discussed in
Note 1 to the  financial  statements,  successful  completion  of the  Company's
development programs and, ultimately, the attainment of profitable operations is
dependent upon future events,  including obtaining adequate financing to fulfill
its development activities, obtaining regulatory approval, and achieving a level
of revenue adequate to support the Company's cost structure.

/s/ Deloitte & Touche LLP

Raleigh, North Carolina
March 26, 2002


                                      F-3
<PAGE>

MOLICHEM MEDICINES, INC. AND SUBSIDIARY

(A Company in the Development Stage)

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2002 AND 2001
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
ASSETS                                                                                         2002                   2001
CURRENT ASSETS:
<S>                                                                                        <C>                  <C>
      Cash and cash equivalents.........................................................    $ 304,178            $ 1,481,881
      Accounts receivable...............................................................          300                435,800
      Prepaid expenses and other current assets.........................................       69,231                  2,902
                                                                                           ----------             ----------
                  Total current assets..................................................      373,709              1,920,583
                                                                                           ----------             ----------
PROPERTY AND EQUIPMENT, net.............................................................       38,020                 32,299
OTHER ASSETS............................................................................        7,515                  7,646
                                                                                           ----------             ----------
TOTAL ASSETS............................................................................    $ 419,244            $ 1,960,528
                                                                                            =========            ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
      Accounts payable..................................................................    $ 819,270              $ 354,280
      Accrued compensation and benefits.................................................       20,122                 26,093
      Deferred revenue..................................................................           -                 360,000
      Accrued income taxes..............................................................            -                 39,500
                                                                                           ----------             ----------
                  Total current liabilities.............................................      839,392                779,873
                                                                                           ----------             ----------
LONG-TERM LIABILITES:
      Deferred revenue, excluding current portion.......................................            -                900,000
                                                                                           ----------             ----------
STOCKHOLDERS' EQUITY (DEFICIENCY):
      Preferred   stock - $0.0001 par value, 20,000,000 shares authorized,  none
                  issued and outstanding at December 31, 2002 and 2001
      Common      stock -  $0.0001  par  value,  80,000,000  shares  authorized,
                  18,679,287 and 17,679,287 shares issued and outstanding at
                  December 31, 2002 and 2001, respectively..............................        1,868                  1,768
      Additional paid-in capital........................................................    4,043,243              2,873,709
      Deferred compensation.............................................................            -               (369,199)
      Accumulated deficit...............................................................   (4,465,259)            (2,225,623)
                                                                                           ----------             ----------
                  Total stockholders' equity (deficiency)...............................     (420,148)               280,655
                                                                                           ----------             ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY).................................    $ 419,244            $ 1,960,528
                                                                                           ==========             ==========
</TABLE>

See notes to consolidated financial statements.


                                      F-4
<PAGE>

MOLICHEM MEDICINES, INC. AND SUBSIDIARY
(A Company in the Development Stage)

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2002 AND 2001, AND PERIOD FROM
DECEMBER 22, 1995 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2002
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                              PERIOD
                                                                         DECEMBER 22, 1995
                                                                        (DATE OF INCEPTION)
                                                                             THROUGH
                                                  2002            2001   DECEMBER 31, 2002
<S>                                           <C>            <C>          <C>
REVENUE:
   Grant revenue ..........................   $        --    $   265,872    $ 1,716,697
   Revenue from joint development agreement     2,624,385        675,500      3,299,885
                                              -----------    -----------    -----------
               Total revenue ..............     2,624,385        941,372      5,016,582
                                              -----------    -----------    -----------
OPERATING EXPENSES:
   Research and development ...............     3,984,196      1,338,729      6,686,978
   General and administrative costs .......       911,541      1,842,699      3,244,815
   Depreciation and amortization ..........        10,070          4,547         23,555
                                              -----------    -----------    -----------
               Total operating expenses ...     4,905,807      3,185,975      9,955,348
                                              -----------    -----------    -----------
LOSS FROM OPERATIONS ......................    (2,281,422)    (2,244,603)    (4,938,766)
INTEREST EXPENSE ..........................        (2,088)        (6,341)       (41,613)
INTEREST INCOME ...........................        17,374         64,821         87,376
                                              -----------    -----------    -----------
LOSS BEFORE INCOME TAXES ..................    (2,266,136)    (2,186,123)    (4,893,003)
INCOME TAXES ..............................       (26,500)        39,500         13,000
                                              -----------    -----------    -----------
NET LOSS ..................................   $(2,239,636)   $(2,225,623)   $(4,906,003)
                                              -----------    -----------    -----------
Net loss per share-basic and diluted ......   $     (0.12)   $     (0.13)   $     (0.34)
                                              ===========    ===========    ===========
See notes to consolidated financial statements.
</TABLE>


