================================================================================


                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                               -------------------

                                   FORM 10-QSB

      (Mark one)
           [X] Quarterly Report Under Section 13 or 15(d) of the Securities
               Exchange Act of 1934

                  FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2003
                                                               Or
           [ ] Transition Report Under Section 13 or 15(d) of the Securities
               Exchange Act of 1934

                       COMMISSION FILE NUMBER: 33-23460-LA

                                -------------------

                           MERA PHARMACEUTICALS, INC.
                           (FORMERLY AQUASEARCH, INC.)
             (Exact name of Registrant as specified in its charter)

                               -------------------

            DELAWARE                                    04-3683628
(State or other jurisdiction of             (IRS Employer Identification Number)
 incorporation or organization)

                        777 SOUTH HIGHWAY 101, SUITE 215
                         SOLANA BEACH, CALIFORNIA 92075
                                 (858) 847-0747
          (Address and telephone number of principal executive offices)

                   73-4460 QUEEN KA'AHUMANU HIGHWAY, SUITE 110
                            KAILUA-KONA, HAWAII 96740
                                 (808) 326-9301
         (Address and telephone number of principal operations offices)

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

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. YES [X] NO [ ]


395,100,318 shares of $0.0001 par value common stock outstanding as of April 30,
2003
================================================================================


<PAGE>


                           MERA PHARMACEUTICALS, INC.


                                   FORM 10-QSB
                      FOR THE QUARTER ENDED APRIL 30, 2003


                                    CONTENTS

                                                                            PAGE
PART I - FINANCIAL INFORMATION

            Item 1:  Financial Statements

                          Condensed Balance Sheets                             3

                          Condensed Statements of Operations                   4

                          Condensed Statements of Cash Flows                   6

                          Notes to Condensed Financial Statements              7

            Item 2:  Management's Plan of Operation

                          Management's Discussion and Analysis of Financial
                          Condition and Results of Operations                 13

            Item 3.  Controls and Procedures                                  16

PART II - OTHER INFORMATION

            Item 1:  Legal Proceedings                                        17

            Item 2:  Changes In Securities                                    17

            Item 3.  Defaults Upon Senior Securities                          17

            Item 4:  Submission of Matters to a Vote of Security Holders      17

            Item 5:  Other Information                                        18

            Item 6:  Exhibits and Reports on Form 8-K                         18

            Signature                                                         18

            Certifications                                                    19


<PAGE>
<TABLE>
<CAPTION>
                           MERA PHARMACEUTICALS, INC.
                            CONDENSED BALANCE SHEETS
                    AS OF APRIL 30, 2003 AND OCTOBER 31, 2002

                                     ASSETS
                                                               April 30, 2003  October 31, 2002
                                                                (Unaudited)       (Audited)
                                                               --------------  ----------------
Current assets:
<S>                                                             <C>            <C>
    Cash and cash equivalents                                   $    28,835    $    40,349
    Accounts receivable and accrued sales, net                      692,872        611,759
    Tax receivable                                                   46,471         36,914
    Inventories                                                   1,254,541      1,001,303
    Investment receivable                                              --          500,000
    Prepaid expenses and other                                       63,973         57,893
                                                                -----------    -----------

Total current assets                                              2,086,692      2,248,218
                                                                -----------    -----------

Plant and equipment, net                                          3,087,086      3,205,768
Goodwill                                                             66,550         66,550
                                                                -----------    -----------

Total Assets                                                    $ 5,240,328    $ 5,520,536
                                                                ===========    ===========

                  LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
    Accounts payable and accrued expenses                       $ 1,066,660        879,153
    Notes payable                                                 1,018,050      2,700,000
    Deferred notes payable                                             --          500,000
    Deferred revenue                                                919,632        800,000
                                                                -----------    -----------

Total Current Liabilities                                         3,004,342      4,879,153
                                                                -----------    -----------

Stockholders' equity:
    Preferred stock, $.0001 par value: 5,000,000
          shares authorized, 1,054 and 0 shares issued
           and outstanding at April 30, 2003 and
          October 31, 2002, respectively                               --             --
    Common stock, $.0001 par value: 500,000,000
          shares authorized, 395,100,318 and 388,803,300
          shares issued and outstanding at April 30, 2003 and
          October 31, 2002, respectively                             39,510         38,880
    Additional paid-in capital                                    4,162,226      1,503,856
    Accumulated deficit                                          (1,965,750)      (901,353)
                                                                -----------    -----------

Total stockholders' equity                                        2,235,986        641,383
                                                                -----------    -----------

Total Liabilities and Stockholders' Equity                      $ 5,240,328    $ 5,520,536
                                                                ===========    ===========

         See the accompanying notes to the financial statements
</TABLE>


                                      -3-

<PAGE>
<TABLE>
<CAPTION>


                           MERA PHARMACEUTICALS, INC.
                       Condensed Statements of Operations
               For the Three Months Ended April 30, 2003 and 2002
                                   (Unaudited)

                                                  Successor        Predecessor
                                                --------------    --------------
                                                 Three Months      Three Months
                                                    Ended             Ended
                                                April 30, 2003    April 30, 2002
                                                --------------    --------------
Revenues
<S>                                              <C>              <C>
    Products, net                                $      28,207    $     125,406
    Contract Services                                   60,069           81,691
    Royalties                                           43,608           18,653
                                                 -------------    -------------