                                      F-5
<PAGE>

MOLICHEM MEDICINES, INC. AND SUBSIDIARY

(A Company in the Development Stage)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
PERIOD FROM DECEMBER 22, 1995 (DATE OF INCEPTION) TO DECEMBER 31, 2002
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                                     ADDITIONAL
                                                                           COMMON        CAPITAL      PAID-IN       DEFERRED
                                                                           SHARES         STOCK       CAPITAL     COMPENSATION
<S>                                                                      <C>         <C>            <C>            <C>
BALANCE, DECEMBER 22, 1995 (Date of Inception)
   - Founder's stock ...............................................     7,716,000   $       771    $       229    $        --
                                                                       -----------   -----------    -----------    -----------
BALANCE, DECEMBER 31, 1995 .........................................     7,716,000           771            229             --
January 1, 1996 - Stock issued for cash ............................     1,157,400           116         19,884             --
May 24, 1996 - Stock issued for cash ($40,000)
   and services ($32,356) ..........................................     4,187,242           420         71,936             --
Net loss ...........................................................            --            --             --             --
                                                                       -----------   -----------    -----------    -----------
BALANCE, DECEMBER 31, 1996 .........................................    13,060,642         1,307         92,049             --
April 9 and 30, 1997 - Stock issued for cash .......................       308,640            30         39,970             --
September 10, 1997 - Options issued in exchange
   for services ....................................................            --            --         85,050             --
Net loss ...........................................................            --            --             --             --
                                                                       -----------   -----------    -----------    -----------
BALANCE, DECEMBER 31, 1997 .........................................    13,369,282         1,337        217,069             --
Net loss ...........................................................            --            --             --             --
                                                                       -----------   -----------    -----------    -----------
BALANCE, DECEMBER 31, 1998 .........................................    13,369,282         1,337        217,069             --
Net loss ...........................................................            --            --             --             --
                                                                       -----------   -----------    -----------    -----------
BALANCE, DECEMBER 31, 1999 .........................................    13,369,282         1,337        217,069             --
Net Loss ...........................................................            --            --             --             --
                                                                       -----------   -----------    -----------    -----------
BALANCE, DECEMBER 31, 2000 .........................................    13,369,282         1,337        217,069             --
January 18, 2001 - Issuance of common stock in
   reverse merger ..................................................     3,300,005           330           (330)            --
January 18, 2001 - Stock issued for cash ...........................     1,000,000           100      1,494,389             --
S Corporation accumulated deficit prior to reverse merger charged to
   paid-in capital upon revocation of S Corporation election........            --            --       (440,744)            --
Deferred stock compensation ........................................            --            --      1,603,313     (1,603,313)
Amortization of deferred stock compensation ........................            --            --             --      1,234,114
May 14, 2001 - Stock options exercised .............................        10,000             1             12             --
Net loss ...........................................................            --            --             --             --
                                                                       -----------   -----------    -----------    -----------
BALANCE, DECEMBER 31, 2001 .........................................    17,679,287   $     1,768    $ 2,873,709    $  (369,199)
                                                                       -----------   -----------    -----------    -----------
January 23, 2002 - Stock issued for cash ...........................     1,000,000           100      1,499,900             --
Amortization of deferred stock compensation ........................            --            --             --         38,833
Remeasurement of unvested stock options ............................            --            --       (272,033)       272,033
Reversal of deferred stock compensation resulting from employee ....            --            --        (58,333)        58,333
terminations
Net loss ...........................................................            --            --             --             --
                                                                       -----------   -----------    -----------    -----------
BALANCE, DECEMBER 31, 2002 .........................................    18,679,287   $     1,868    $ 4,043,243    $        --
                                                                       ===========   ===========    ===========    ===========
<CAPTION>


                                                                                       TOTAL
                                                                                   STOCKHOLDERS'
                                                                      ACCUMULATED     EQUITY
                                                                        DEFICIT     (DEFICIENCY)
<S>                                                                   <C>            <C>
BALANCE, DECEMBER 22, 1995 (Date of Inception)
   - Founder's stock ...............................................  $        --    $     1,000
                                                                      -----------    -----------
BALANCE, DECEMBER 31, 1995 .........................................           --          1,000
January 1, 1996 - Stock issued for cash ............................           --         20,000
May 24, 1996 - Stock issued for cash ($40,000)
   and services ($32,356) ..........................................           --         72,356
Net loss ...........................................................      (55,987)       (55,987)
                                                                      -----------    -----------
BALANCE, DECEMBER 31, 1996 .........................................      (55,987)        37,369
April 9 and 30, 1997 - Stock issued for cash .......................           --         40,000
September 10, 1997 - Options issued in exchange
   for services ....................................................           --         85,050)
Net loss ...........................................................     (141,012)      (141,012)
                                                                      -----------    -----------
BALANCE, DECEMBER 31, 1997 .........................................     (196,999)        21,407
Net loss ...........................................................      (65,923)       (65,923)
                                                                      -----------    -----------
BALANCE, DECEMBER 31, 1998 .........................................     (262,922)       (44,516)
Net loss ...........................................................     (129,778)      (129,778)
                                                                      -----------    -----------
BALANCE, DECEMBER 31, 1999 .........................................     (392,700)      (174,294)
Net Loss ...........................................................      (48,044)       (48,044)
                                                                      -----------    -----------
BALANCE, DECEMBER 31, 2000 .........................................     (440,744)      (222,338)
January 18, 2001 - Issuance of common stock in
   reverse merger ..................................................           --             --
January 18, 2001 - Stock issued for cash ...........................           --      1,494,489
S Corporation accumulated deficit prior to reverse merger charged to
   paid-in capital upon revocation of S Corporation election........      440,744             --
Deferred stock compensation ........................................           --             --
Amortization of deferred stock compensation ........................           --      1,234,114
May 14, 2001 - Stock options exercised .............................           --             13
Net loss ...........................................................   (2,225,623)    (2,225,623)
                                                                      -----------    -----------
BALANCE, DECEMBER 31, 2001 .........................................  $(2,225,623)   $   280,655
                                                                      -----------    -----------
January 23, 2002 - Stock issued for cash ...........................           --      1,500,000
Amortization of deferred stock compensation ........................           --         38,833
Remeasurement of unvested stock options ............................           --             --
Reversal of deferred stock compensation resulting from employee ....           --             --
terminations
Net loss ...........................................................   (2,239,636)    (2,236,636)
                                                                      -----------    -----------
BALANCE, DECEMBER 31, 2002 ......................................... $(4,465,259)   $  (420,148)
                                                                      ===========    ===========

</TABLE>


See notes to consolidated financial statements.


                                      F-6
<PAGE>

MOLICHEM MEDICINES, INC. AND SUBSIDIARY

(A Company in the Development Stage)

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2002 AND 2001, AND PERIOD FROM
DECEMBER 22, 1995 (DATE OF INCEPTION) TO DECEMBER 31, 2002
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                                                     PERIOD
                                                                                                                DECEMBER 22, 1995
                                                                                                               (DATE OF INCEPTION)
                                                                                                                    THROUGH
                                                                                       2002          2001       DECEMBER 31, 2002
<S>                                                                                <C>            <C>            <C>
OPERATING ACTIVITIES:
      Net loss .................................................................   $(2,239,636)   $(2,225,623)   $(4,906,003)
      Adjustments to reconcile net loss to
         net cash provided by (used in) operating activities:
         Depreciation and amortization .........................................        10,069          4,547         23,554
         Amortization of deferred stock compensation ...........................        38,833      1,234,114      1,272,947
         Stock and options issued for consulting services ......................            --             --        117,406
      Increase  (decrease) in cash  attributable to changes in operating  assets
         and liabilities:
         Accounts receivable ...................................................       435,500       (435,800)          (300)
         Prepaid expenses and other assets .....................................       (66,329)         1,901        (69,231)
         Accounts payable and accrued liabilities ..............................       459,017        316,973        839,390
         Deferred revenue ......................................................    (1,260,000)     1,210,000             --
         Accrued income taxes ..................................................       (39,500)        39,500             --
                                                                                   -----------    -----------    -----------
                  Net cash provided by (used in) operating activities ..........    (2,662,046)       145,612     (2,722,237)
                                                                                   -----------    -----------    -----------
INVESTING ACTIVITIES:
      Purchases of property and equipment ......................................       (15,657)       (31,259)       (58,981)
      Investment in other assets ...............................................            --         (6,348)       (10,106)
                                                                                   -----------    -----------    -----------
                  Net cash used in investing activities ........................       (15,657)       (37,607)       (69,087)
                                                                                   -----------    -----------    -----------
FINANCING ACTIVITIES:
      Proceeds of loan payable .................................................            --         40,000        120,000
      Repayment on loan payable ................................................            --       (120,000)      (120,000)
      Repayment of note payable ................................................            --       (106,534)            --
      Stock issued in private placement ........................................            --      1,494,489      1,494,489
      Issuance of stock ........................................................     1,500,000             13      1,601,013
                                                                                   -----------    -----------    -----------
                  Net cash provided by financing activities ....................     1,500,000      1,307,968      3,095,502
                                                                                   -----------    -----------    -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                                                                                    (1,177,703)     1,415,973        304,178
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .................................     1,481,881         65,908             --
                                                                                   -----------    -----------    -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD .......................................   $   304,178    $ 1,481,881    $   304,178
                                                                                   ===========    ===========    ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
      Cash paid for income taxes ...............................................   $    13,000    $        --    $    13,000
                                                                                   ===========    ===========    ===========
      Cash paid for interest ...................................................   $     2,088    $    37,875    $    39,963
                                                                                   ===========    ===========    ===========
</TABLE>

See notes to consolidated financial statements


                                      F-7
<PAGE>

MOLICHEM MEDICINES, INC. AND SUBSIDIARY

(A Company in the Development Stage)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002 AND 2001
--------------------------------------------------------------------------------

1.       NATURE OF BUSINESS

         Organization  and  Description  of the  Business - Since its  inception
         Molichem Medicines, Inc. (the "Company") has operated as an early stage
         pharmaceutical  company  focused  on  the  discovery,  development  and
         marketing  of  pharmaceutical  products  for the  treatment  of serious
         respiratory   and   related    conditions.    These   development   and
         commercialization  activities  were  conducted by the Company's  wholly
         owned  subsidiary  Molichem  R&D. As described  more fully in Note 13 ,
         effective  May 6, 2003 100  percent  of the stock of  MoliChem  R&D was
         transferred  to  Lantibio,  Inc. in exchange for  13,379,282  shares of
         common  stock of the  Company  held by  Lantibio,  Inc.,  and a license
         agreement  providing  certain rights to  intellectual  property held by
         MoliChem  R&D.  Upon  consummation  of  this  transaction  all  of  the
         Company's  assets and liabilities were transferred to MoliChem R&D, and
         the  Company's  operations  consisted of holding  certain  intellectual
         property  rights,  and  maintaining  its  status as a public  reporting
         entity. The Company is headquartered in Chapel Hill, North Carolina.

         Molichem R&D, Inc.  ("Molichem  R&D") was  incorporated on December 22,
         1995 in North  Carolina.  On January 18,  2001,  Molichem  R&D acquired
         Cortez  Development,  Ltd.  ("Cortez")  in a  reverse  merger  in which
         Molichem  R&D was the  accounting  acquirer  and  Cortez  was the legal
         acquirer (see Note 3). Cortez was  incorporated  on July 20, 1998 under
         the laws of the State of Delaware  and had no  operations  prior to the
         reverse merger.

         Prior  to the  reverse  merger,  Molichem  R&D was  known  as  Molichem
         Medicines, Inc. (the "Company"). In connection with the reverse merger,
         the Company  changed its name to Molichem R&D.  Cortez then changed its
         name to Molichem  Medicines,  Inc.  Subsequent to the completion of the
         reverse merger,  Molichem R&D, the operating company, is a wholly-owned
         subsidiary of Molichem Medicines, Inc.

         The consolidated  financial statements have been prepared in accordance
         with  Statement  of  Financial  Accounting  Standards  ("SFAS")  No. 7,
         Accounting  and  Reporting by  Development  Stage  Enterprises,  as the
         Company is devoting  substantially all of its efforts to establishing a
         new business and planned principal  operations have not commenced.  Its
         principal activities to date have been development of a financial plan,
         procurement  of  capital,  research  and  development,  acquisition  of
         operating   equipment,   recruitment   of  personnel,   development  of
         proprietary drug candidates,  and clinical research. The success of the
         Company is dependent  upon  obtaining  additional  financing from third
         parties and the successful  development  and marketing of products from
         the Company's  research and  development  programs in order to generate
         revenue adequate to support its cost structure.

2.       LIQUIDITY

         The  Company's  financial  statements  are  prepared  using  accounting
         principles   generally   accepted  in  the  United  States  of  America
         applicable to a going concern,  which  contemplates  the realization of
         assets and liquidation of liabilities in the normal course of business.
         The Company has incurred  losses of $2,239,636  and  $2,225,623 for the
         years  ended  December  31,  2002  and  2001,   respectively,   has  an
         accumulated  deficit of  $4,465,259  and  negative  working  capital of
         $465,683 as of December 31, 2002. These factors raise substantial doubt
         about the Company's ability to continue as a going concern. The Company
         plans to pursue  additional  equity  financing  to fund the cost of its
         basic infrastructure and future operations. In the event the Company is
         unable to obtain additional financing or generate cash from operations,
         it might not have sufficient funds to permit the Company to continue to
         operate for a year  following  December  31, 2002.  Management's  plans
         regarding these matters are further  discussed in Note 13 in connection
         with the  subsequent  reorganization  of the  Company  on May 6,  2003.
         However, management cannot provide any assurances that the Company will
         be successful  in  accomplishing  any of its plans.  The ability of the
         Company to continue as a going concern is dependent upon its ability to
         successfully  complete  the  reorganization  discussed  in  Note 13 and
         eventually  secure  other  sources of financing  and attain  profitable
         operations.  The accompanying  financial  statements do not include any
         adjustments  that  might be  necessary  if the  Company  is  unable  to
         continue as a going concern.