    Total Revenues                                     131,884          225,750
                                                 -------------    -------------

Costs and Expenses
    Cost of products sold                                6,560           33,711
    Cost of subcontract services                       109,229          169,000
    Research and development costs                      55,616           82,455
    General and administrative                         312,885          362,823
    Depreciation                                        53,986             --
                                                 -------------    -------------

Total costs and expenses                               538,276          647,989
                                                 -------------    -------------

Loss from operations                                  (406,392)        (422,239)

Other income (expense):
    Interest and other income                            1,111             --
    Interest expense                                   (31,540)         (12,948)
                                                 -------------    -------------

Total other income (expense)                           (30,429)         (12,948)
                                                 -------------    -------------

Net loss before reorganization items                  (436,821)        (435,187)
                                                 -------------    -------------

Professional fees related to reorganization               --            (62,148)

Net loss before extraordinary items                   (436,821)        (497,335)

Gain on discharge of debt                                 --               --
                                                 -------------    -------------

Net loss before income tax provision                  (436,821)        (497,335)

Tax expense                                               --               --
Refundable tax credit                                    1,347             --
                                                 -------------    -------------

Net loss                                         $    (435,474)   $    (497,335)
                                                 =============    =============

Loss per share                                          (0.001)          (0.004)
Weighted average shares outstanding                395,100,318      122,131,919

               See the accompanying notes to the financial statements
</TABLE>

                                      -4-


<PAGE>

<TABLE>
<CAPTION>



                           MERA PHARMACEUTICALS, INC.
                       Condensed Statements of Operations
                For the Six Months Ended April 30, 2003 and 2002
                                   (Unaudited)

                                                  Successor        Predecessor
                                                --------------    --------------
                                                 Six Months        Six Months
                                                    Ended             Ended
                                                April 30, 2003    April 30, 2002
                                                --------------    --------------
Revenues
<S>                                              <C>              <C>
    Products, net                                $     151,976    $     271,607
    Contract Services                                   88,808          182,887
    Royalties                                           73,282           29,074
                                                 -------------    -------------

    Total Revenues                                     314,066          483,568
                                                 -------------    -------------

Costs and Expenses
    Cost of products sold                               36,343           73,979
    Cost of subcontract services                       146,861          317,947
    Research and development costs                     286,597          333,303
    General and administrative                         857,681          599,882
    Depreciation                                        60,346             --
                                                 -------------    -------------

Total costs and expenses                             1,387,828        1,325,111
                                                 -------------    -------------

Loss from operations                                (1,073,762)        (841,543)

Other income (expense):
    Interest and other income                            1,319             --
    Interest expense                                   (72,521)         (35,487)
                                                 -------------    -------------

Total other income (expense)                           (71,202)         (35,487)
                                                 -------------    -------------

Net loss before reorganization items                (1,144,964)        (877,030)
                                                 -------------    -------------

Professional fees related to reorganization               --            (93,565)

Net loss before extraordinary items                 (1,144,964)        (970,595)

Gain on discharge of debt                               71,009             --
                                                 -------------    -------------

Net loss before income tax provision                (1,073,955)        (970,595)

Tax expense                                               --               --
Refundable tax credit                                    9,557             --
                                                 -------------    -------------

Net loss                                         $  (1,064,398)   $    (970,595)
                                                 =============    =============

Loss per share                                          (0.003)          (0.008)
Weighted average shares outstanding                394,050,815      122,132,752



               See the accompanying notes to the financial statements

</TABLE>


                                      -5-

<PAGE>


<TABLE>
<CAPTION>


                           MERA PHARMACEUTICALS, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                FOR THE SIX MONTHS ENDED APRIL 30, 2003 AND 2002
                                   (UNAUDITED)

                                                         Successor      Predecessor
                                                     ---------------- ----------------
                                                     Six Months Ended Six Months Ended
                                                      April 30, 2003  April 30, 2002
                                                     ---------------- ----------------
Cash Flows from Operating Activities:
<S>                                                    <C>            <C>
Net loss                                               $(1,064,398)   $  (970,595)
Adjustments to reconcile net loss to net cash
used in operating activities:
       Depreciation                                        122,601        124,017
       Gain on discharge of debt                           (71,009)          --
Changes in assets and liabilities:
       Accounts receivable                                 (81,112)        49,664
       Tax receivable                                       (9,557)          --
       Inventories                                        (253,238)       (25,204)
       Other current assets                                 (6,080)       (33,853)
       Accounts payable and accrued expenses               258,516        304,741
       Deferred revenue                                    119,632
                                                       -----------    -----------
Net cash used by operating activities                     (984,645)      (551,230)
                                                       -----------    -----------

Cash Flows from Investing Activities:
       Purchases of fixed assets                            (3,919)          --
                                                       -----------    -----------
Net cash used by investing activities                       (3,919)          --
                                                       -----------    -----------