3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         PRINCIPLES OF  CONSOLIDATION - The  consolidated  financial  statements
         include the  accounts of the Company and its


                                      F-8
<PAGE>

         wholly owned subsidiary,  Molichem R&D, Inc.  Significant  intercompany
         accounts have been eliminated.

         CASH AND CASH  EQUIVALENTS  - For  purposes of the  statements  of cash
         flows,  the  Company  considers  all  highly  liquid  debt  instruments
         purchased with an original  maturity of three months or less to be cash
         equivalents.

         PROPERTY AND EQUIPMENT - Property and equipment,  consisting  primarily
         of office  equipment,  are recorded at cost and  depreciated  using the
         straight-line method over their estimated useful lives of five to seven
         years.

         IMPAIRMENT OF LONG-LIVED  ASSETS -The Company  assesses its  long-lived
         assets for impairment as required by Statement of Financial  Accounting
         Standards  ("SFAS") No. 144,  Accounting for the Impairment or Disposal
         of Long-Lived  Assets.  When  circumstances  indicate that the carrying
         amount of an asset may not be  recoverable,  the  Company  performs  an
         evaluation  impairment  based  on  undiscounted  projected  cash  flows
         through the remaining  amortization  period. If impairment  exists, the
         amount of such  impairment  is calculated  based on the estimated  fair
         value of the assets, as determined based on the anticipated cash flows,
         discounted  at a  rate  commensurate  with  the  risk  involved.  As of
         December  31,  2002,   management  has  determined  that  there  is  no
         impairment.

         INCOME  TAXES - Prior to January 18, 2001,  Molichem R&D was  organized
         for income tax purposes  under  Subchapter  S of the  Internal  Revenue
         Code.  Accordingly,  no income  taxes were  provided  as the  Company's
         income or loss was included in the federal and state income tax returns
         of its  stockholders.  In connection  with the reverse merger (see Note
         3), the  Subchapter  S election  was revoked and  Molichem R&D became a
         Subchapter C  corporation  for income tax  purposes.  Accordingly,  the
         accumulated  deficit of Molichem  R&D of $440,744  prior to the reverse
         merger was eliminated by a charge to additional  paid-in  capital.  The
         results of  operations of Molichem R&D during 2001 prior to the reverse
         merger were  immaterial.  Subsequent  to January 18, 2001,  the Company
         records income taxes under the  provisions of SFAS No. 109,  Accounting
         for Income Taxes.  The Company provides for deferred income taxes under
         the asset and liability  method,  whereby  deferred income taxes result
         from  temporary  differences  between  the  tax  bases  of  assets  and
         liabilities and their reported amounts in the financial statements. The
         Company  has  elected to file its  federal and state tax returns on the
         cash basis.

         GRANT REVENUE - The Company has received  government and private grants
         to fund the research and  development  of its drug for the treatment of
         cystic fibrosis. The Company is eligible to receive additional proceeds
         under  certain  committed  grants if it elects to request  those funds.
         Revenue from grants is recognized as costs qualifying for reimbursement
         under the grant are incurred and a request for reimbursement is made to
         the grantor.  Pursuant to the provisions of a certain grant award,  the
         occurrence  of future  events may  require  the  Company to repay funds
         previously  received  under those  grants (see Note 10). In  connection
         with the  transaction  described  in Note  14,  such  obligations  were
         transferred to Newco.

         RESEARCH AND  DEVELOPMENT  - The Company  charges the costs of research
         and development to expense as incurred.

         STOCK-BASED  COMPENSATION  - The  Company  accounts  for stock  options
         issued to employees using the intrinsic value method in accordance with
         Accounting  Principles Board Opinion No. 25 ("APB 25"),  Accounting for
         Stock Issued to Employees and related interpretations.  APB 25 provides
         that  compensation  expense  for stock  options be valued at the quoted
         market  price of the  Company's  stock less any amount the  employee is
         required  to pay to  acquire  the stock  covered by the  option.  Stock
         options issued to non-employees are valued at fair value, determined by
         using either the fair value of the goods or services  provided by those
         non-employees, or an option valuation model in accordance with SFAS No.
         123, Accounting for Stock Based Compensation, whichever is more readily
         determinable and yields the most accurate measure of fair value.

         The following table illustrates the effect on net loss and net loss per
         share if the Company had applied the fair value recognition  provisions
         of SFAS No. 123, to stock-based employee compensation:

<TABLE>
<CAPTION>
                                                                                                              INCEPTION TO
                                                                                                               DECEMBER 31,
                                                                                  2002           2001             2002
                                                                                  ----           ----             ----
<S>                                                                          <C>             <C>             <C>
         Net loss as reported..............................................  $ (2,239,636)   $(2,225,623)    $(4,906,003)
         Add: Stock-based employee compensation expense included in
                reported net loss..                                                38,833      1,234,114       1,390,353
         Deduct: Total stock-based employee compensation expense
                determined under fair value based method for all awards....      (184,559)    (2,942,540)     (2,844,685)
                                                                              -----------    -----------     -----------
         Pro forma net loss................................................  $ (2,385,362)   $(3,934,049)    $(6,360,335)
                                                                              ============   ============    ============
</TABLE>


                                      F-9
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                          <C>             <C>             <C>
         Net loss per share:
           Basic and diluted - as reported:................................  $       (.12)   $      (.13)    $      (.34)
           Basic and diluted - pro forma...................................  $       (.13)   $      (.23)    $      (.44)
</TABLE>

         FINANCIAL  INSTRUMENTS - The carrying amount of the Company's financial
         instruments,  representing  accounts  receivable,  and accounts payable
         approximate their fair value.

         USE OF ESTIMATES - In preparing financial  statements that conform with
         accounting  principles  generally  accepted  in the  United  States  of
         America,  management must use estimates and assumptions that affect the
         reported  amounts  of  assets  and   liabilities,   the  disclosure  of
         contingent  assets  and  liabilities  at  the  date  of  the  financial
         statements,  and amounts of revenue and expenses  reflected  during the
         reporting period. Actual results could differ from those estimates.

         CONCENTRATION OF CREDIT RISK - Financial instruments, which potentially
         expose  the  Company  to   concentrations   of  credit  risk,   consist
         principally of cash on deposit with a bank that exceed insured  limits,
         and accounts  receivable.  On-going credit  evaluations of its business
         partner's   financial   condition  is  performed  by  management   and,
         generally,  collateral is not required.  The Company's business partner
         represented  approximately 100% of accounts  receivable at December 31,
         2001. The Company's  business partner accounted for 100% of revenues in
         2002,  and two customers  each accounted for 72% and 20% of revenues in
         2001.

         SEGMENT  REPORTING  - SFAS No.  131,  Disclosure  about  Segments of an
         Enterprise and Related Information, establishes standards for reporting
         information  about  the  Company's  operating  segments.   The  Company
         operates   in   one   operating    segment,    the    development   and
         commercialization  of  medications  for the  treatment  of chronic  and
         serious illnesses.

         COMPREHENSIVE  INCOME - SFAS No. 130, Reporting  Comprehensive  Income,
         established  standards for the  reporting and display of  comprehensive
         income and its components in a full set of basic financial  statements.
         Comprehensive  income includes all non-owner changes in equity during a
         period  and  includes  revenue,  expenses,  gains and  losses  that are
         excluded from earnings under accounting  principles  generally accepted
         in the United States of America.  For the periods  presented,  net loss
         and comprehensive loss are the same.

         RECENTLY  ADOPTED  ACCOUNTING  STANDARDS - In December  2002,  the FASB
         issued  SFAS  No.  148,   Accounting  for   Stock-Based   Compensation,
         Transition and Disclosure. SFAS No. 148 provides alternative methods of
         transition  for a voluntary  change to the fair value  based  method of
         accounting for  stock-based  employee  compensation,  and also requires
         that disclosures of the pro forma effect of using the fair value method
         of accounting for stock-based  employee  compensation be displayed more
         prominently  and in a tabular  format.  The  transition  and disclosure
         requirements  of this statement are effective for the Company's  fiscal
         year  2002.  See  "Stock-based   Compensation"  above  for  disclosures
         required by SFAS 148.

         This statement was effective for the Company beginning January 1, 2002.
         The  adoption  of this  statement  had no  impact  on its  consolidated
         financial statements.

         RECENTLY ISSUED ACCOUNTING STANDARDS In July, 2002 the FASB issued SFAS
         No.  146,  Accounting  for  Costs  Associated  with  Exit  or  Disposal
         Activities.  In November  2002, the FASB issued  Interpretation  No. 45
         ("FIN 45"),  Guarantor's  Accounting  and Disclosure  Requirements  for
         Guarantees, Including Indirect Guarantees of Indebtedness of Others. In
         January 2003,  the FASB issued FASB  Interpretation  No. 46 ("FIN 46"),
         Consolidation of Variable Interest  Entities,  an Interpretation of ARB
         No. 51. The Company has  evaluated  the impact of the adoption of these
         standards and does not believe that their  adoption will have an impact
         on its financial position and results of operations.

4.       REVERSE MERGER AND RECAPITALIZATION

         As discussed in Note 1, Molichem R&D acquired Molichem Medicines,  Inc.
         (formerly Cortez  Development  Company,  Ltd.) in a reverse merger (the
         "Merger")  on January  18,  2001.  On January  11,  2001,  the Board of
         Directors  of  Molichem  Medicines,  Inc.  declared a  6.959314-for-one
         common  share stock split  effected in the form of a stock  dividend to
         stockholders of record on that date.

         Following  the split,  8,469,491  shares of  Molichem  Medicines,  Inc.
         $.0001 par value common stock were outstanding.  In connection with the
         Merger, holders of 5,219,486 shares of Molichem Medicines,  Inc. common
         stock contributed those shares to Molichem  Medicines,  Inc., and those
         shares were  cancelled.  Molichem  Medicines,  Inc.  also issued 50,000
         shares  of  common  stock  in  exchange  for  legal   services.   These
         transactions  resulted in Molichem  Medicines,  Inc.


                                      F-10
<PAGE>

         having 3,300,005  common shares  outstanding  immediately  prior to the
         Merger.

         To effect  the  Merger,  each of the  1,732,670  outstanding  shares of
         Molichem  R&D common stock was  exchanged  for 7.716 shares of Molichem
         Medicines,  Inc. common stock. Prior to the Merger, Molichem Medicines,
         Inc. was a shell corporation with no significant operations. The merger
         was accounted for as a reverse acquisition of Molichem Medicines,  Inc.
         through  issuance  of  3,300,005  shares  of  stock  by  Molichem  R&D,
         accompanied   by  a   recapitalization.   Accordingly,   the  financial
         statements  prior to the date of  acquisition  reflect  the  historical
         results of  operations  of Molichem  R&D.  References  to the number of
         outstanding  shares,  par value,  additional  paid-in capital,  and per
         share  amounts for Molichem  R&D for all periods have been  restated to
         reflect the ratio of the exchange of shares in the merger.

         In connection with the merger, Molichem Medicines,  Inc. sold 1,000,000
         stock units (each unit  consisting  of one share of common  stock and a
         warrant  for the  purchase  of one share of common  stock) in a private
         placement for cash  proceeds of  $1,494,489,  net of issuance  costs of
         $5,511.  The warrants  were  exercised on January 17, 2002 at $1.50 per
         share, resulting in net proceeds of $1,500,000 to the Company.

5.       PROPERTY AND EQUIPMENT

         Property and  equipment as of December 31, 2002 and 2001,  consisted of
         the following:

                                                              2002        2001

                     Office equipment .................   $ 44,183    $ 33,346
                     Furniture and fixtures ...........     14,289       9,469
                     Research and development equipment        510         510
                                                          --------    --------
                                                            58,982      43,325
                     Less accumulated depreciation ....    (20,962)    (11,026)
                                                          --------    --------
                     Total ............................   $ 38,020    $ 32,299
                                                          ========    ========

6.       STOCK OPTIONS

         Stock  Option  Plan - On  August  10,  2001,  the  Company's  Board  of
         Directors adopted the 2001 Stock Award Plan (the "Plan"). In connection
         with the Plan,  a total of  2,700,000  shares of the  Company's  common
         stock have been  reserved for  issuance,  inclusive of the shares under
         nonqualified option grants existing upon adoption of the Plan. The Plan
         provides for the grant of incentive stock options,  nonqualified  stock
         options,  and  restricted  stock  to  employees,  directors,  officers,
         consultants  and certain  other  persons as set forth in the Plan.  The
         exercise price,  vesting period, and other aspects of individual grants
         are  determined  by a committee of the Board of Directors  appointed to
         administer  the Plan.  No options have been granted  subsequent  to the
         adoption  of the Plan.  At  December  31,  2002,  932,140  shares  were
         available for issuance under the Plan.