Cash Flows from Financing Activities
       Proceeds from short-term advance                       --          500,000
       Proceeds from issuance of preferred stock           659,000           --
       Proceeds from issuance of common stock            2,000,000           --
       Proceeds from notes payable                         348,232           --
       Payment of notes payable                         (2,030,182)          --
                                                       -----------    -----------
Net cash provided by financing activities                  977,050        500,000
                                                       -----------    -----------

Net increase (decrease) in cash and cash equivalents       (11,514)       (51,230)
Cash and cash equivalents, beginning of the period          40,349         47,398
                                                       -----------    -----------
Cash and cash equivalents, end of the period           $    28,835    $    (3,832)
                                                       ===========    ===========




             See the accompanying notes to the financial statements
</TABLE>



                                      -6-
<PAGE>



                           MERA PHARMACEUTICALS, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                FOR THE SIX MONTHS ENDED APRIL 30, 2003 AND 2002



1.          GENERAL

           The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the instructions to Form 10-QSB. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. The results of
operations for the three-month and six-month periods presented are not
necessarily indicative of the operating results anticipated for the fiscal year
ending October 31, 2003.

           These financial statements should be read in conjunction with the
financial statements in our Annual Report on Form 10-KSB for the year ended
October 31, 2002.

           FRESH START ACCOUNTING -- Upon emergence from bankruptcy, the Company
adopted "fresh start" accounting. As a result, all assets and liabilities were
restated to reflect their respective fair values. The condensed financial
statements after emergence are those of a new reporting entity (the "Successor")
and are not comparable to the financial statements of the pre-confirmation
company (the "Predecessor").

2.         GOING CONCERN

           These financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has operating and
liquidity concerns, has incurred an accumulated deficit of $1,965,750 through
the quarter ended April 30, 2003 and current liabilities exceeded current assets
by $917,650. The Company anticipates that future revenue will be sufficient to
cover certain operating expenditures and, in the interim, will continue to
pursue additional capital investment. However, there can be no assurance that
the Company will be able to acquire the necessary capital to achieve a level of
sales that will permit it to operate on the basis of revenues alone. These
factors, among others, create an uncertainty about the Company's ability to
continue as a going concern.

3.         INVENTORIES

           Inventories are stated at the lower of cost or market. The Company
intends to determine cost on a first-in, first-out basis. At April 30, 2003
inventories consisted of $913,559 of work in process and $340,982 of finished
goods and are stated at their net realizable value.

4.         REVENUE RECOGNITION

           Product revenue is recognized upon shipment to customers. Contract
services revenue is recognized as services are performed on a cost reimbursement
basis. The Company has adopted Security and Exchange Commission's Staff
Accounting Bulletin (SAB) No. 101, which provides guidance on the recognition,
presentation and disclosure of revenue in financial statements.



                                      -7-
<PAGE>




                           MERA PHARMACEUTICALS, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                FOR THE SIX MONTHS ENDED APRIL 30, 2003 AND 2002




5.         LOSS PER SHARE

           The Company computed basic and diluted loss per share amounts for
April 30, 2003 and 2002 pursuant to the Statement of Financial Accounting
Standard (SFAS) No. 128, "Earnings Per Share." The assumed effects of the
exercise of outstanding warrants and conversion of notes would be anti-dilutive,
accordingly dilutive per share amounts have not been presented in the
accompanying statements of operations.

6.         NOTES PAYABLE

           During the months of July through December 2002, the Company issued
various promissory notes totaling $2,805,000 to a limited liability company
managed by Richard D. Propper, MD and Daniel P. Beharry, both officers and
directors of the Company, for funds that the Company borrowed. $2,011,000 of
such notes was repaid in December 2002. The promissory notes were cancelled upon
repayment of the loans, and all interest accrued on the notes was forgiven. The
total interest accrued and forgiven on these notes was $71,009. A new promissory
note was negotiated by the parties and issued on December 31, 2002 by the
Company for the balance of $794,000. This promissory note accrues interest at 6%
per annum and has a maturity date of December 31, 2003. During the six months
ended April 30, 2003, the total interest accrued on the new promissory note was
$30,285 of which $25,189 was attributable to the quarter ended April 30, 2003.

           During the month of November 2002, the Company issued various
convertible promissory notes totaling $185,732 to Richard D. Propper, MD, an
officer and director of the Company. On January 10, 2003 a payment of $13,901 in
principal and accrued interest was made against this obligation, leaving a
principal balance of $172,000. The terms of the notes include interest accruing
at 10% per annum. The notes matured on March 31, 2003. An extended maturity date
is currently being negotiated. The outstanding principal and interest due and
payable on these notes is convertible into common stock at the per share price
of $0.05 at the lender's option. In addition, certain of these convertible
promissory notes call for issuance of common stock warrants to the lender equal
to the face amount of the promissory notes divided by $0.05, or warrants to
purchase up to 3,440,000 shares of common stock. The exercise price of the
warrants is $0.05 per share and the warrants have 5-year terms. During the six
months ended April 30, 2003, the total interest accrued on such notes was
$7,595.