         Non-plan Option Grants - On September 1, 1997,  fully vested options to
         acquire  131,248  shares of the  Company's  common  stock at $.0013 per
         share were granted to certain  advisors of the Company.  The fair value
         of the services  rendered in exchange for those  options of $85,050 was
         recognized  as an  expense  at the time of the grant of those  options.
         During 2001, the Company  granted  options to acquire 268,000 shares of
         common stock to consultants, and options to acquire 1,760,000 shares of
         common  stock to  employees  and  directors.  The  options  granted  to
         consultants  had an estimated  total fair value of  $292,913,  of which
         $269,781  was  recorded as  compensation  expense in 2001.  The options
         granted to employees had a total intrinsic value of $1,310,000 of which
         $964,333 was recorded as compensation  expense in 2001. No options were
         granted during 2002. At December 20, 2002,  options to purchase a total
         of 381,388  shares of common stock  representing  all unvested  options
         were  forfeited  in  connection  with  the  termination  of  employment
         agreements.


                                      F-11
<PAGE>

         Transactions affecting stock options are summarized below:

                                                             WEIGHTED-
                                                             AVERAGE
                                                NUMBER OF    EXERCISE
                                                 SHARES       PRICE
                                               ----------    -------
Stock options outstanding, December 31, 2000      131,248    $0.0013
Options granted ............................    2,028,000    $1.5300
Options exercised ..........................      (10,000)   $0.0013
                                               ----------    -------
Stock options outstanding, December 31, 2001    2,149,248    $1.4400
                                               ----------    -------
Options granted ............................           --    $    --
Options exercised ..........................           --    $    --
Options forfeited ..........................     (381,388)   $  1.54
                                               ----------    -------
Stock options outstanding, December 31, 2002    1,767,860    $  1.42
                                               ==========    =======

         The  following  table  summarizes  the  status  of  the  stock  options
outstanding and exercisable at December 31, 2002.

               NUMBER         AVERAGE       WEIGHTED-      NUMBER      WEIGHTED-
 RANGE OF    OUTSTANDING     REMAINING       AVERAGE     EXERCISABLE    AVERAGE
 EXERCISE       AS OF       CONTRACTUAL     EXERCISE        AS OF      EXERCISE
  PRICES     DECEMBER 31    LIFE (YEARS)      PRICE      DECEMBER 31     PRICE
  ------     -----------    ------------      -----      -----------     -----
 $0.0013       121,248          4.7         $0.0013       121,248      $0.0013
  $ 1.50     1,624,112          5.8          $ 1.50     1,624,112       $ 1.50
  $ 3.50        22,500          3.2          $ 3.50        22,500       $ 3.50
             1,767,860          5.8          $ 1.42     1,767,860       $ 1.42

         The  Company's  calculations  are based on a multiple  award  valuation
         approach and forfeitures are recognized as they occur.  Options granted
         prior to 2001 were  valued  using  the fair  market  value of  services
         received  in  exchange  for  options.  If the  computed  values  of the
         Company's stock-based awards to employees had been calculated using the
         fair value method as specified  under SFAS No. 123, net loss would have
         been $2,385,362, $3,934,049 and $6,360,335 for the years ended December
         31, 2002 and 2001 and the period  December 22, 1995 (date of inception)
         to  December  31,  2002,  respectively.  Basic and diluted net loss per
         share for those periods would have been $(0.13),  $(0.23), and $(0.44),
         respectively.

         The Company's  calculations  for employee grants for 2002 and 2001 were
         made using the Black-Scholes  option-pricing  model using the following
         assumptions:

            Weighted-average fair value per share of options granted.  $1.60
            Expected stock price volatility..........................  90%
            Expected lives of options................................  various
            Risk-free interest rate..................................  3.5%-5.0%
            Expected dividend yield..................................  none

         In connection with the transaction  described in Note 13, subsequent to
         December 31, 2002  options to purchase a total of  1,637,114  shares of
         common stock were cancelled.

7.       CONTRACT DEPOSIT AND COMMERCIALIZATION AGREEMENT

         On  May  11,  2001,  the  Company   entered  into  a  Development   and
         Commercialization  Agreement (the  "Agreement")  with  InterMune,  Inc.
         ("InterMune")  for the joint development and  commercialization  of its
         compound,  Moli1901.  Under  the  Agreement,  InterMune  was  granted a
         co-exclusive  worldwide  license for Moli1901 and was required to share
         equally the costs of development and  commercialization of Moli1901 for
         the treatment of cystic  fibrosis and other  therapeutic  applications.
         Upon  commercialization  of Moli1901,  InterMune  and the Company would
         share  equally  in the net  profits  or  losses  from  the  sale of the
         products that have been jointly developed. The Agreement was terminated
         effective   December  16,  2002  resulting  in  the  Company  obtaining
         exclusive rights to the Moli1901 technology in exchange for the release
         of InterMune from all obligations under the agreement.

         Upon  execution  of the  Agreement,  InterMune  made  a  non-refundable
         up-front payment to the Company of $1,450,000.


                                      F-12
<PAGE>

         InterMune was obligated to make additional  non-refundable  payments of
         up to $5,000,000 upon the achievement of specified  milestones  related
         to each therapeutic  application  developed from Moli1901.  None of the
         specified  milestones  were achieved  prior to the  termination  of the
         agreement.

         In November 2000,  InterMune  paid the Company  $50,000 as a refundable
         exclusive dealing binder (the "Binder Payment") under which the Company
         agreed to pursue the execution of the Agreement.  Upon execution of the
         Agreement, the Binder Payment became non-refundable.

         The up-front  payments  described above totaling  $1,500,000 were being
         recognized  as  revenue  ratably  over the  estimated  initial  product
         development period for the cystic fibrosis indication for Moli1901prior
         to the termination of the agreement.  Upon termination of the Agreement
         in 2002 all remaining deferred revenue was recognized as income.

         The Company recognized revenue  attributable to the amortization of the
         upfront payments and shared product development costs as follows:

                                                              INCEPTION TO
                                                              DECEMBER 31,
                                        2002         2001         2002
                                    ----------   ----------   ----------
Amortization of up front payments   $1,260,000   $  240,000   $1,500,000
Shared product development costs     1,364,385      435,500    1,799,885
                                    ----------   ----------   ----------
Total ...........................   $2,624,385   $  675,500   $3,299,885
                                    ==========   ==========   ==========

8.       INCOME TAXES

         The differences between the amount of tax at the current federal income
         tax rate and the  provision  for the year ended  December  31, 2002 and
         2001 are as follows:

                                                    2002           2001
Federal income tax benefit at statutory rate   $  (770,000)   $  (743,000)
State income taxes, net of federal benefit .      (104,000)      (101,000)
Expenses eligible for orphan drug credit ...       393,000             --
Orphan drug credits ........................    (1,157,000)      (264,000)
Other ......................................        39,500          4,500
Increase in valuation allowance ............     1,572,000      1,143,000
                                               -----------    -----------
Provision for income taxes .................   $   (26,500)   $    39,500
                                               ===========    ===========

         The tax  benefit  for 2002  includes  $13,500  of Federal  tax  benefit
         resulting  from the carry back to 2001 of losses  incurred in 2002, and
         an  adjustment  of $13,000 of  recorded  liabilities  for state  income
         taxes.  The $39,500 tax provision for 2001 includes  $13,500 of current
         federal tax and $26,000 of current state tax payable.

         The tax effects of temporary differences that give rise to deferred tax
         assets and  liabilities  as of December 31, 2002 and 2001 are presented
         below:

                                                  2002           2001
Current deferred tax assets (liabilities):
        Accounts receivable ..............   $        --    $  (168,000)
        Accrued expenses .................       314,000        142,000
        Deferred revenue .................            --        139,000
        Other ............................        (9,000)        (1,000)
                                             -----------    -----------
                                                 305,000        112,000
                                             -----------    -----------
Noncurrent deferred tax assets:
        Net operating loss carryforwards .       537,000             --
        Deferred revenue .................            --        348,000
        Stock compensation ...............       492,000        477,000
        Orphan drug credits ..............     1,356,000        199,000
        Other ............................        25,000          7,000
                                             -----------    -----------
                                               2,410,000      1,031,000
                                             -----------    -----------
Less valuation allowance .................    (2,715,000)    (1,143,000)
                                             -----------    -----------
Net deferred tax asset ...................   $        --    $        --
                                             ===========    ===========


                                      F-13
<PAGE>

         The Company has  established a valuation  allowance of  $2,715,000  and
         $1,143,000  at  December  31,  2002  and  2001,  respectively,  because
         management  believes that net deferred income tax assets are not likely
         to be  realized in the  future.  The Company has Federal net  operating
         losses  of  $1,389,000  available  to offset  income of future  periods
         through 2022. In addition,  the Company has state net operating  losses
         of $427,000 available to offset income of future periods through 2017.

9.       401(K) SAVINGS PLAN

         Effective  January 1, 2001, the Company  provided a 401(k) Savings Plan
         (the "Plan") to all employees. Under the terms of the Plan, the Company
         contributes 3% of employees' annual salary.  Company contributions were
         approximately  $20,000 and $13,000 for the year ended December 31, 2002
         and 2001, respectively.

10.      COMMITMENTS AND CONTINGENCIES

         Research  Grants - The Company has  received  research  grants from the
         Cystic Fibrosis  Foundation (the  "Foundation") to develop its compound
         Moli1901  for  the  treatment  of  cystic  fibrosis.   The  Company  is
         contingently  liable  to  repay  these  grants  if the  Food  and  Drug
         Administration  ("FDA") approves  Moli1901 for marketing to the public.
         As of December 31,  2001,  the Company had received a total of $786,560
         in grants from the Foundation.  Repayment, if required, would be due 60
         days from the date of FDA approval.

         Operating  Leases - The Company has a lease  agreement for office space
         that,  including  amendments made subsequent to year end,  expires July
         31,  2004.  In addition,  the Company has a 36-month  lease for certain
         office equipment.  As of December 31, 2002, annual future minimum lease
         payments under the operating leases are as follows:

            2003....................................      $51,809
            2004....................................       29,644
                                                          -------
            Total...................................      $81,453
                                                          =======

         Rent expense for 2002 and 2001 was  approximately  $77,446 and $43,437,
         respectively.

         Other  Commitments - The Company has research and  development  studies
         currently in process that  require  progress  payments and payment upon
         completion  of the studies.  At December  31, 2002,  the total of those
         remaining  commitments  was  approximately  $700,500.  All of the above
         commitments   remaining  at  the  effective  date  of  the  transaction
         described in Note 14 were assumed by Lantibio.

11.      EARNINGS PER SHARE

         The  computation of basic and diluted  earnings per share for each year
         is as follows:

<TABLE>
<CAPTION>
                                                                              INCEPTION TO
                                                                              DECEMBER 31,
                                                 2002            2001            2002
                                             ------------    ------------    ------------
<S>                                          <C>             <C>             <C>
Numerator:
Net loss .................................   $ (2,239,636)   $ (2,225,623)   $ (4,906,003)
                                             ============    ============    ============
Denominator:
Weighted-average common shares outstanding     18,635,446      17,475,451      14,390,582
Basic and diluted loss per share .........   $      (0.12)   $      (0.13)   $      (0.34)
</TABLE>

         The  following  number of warrants  and  options to purchase  shares of
         common stock were outstanding during each period, but were not included
         in the  computation  of diluted  earnings per share because the Company
         realized a loss during the period,  and  therefore  the effect would be
         antidilutive:

                                            INCEPTION TO
                                            DECEMBER 31,
                        2002        2001        2002
                     ---------   ---------   ---------
Number of options    1,767,860   2,149,248   2,149,248
Number of warrants          --   1,000,000   1,000,000
                     ---------   ---------   ---------
Total ............   1,767,860   3,149,248   3,149,248
                     =========   =========   =========


                                      F-14
<PAGE>

12.      RELATED PARTY TRANSACTIONS

         Until August 2001, the Company rented its corporate  headquarters  from
         its principal  stockholder pursuant to a month-to-month  written lease.
         Rent was charged to the  Company at the rate of $1,450 per month.  Rent
         expense  recognized  for 2001 was  $11,600.  The  Company  incurred  no
         related party rent during 2002.