           During the month of April 2003, the Company entered into a line of
credit agreement with Aquasearch Investment Partners, a general partner of which
is Gregory F. Kowal, a director of the Company. Under the credit agreement, the
Company may borrow up to $125,000 from Aquasearch Investment Partners at an
annual interest rate of 10%. The credit agreement also provides for the issuance
of warrants to purchase shares of the Company's common stock at a price of $0.05
per share. The total number of shares subject to purchase on those conditions is
dependent upon the maximum balance outstanding under the line of credit during
its term. As of April 30, 2003, no warrants had been issued under this
agreement.



                                      -8-
<PAGE>




                           MERA PHARMACEUTICALS, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                FOR THE SIX MONTHS ENDED APRIL 30, 2003 AND 2002


7.           COMMON STOCK, PREFERRED STOCK AND STOCK PURCHASE WARRANTS

           In November 2002, the Company issued warrants to purchase up to
3,440,000 shares of common stock to Richard D. Propper, MD, an officer and
director of the Company, in connection with various convertible promissory notes
issued by the Company to Dr. Propper (see Note 6). The exercise price of the
warrants is $0.05 per share and the warrants have 5-year terms. This transaction
was exempt from registration under the Securities Act of 1933, as amended,
pursuant to Section 4(2).

           On December 2, 2002, the Company issued 80 shares of Series A
preferred stock at a price of $625.00 per share, for aggregate consideration of
$50,000, to an individual investor. Each share of Series A preferred stock is
convertible into 10,417 shares of common stock. This transaction was exempt from
registration under the Securities Act of 1933, as amended, pursuant to Section
4(2).

           On December 30, 2002, the Company issued 18,181,818 shares of common
stock at a price of $0.11 per share, for aggregate consideration of $2,000,000,
to a Hawaiian limited liability company. That company is managed in part by
Richard D. Propper, MD and Daniel P. Beharry, both officers and directors of the
Company, but neither Dr. Propper nor Mr. Beharry has an ownership interest in
that company, and they receive no compensation in connection with their
management of it. This transaction was exempt from registration under the
Securities Act of 1933, as amended, pursuant to Section 4(2).

           On December 30, 2002, the Company issued 974 shares of Series B
preferred stock at a price of $625.00 per share, for aggregate consideration of
$609,000, to a limited liability company. That company is managed by Richard D.
Propper, MD and Daniel P. Beharry, both officers and directors of the Company,
but neither Dr. Propper nor Mr. Beharry has an ownership interest in that
Hawaiian limited liability company, and they receive no compensation in
connection with their management of it. Each share of Series B preferred stock
is convertible into 8,929 shares of common stock. This transaction was exempt
from registration under the Securities Act of 1933, as amended, pursuant to
Section 4(2).

           The following is a summary of the Company's outstanding common stock
purchase warrants for the quarter ended April 30, 2003:

--------------- ------------------ ---------------------------------------------
Exercise Price     Outstanding at       Issued     Exercised     Outstanding at
                   October 31,2002                               April 30, 2003
--------------- ------------------- ------------- ------------ -----------------
      $0.05               -            3,440,000        -          3,440,000

                ------------------- ------------- ------------ -----------------
                          -            3,440,000        -          3,440,000
                ------------------- ------------- ------------ -----------------

           The Company has reserved a sufficient number of shares of its
authorized common stock for issuance upon exercise of the outstanding warrants.



                                      -9-


<PAGE>
                           MERA PHARMACEUTICALS, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                FOR THE SIX MONTHS ENDED APRIL 30, 2003 AND 2002




8.           STOCK OPTION PLANS

           In March 1996, the Board of Directors adopted the 1996 Stock Option
Plan. The 1996 Stock Option Plan provided for the grant of incentive stock
options to employees, and for nonstatutory stock options and stock purchase
rights to employees and consultants. The 1996 Stock Option Plan was terminated
on June 17, 2002 upon confirmation of the Company's Plan of Reorganization by
the Bankruptcy Court, and the Company has not yet adopted a plan to replace it.

9.         INCOME TAXES

           The Company accounts for income taxes under Financial Accounting
Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes." SFAS No. 109 requires the use of the
liability method in determining income tax expense. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amount of existing assets
and liabilities and their respective tax bases and operating loss and tax credit
carryforwards. A valuation allowance is established when necessary to reduce
deferred tax assets to the amount expected to be realized. Since its formation
the Company has incurred net operating losses. For financial statement purposes,
the deferred tax asset for loss carryforwards has been fully offset by a
valuation allowance since it is uncertain whether any future benefit will be
realized.

           The Company is a Qualified High Tech Business ("QHTB") in the State
of Hawaii. QHTBs qualify for certain refundable state tax credits. As of April
30, 2003, the Company qualified for an estimated $46,000 for such credits
related to eligible research and development activities.

10.        PROPOSED MERGER

           On January 3, 2003, the Company entered into a Memorandum of
Understanding ("MOU") setting forth the principal terms of an agreement
governing the merger (the "Merger") between a wholly-owned, non-operating
subsidiary of the Company and Ancile Pharmaceuticals, Inc., a California
corporation ("Ancile"). In March 2003 the parties mutually agreed not to proceed
with the Merger on the terms outlined in the MOU. However, the Company and
Ancile remain open to opportunities that will be mutually advantageous to both
parties.