13.      SUBSEQUENT EVENT

         On May 6, 2003 the  Company  exchanged  100 percent of the stock of its
         subsidiary  MoliChem R&D, Inc. for  13,379,282  shares of the Company's
         stock owned by Lantibio,  Inc., a company owned by the former President
         and certain  former  shareholders  of the  Company.  The  Company  also
         received a non-exclusive  license (the "License agreement") to develop,
         market,  and sell certain products  incorporating  MoliChem R&D, Inc.'s
         compounds  Moli56A and Moli56B.  Upon  consummation of the transaction,
         MoliChem R&D, Inc.  became a wholly-owned  subsidiary of Lantibio.  The
         License  Agreement has a ten year term,  provides for annual  licensing
         fees of $1.00 payable by the Company on each anniversary of the License
         Agreement,  a one time continuation  payment of $500,000 payable on the
         first  anniversary  of the  License  Agreement,  a one  time  milestone
         payment  of  $2,000,000  payable by the  Company  within 60 days of the
         approval of a product  incorporating the technology  encompassed by the
         License  Agreement,  and annual royalty  payments equal to 6 percent of
         net  sales  related  to  the  technology  encompassed  by  the  License
         Agreement. In addition, options to purchase a total of 1,637,114 shares
         of common stock were cancelled in connection with the  transaction.  In
         addition, all of the assets and liabilities of MoliChem Medicines, Inc.
         were  transferred  to MoliChem R&D,  Inc.,  which became a wholly-owned
         subsidiary of Lantibio, Inc.

         The  following  pro forma  balance  sheet  reflects  the  effect of the
         transaction  on the Company's  balance sheet as though the  transaction
         had been consummated as of December 31, 2002:

Total assets                                 $      --
                                             =========
Stockholders' equity
  Common stock                                   1,080
  Additional paid-in capital                   884,870
  Accumulated deficit                         (885,950)
                                             ---------
  Total stockholders' equity                       (--)
                                             ---------
Total liabilities and stockholders' equity   $      --
                                             =========

**********


                                      F-15
<PAGE>


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,

                              AS ADOPTED PRSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gilles Cloutier, certify that:

1.          I have  reviewed  this  annual  report on Form  10-KSB  of  MoliChem
            Medicines, Inc.;

2.          Based on my  knowledge,  this  annual  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 annual report;

3.          Based on my knowledge, the financial statements, and other financial
            information  included in the annual  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 annual report;

4.          I  am  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
                        registrant,  including its consolidated subsidiaries, is
                        made  known  to  me by  others  within  those  entities,
                        particularly  during  the  period in which  this  annual
                        report is being prepared;

            b.          evaluated   the   effectiveness   of  the   registrant's
                        disclosure  controls and  procedures as of a date within
                        90 days prior to the filing date of this  annual  report
                        (the "Evaluation Date"); and

            c.          presented in this annual report my conclusions about the
                        effectiveness of the disclosure  controls and procedures
                        based on my evaluation as of the Evaluation Date;

5.          I  have  disclosed,  based  on my  most  recent  evaluation,  to the
            registrant's  auditors and the audit committee of registrant'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
                        registrant's ability to record,  process,  summarize and
                        report  financial  data  and  have  identified  for  the
                        registrant'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 registrant's internal controls; and

6.          I  have   indicated  in  this  annual  report   whether  there  were
            significant  changes in internal  controls or in other  factors that
            could significantly  affect internal controls subsequent to the date
            of my most recent evaluation,  including any corrective actions with
            regard to significant deficiencies and material weaknesses.

      Date: May 19, 2003              By:  /S/ GILLES CLOUTIER
                                           -------------------------------
                                           Gilles Cloutier
                                           Chief Executive and Financial Officer

<PAGE>

                                  EXHIBIT INDEX

EXHIBIT NO.                        DESCRIPTION

3(i)  Certificate of Incorporation of the Registrant*
3(ii) Amended and Restated By-Laws of the Registrant*
4     Form of common stock Certificate of MoliChem Medicines, Inc.*
9     Stockholders Voting Agreement and Irrevocable Proxy dated January 18, 2001
      among Alfred G. Childers, Robert J. Harvey, Luis Molina, W. Lowry Caudill,
      John E. & Cynthia M. Shackles, and Dacha Capital, Inc.*
10.1  Employment Agreement dated January 30, 2001 between MoliChem Medicines and
      Luis  Molina*  10.2  Employment  Agreement  date  January 30, 2001 between
      MoliChem Medicines and Terry Williams*
10.3  Technology  Transfer and Custom  Services  Agreement  dated March 23, 2001
      between Apotex Fermentation Inc. and MoliChem R&D, Inc.*
10.4  Exclusive Development and  Commercialization  Agreement dated May 11, 2001
      among InterMune, Inc. and MoliChem R&D, Inc.*
10.5  Form of Option Agreement*
10.6  Employment  Agreement dated as of April 1, 2001 between MoliChem R&D, Inc.
      and Gilles Cloutier*
10.7  Employment  Agreement dated as of September 17, 2001 between MoliChem R&D,
      Inc. and Ronald Keeney*
10.8  Europa Center Office Lease dated July 2, 2001 between Europa  Center,  LLC
      and MoliChem R&D, Inc.*
10.9  MoliChem Medicines, Inc. 2001 Stock Award Plan*
10.10 Amendment  No.  1  to  the  Exclusive  Development  and  Commercialization
      Agreement with Intermune, Inc. dated as of May 11, 2001***
10.11 Stock Purchase Agreement dated as of May 5, 2003
10.12 Stock  Exchange  Agreement  dated  as of May  6,  2003  among  Registrant,
      Molichem R&D, Inc. and Lantibio, Inc.
10.13 License Agreement dated as of May 6, 2003 between  Registrant and Molichem
      R&D, Inc.
11    Statement of Computation of Per Share Earnings**
99.1  Certificate of Chief Executive and Financial Officer

*     Incorporated  by reference  to  Registration  Statement on Form SB-2,  No.
      333-64430
**    Included in financial statements filed herewith
***   Incorporated  by  reference  to  Quarterly  Report  on Form  10QSB for the
      quarterly period ended June 30, 2002