11.         RELATED PARTY TRANSACTIONS

           On August 1, 2002, the Company entered into a month-to-month
consulting agreement with Richard L. Sherman, a director of the Company. Under
the agreement Mr. Sherman was to receive $5,500 per month. This agreement was
terminated on February 28, 2003. No amounts were paid to Mr. Sherman under this
agreement during the three months ended April 30, 2003.



                                      -10-
<PAGE>


                           MERA PHARMACEUTICALS, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                FOR THE SIX MONTHS ENDED APRIL 30, 2003 AND 2002


           On March 27, 2003, the Company entered into a sales agreement with
Aquasearch Investment Partners ("AIP"), a general partner of which is Gregory F.
Kowal, a Company director. Under the agreement AIP purchased 10,000 bottles of
THE ASTAFACTOR(R) Sports Formula for $7.60 per bottle, or an aggregate price of
$76,000. AIP then cosigned the product back to the Company to be resold in the
commercial market. AIP will receive $8.35 for each bottle the Company resells
under this agreement on AIP's behalf. Based on the Security and Exchange
Commission's Staff Accounting Bulletin (SAB) No. 101, which provides guidance on
the recognition of revenue in financial statements, the Company has deferred
recognition of revenue from this transaction until the Company resells the
product in the commercial market.

12.        COMMITMENTS

           In January 2001 the Company entered into research and license
agreements with a major university to access, manufacture, use and sell products
from a microalgal collection. Under terms of the research agreement, the
university was to receive reimbursement for its costs incurred in performing the
research. The budget over the initial two-year term for maintenance and research
work on the collection was approximately $550,000, although less than $400,000
was reportedly expended. The license agreement provided for royalties to be paid
to the university on income from commercialization of products developed from
the collection. No commercialization of products occurred under that license.
Both agreements expired effective December 31, 2002, and the Company is not
incurring any ongoing expense associated with these agreements. The amount due
to the university under the expired research agreement remains in dispute,
though the financial statements reflect the full amount for which the university
has billed the Company. During the six months ended April 30, 2003, no amounts
were paid under the research agreement or the license agreement.

           In June 2002, the Company entered into a lease for office space in
San Diego, California. Rent expense for this facility was $10,578 per month.
This lease terminated on February 14, 2003.

           In November 2002, the Company entered into a technical services
agreement with the entity (the "Chinese Entity") that is developing a
large-scale cultivation and production facility in China (the "Chinese
Facility") in order to utilize the Company's intellectual property under license
from the Company for the production of our product(s). Under the technical
services agreement, the Company will provide technical services to the Chinese
Entity to assist in the design, construction and initial operation of the
Chinese Facility. The initial budget for the contract is $1,000,000 plus related
expenses, with some payments being conditioned upon the Company's meeting
certain objectives. The term of this contract is fifteen years. No amount has
been accrued for payments to be received under this contract.

           In February 2003, the Company assumed an existing lease of another
entity for premises to use as its executive office space in Solana Beach,
California for the remaining term of that lease. Total rent expense for the
Company's executive office space was $5,987 per month through May 15, 2003. The
Company terminated the lease for approximately 50% of the space effective May
31, 2003. The remaining space has a term that runs through May 14, 2004 and a
monthly rent expense of approximately $3,200.



                                      -11-
<PAGE>



                           MERA PHARMACEUTICALS, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                FOR THE SIX MONTHS ENDED APRIL 30, 2003 AND 2002


13.        CONTINGENCIES

           Dr. Mark Huntley, former Chief Technical Officer of the Company, has
asserted a claim that the Company involuntarily terminated his employment. The
Company's position is that Dr. Huntley resigned. The parties are engaged in
discussions to resolve this matter. Management does not believe that the
resolution of this matter will have a material adverse effect on the Company's
financial condition.

14.        SUBSEQUENT EVENTS AND OTHER

           Dr. Mark Huntley resigned as the Company's Chief Technical Officer in
December 2002 (see Note 13).

           Mr. Harry Dougherty tendered his resignation from the position of
President of the Company, to take effect February 28, 2003. After discussions
between Mr. Dougherty and Company management, the resignation was made effective
as of January 31, 2003. Mr. Dougherty's resignation was not motivated by
disagreements on any matter relating to operations, policies or practices.

           At its meeting held on May 23, 2003, the Board of Directors
authorized the issuance of stock to Gregory F. Kowal, a member of the Board, in
consideration of his efforts in securing equity investment for the Company in
December 2002. The total number of shares of stock issuable to Mr. Kowal is
264,333.





                                      -12-
<PAGE>



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

           This Report contains forward-looking statements within the meaning of
section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including statements that include the words "believes,"
"expects," "estimates," "anticipates" or similar expressions. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause our actual results, performance or achievements to
differ materially from those expressed or implied by such forward-looking
statements. Risk factors include, but are not limited to, our ability to raise
or generate additional capital; our ability to cost-effectively manufacture our
products on a commercial scale; the concentration of our current customer base;
competition; our ability to comply with applicable regulatory requirements;
potential need for expansion of our production facility; the potential loss of a
strategic relationship; inability to attract and retain key personnel;
management's ability to effectively manage our growth; difficulties and resource
constraints in developing new products; protection and enforcement of our
intellectual property; compliance with environmental laws; climate uncertainty;
currency fluctuations; exposure to product liability lawsuits; and control of
our management and affairs by principal shareholders.

           The reader should carefully consider, together with the other matters
referred to herein, the information contained under the caption "Risk Factors"
in our Annual Report on Form 10-KSB for a more detailed description of these
significant risks and uncertainties. We caution the reader, however, that these
factors may not be exhaustive.

           Since inception, our primary operating activities have consisted of
basic research and development and production process development, recruiting
personnel, purchasing operating assets and raising capital. From inception
through September 16, 2002 (the date that we completed our bankruptcy
proceedings and adopted "fresh-start accounting") we had an accumulated deficit
of approximately $22,262,111. From September 16, 2002 through April 30, 2003 we
had an accumulated deficit of $1,965,750. Our losses to date have resulted
primarily from costs incurred in research and development and from general and
administrative expenses associated with operations. We expect to continue to
incur operating losses for at least the current fiscal year and perhaps beyond.
We expect to have quarter-to-quarter and year-to-year fluctuations in revenues,
expenses and losses, some of which could be significant.



                                      -13-
<PAGE>



           We have a limited operating history. An assessment of our prospects
should include the technology risks, market risks, expenses and other
difficulties frequently encountered by early-stage operating companies, and
particularly companies attempting to enter competitive industries with
significant technology risks and barriers to entry. We have attempted to address
these risks by, among other things, hiring and retaining highly qualified
persons and forging strategic alliances with companies and universities that
complement and leverage our technical strengths. However, our best efforts
cannot guarantee that we will overcome these risks in a timely manner, if at
all.

RESULTS OF OPERATIONS

           REVENUES. During the quarters ended April 30, 2003 and 2002, product
sales of ASTAFACTOR(R), which is currently the Company's only marketed product,
totaled $28,207 and $125,406, respectively. During the six months ended April
30, 2003 and 2002, product sales of ASTAFACTOR(R), totaled approximately
$151,976 and $271,607 respectively.

           Sales made through the Company's retail sales channel result from
large orders placed through brokers, which in turn supply the demand at the
retail outlet level. The timing of such orders can significantly affect the
revenues that are recognized (or not recognized) in any given quarter. As a
result, the amount of revenue realized from product sales in any given quarter
does not necessarily relate to the rate at which the retail sales of the
Company's product are occurring. As the number of retail outlets and the rate of
sales of the Company's products increases, the revenue stream should become more
regular, though some degree of variation will always exist. The higher sales
figures for the first half of fiscal year 2002 resulted from large orders that
we received from our distributors and higher than normal direct sales.

           During the quarter ended April 30, 2003 the Company received sales
orders for approximately $42,000 on which revenue was not recognized due to
certain return provisions. The Company will evaluate in future quarters when
sales are confirmed by the distributor, if it is appropriate to recognize
revenue from these orders.

           We recognized revenues of approximately $60,069 and $81,691 for the
quarters ended April 30, 2003 and 2002, respectively, from a subcontract for our
work on a U.S. Department of Energy ("DOE") project. For the six months ended
April 30, 2003 and 2002, revenues from the DOE project were $88,808 and $182,997
respectively. The decrease in revenues under this research agreement for the
first half of fiscal year 2003 in comparison to the first half of fiscal year
2002 resulted from the reduction in personnel assigned to perform work under
this project.

           Royalty revenues for the quarters ended April 30, 2003 and 2002 were
of $43,608 and $18,653 respectively. For the six months ended April 30, 2003 and
2002, royalty revenues were $73,282 and $29,074 respectively. Royalty revenues
included amounts received from another company based on sales of its products.
Management does not have the ability to predict at what level these royalty
revenues will be received for the balance of fiscal 2003.

           In November 2002, the Company entered into a technical services
agreement with a Chinese joint venture to assist the joint venture in the design
and construction of a large cultivation and processing facility in Hainan,
China. The same Chinese joint venture had previously entered into a license and
distribution agreement with the Company to utilize our intellectual property to
produce AstaFactor(r) and to distribute AstaFactor(r) in China. Under the terms
of the consulting agreement, the Company is to receive payments of up to $1
million in exchange for consulting services, with the actual budget to be
finalized. Construction of the Hainan facility has not yet begun, in large
measure due to the fact that the rate of sales of AstaFactor(r) in the United
States does not yet justify expansion beyond our Kona facility. It has also
taken the Chinese joint venture longer than anticipated to obtain approval for
distribution of AstaFactor(r) in China. The Company does not expect to receive
any revenue under the technical services agreement until construction of the
Hainan facility begins. The Company's accumulated inventory, together with its
existing production capacity in Kona, is sufficient to ensure the ability to
meet customer demands for the foreseeable future.

           COST OF PRODUCTS SOLD. Cost of products sold include manufacturing
and production costs associated with ASTAFACTOR(R). Cost of products sold was
approximately $6,560 and $33,711 for the quarters ended April 30, 2003 and 2002,
respectively. This resulted in a gross margin of approximately $21,647 or 77%
for the quarter ended April 30, 2003, and $91,695 or 73% for the quarter ended
April 30, 2002. Cost of products sold was $36,343 and $73,979 for the six months
ended April 30, 2003 and 2002, respectively. This resulted in a gross margin of
$115,633 or 76% for the six months ended April 30, 2003, and $197,628 or 73% for
the six months ended April 30, 2002.



                                      -14-
<PAGE>


           The decrease in overall cost of products sold in the first half of
fiscal year 2003 as compared to the first half of fiscal year 2002 resulted
primarily from lower sales volumes. The increase in gross margin percentage in
the first half of fiscal year 2003 as compared to the first half of fiscal year
2002 resulted from sales to retail consumers which have a higher profit margin
when compared to sales made to product distributors.

           Cost of contract services include labor costs associated with the
U.S. Department of Energy project. During the quarters ended January 31, 2003
and January 31, 2002, the cost of contract services was $109,229 and $169,000
respectively. During the six months ended January 31, 2003 and January 31, 2002,
the cost of contract services was $146,861 and $317,947 respectively. The
decrease in costs in fiscal year 2003 was primarily due to the reduction in
personnel hours devoted to this project.

           RESEARCH AND DEVELOPMENT COSTS. Research and development costs
include salaries, research supplies and materials and other expenses related to
product development. Research and development costs for the quarter ended April
30, 2003 were $55,616 as compared to $82,455 for the quarter ended April 30,
2002. During the six months ended April 30, 2003 research and development costs
were $286,597 as compared to $333,303 for the six months ended April 30, 2002.
The decrease in costs in fiscal year 2003 resulted from cost control measures
instituted by the Company.

           GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses consist principally of salaries, fees for professional services and
promotional and marketing expenses related to ASTAFACTOR(R). General and
administrative expenses for the second quarter of fiscal year 2003 were $312,885
as compared to $362,823 for the respective period of fiscal year 2002. The
decrease in selling, general and administrative expenses in the second quarter
of fiscal year 2003 as compared to the comparable period in the prior year
resulted from cost control measures instituted by the Company.

           For the six months ended April 30, 2003 general and administrative
expenses were $857,681 as compared to $599,282 for the respective period of
fiscal year 2002. The increase in overall general and administrative expenses in
the first half of fiscal year 2003 resulted from an increase in personnel and
related expenses incurred to support increased operations following the
Company's emergence from bankruptcy through its Chapter 11 reorganization, which
was completed just prior to the beginning of fiscal 2003.

           During the second quarter of fiscal 2003 the Company instituted
various cost control measures that resulted in a reduction in ongoing general
and administrative expenses. The cost control measures caused general and
administrative expenses to decrease by $231,328, or 43%, from $544,213 for the
first quarter of 2003 to $312,885 for the second quarter of 2003.



                                      -15-
<PAGE>


           INTEREST EXPENSE. For the quarters ended April 30, 2003 and 2002,
interest expense was $31,540 and $12,948, respectively. Interest expense
increased in the second quarter of fiscal year 2003 due to a greater amount of
outstanding debt as compared to the comparable period in fiscal year 2002.

           LIQUIDITY AND CAPITAL RESOURCES. We have financed our operations
principally through public and private sales of debt and equity securities,
together with revenues described above. During the three months ended April 30,
2003 we borrowed $49,000 under a line of credit agreement with AIP, of which
Gregory F. Kowal, a director of the Company, is a general partner. Under the
credit agreement, the Company may borrow up to $125,000 from Aquasearch
Investment Partners at an annual interest rate of 10%. The principal amount
outstanding under that credit agreement as of April 30, 2003, was $49,000. The
credit agreement also provides for the issuance of warrants to purchase shares
of the Company's common stock at a price of $0.05 per share. The total number of
shares available to purchase on those terms is dependent upon the maximum
balance outstanding under the line of credit during its term. No warrants were
issued under the agreement during the quarter ended April 30, 2003.

           The Company is owed additional amounts under a conditional license of
certain of its intellectual property rights ("IP") and the grant of the rights
to distribute its products in certain geographic markets. The condition to the
payment of the license and distribution rights fees is the performance of the
comprehensive technical services agreement the Company entered into with the
Chinese Entity in November 2002, pursuant to which the Company will provide
services to support the construction of the Chinese Facility at which the IP
will be used and to assist in the effective implementation of the IP.

           In addition, the Company has received a conditional commitment from
an entity for a $285,000 equity investment prior to the end of calendar 2003.
The Company believes that the condition associated with that investment will be
met and the investment will be received. However, because such investment is not
expected to be received during the Company's fiscal year 2003, it is not
reflected in the Company's financial statements.

ITEM 3.  CONTROLS AND PROCEDURES

           a. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. Under the
supervision and with the participation of our management, including our chief
executive officer and controller, we conducted an evaluation of our disclosure
controls and procedures, as such terms are defined in Rule 13a-14(c) promulgated
under the Exchange Act, within the 90 day period prior to the filing date of
this quarterly report.

           After review and evaluation, management has concluded that the
disclosure controls and procedures are designed effectively to accumulate and
communicate material information required to be disclosed in the Company's
reports to the Securities and Exchange Commission.



                                      -16-
<PAGE>


           b. CHANGES IN INTERNAL CONTROLS. There were no significant changes in
our internal controls and no other factors that could significantly affect these
controls subsequent to our most recent evaluation. Management found that no
corrective actions with regard to any significant deficiency or material
weakness in our internal controls needed to be implemented at this time.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS - The Company is not a party to any legal proceeding.

ITEM 2. CHANGES IN SECURITIES - During the fiscal quarter ended April 30, 2003,
the Company entered into a revolving line of credit agreement with Aquasearch
Investment Partners ("AIP"). As part of the agreement, the Company will issue
warrants to AIP. The number of shares subject to purchase is equal to the
highest outstanding principal balance under the line of credit divided by $0.05.
The warrants have an exercise price of $0.05 per share and a term of five years.
This transaction was exempt from registration under the Securities Act of 1933,
as amended, pursuant to Section 4(2).

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES - None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None.

ITEM 5.  OTHER INFORMATION - None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

a. EXHIBITS

99.1 Certification of Richard D. Propper, MD pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.2 Certification of Anthony E. Applebaum pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

b. REPORTS ON FORM 8-K

No reports of Form 8-K were filed during the quarter for which this report is
filed.




                                      -17-
<PAGE>







SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant has duly caused
this Quarterly Report on Form 10-QSB to be signed on its behalf by the
undersigned thereunto duly authorized.

                                             MERA PHARMACEUTICALS, INC.

Dated:  June 19, 2003                        by: /S/ RICHARD D. PROPPER, MD
                                                 --------------------------
                                                Richard D. Propper, MD,
                                                Chief Executive Officer





                                      -18-
<PAGE>



                                  CERTIFICATION

I, Richard D. Propper, MD, certify that:

1.         I have reviewed this quarterly report on Form 10-QSB of Mera
           Pharmaceuticals, Inc.;

2.         Based on my knowledge, this quarterly report does not contain any
           untrue statement of a material fact or omit to state a material fact
           necessary to make the statements made, in light of the circumstances
           under which such statements were made, not misleading with respect to
           the period covered by this quarterly report;

3.         Based on my knowledge, the financial statements, and other financial
           information included in this quarterly report, fairly present in all
           material respects the financial condition, results of operations and
           cash flows of the registrant as of, and for, the periods presented in
           this quarterly report;

4.         The Company's other certifying officers and I are responsible for
           establishing and maintaining disclosure controls and procedures (as
           defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
           and have:

a)         designed such disclosure controls and procedures to ensure that
           material information relating to the Company, including its
           consolidated subsidiaries, is made known to us by others within those
           entities, particularly during the period in which this quarterly
           report is being prepared;

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

c)         presented in this quarterly report our conclusions about the
           effectiveness of the disclosure controls and procedures based on our
           evaluation as of the Evaluation Date;

5.         The Company's other certifying officers and I have disclosed, based
           on our most recent evaluation, to the Company's auditors and the
           audit committee of Company's board of directors (or persons
           performing the equivalent functions):

a)         all significant deficiencies in the design or operation of internal
           controls which could adversely affect the Company's ability to
           record, process, summarize and report financial data and have
           identified for the Company's auditors any material weaknesses in
           internal controls; and

b)         any fraud, whether or not material, that involves management or other
           employees who have a significant role in the Company's internal
           controls; and

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

Date:  June 19, 2003

/s/RICHARD D. PROPPER, MD
-------------------------
Richard D. Propper, MD
Chief Executive Officer






                                      -19-
<PAGE>

                                  CERTIFICATION

I, Anthony E. Applebaum, certify that:

1.         I have reviewed this quarterly report on Form 10-QSB of Mera
           Pharmaceuticals, Inc.;

2.         Based on my knowledge, this quarterly report does not contain any
           untrue statement of a material fact or omit to state a material fact
           necessary to make the statements made, in light of the circumstances
           under which such statements were made, not misleading with respect to
           the period covered by this quarterly report;

3.         Based on my knowledge, the financial statements, and other financial
           information included in this quarterly report, fairly present in all
           material respects the financial condition, results of operations and
           cash flows of the registrant as of, and for, the periods presented in
           this quarterly report;

4.         The Company's other certifying officers and I are responsible for
           establishing and maintaining disclosure controls and procedures (as
           defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
           and have:

a)         designed such disclosure controls and procedures to ensure that
           material information relating to the Company, including its
           consolidated subsidiaries, is made known to us by others within those
           entities, particularly during the period in which this quarterly
           report is being prepared;

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

c)         presented in this quarterly report our conclusions about the
           effectiveness of the disclosure controls and procedures based on our
           evaluation as of the Evaluation Date;

5.         The Company's other certifying officers and I have disclosed, based
           on our most recent evaluation, to the Company's auditors and the
           audit committee of Company's board of directors (or persons
           performing the equivalent functions):

a)         all significant deficiencies in the design or operation of internal
           controls which could adversely affect the Company's ability to
           record, process, summarize and report financial data and have
           identified for the Company's auditors any material weaknesses in
           internal controls; and

b)         any fraud, whether or not material, that involves management or other
           employees who have a significant role in the Company's internal
           controls; and

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

Date:  June 19, 2003

/s/ANTHONY E. APPLEBAUM
-----------------------
Anthony E. Applebaum
Controller





                                      -20-
<PAGE>