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

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                       ----------------------------------

                                   FORM 10-QSB

        (Mark one)

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

                  FOR THE QUARTERLY PERIOD ENDED JULY 31, 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
       incorporation or organization)                   Number)


                        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 [ ]


405,643,926 shares of $0.0001 par value common stock
outstanding as of August 28, 2003
================================================================================

<PAGE>

                           MERA PHARMACEUTICALS, INC.

                                   FORM 10-QSB
                       FOR THE QUARTER ENDED JULY 31, 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                                  17

PART II - OTHER INFORMATION

           Item 1:  Legal Proceedings                                        18

           Item 2:  Changes In Securities                                    18

           Item 3.  Defaults Upon Senior Securities                          18

           Item 4:  Submission of Matters to a Vote of Security Holders      18

           Item 5:  Other Information                                        18

           Item 6:  Exhibits and Reports on Form 8-K                         19

           Signature                                                         19

           Certifications                                                    20


<PAGE>
                           MERA PHARMACEUTICALS, INC.
                            CONDENSED BALANCE SHEETS
                    AS OF JULY 31, 2003 AND OCTOBER 31, 2002

<TABLE>
<CAPTION>
                        ASSETS
                                                                  July 31, 2003           October 31, 2002
                                                                   (Unaudited)               (Audited)
                                                               ---------------------    ---------------------
Current assets:
<S>                                                            <C>                      <C>
    Cash and cash equivalents                                               $ 4,070                 $ 40,349
    Accounts receivable and accrued sales, net                              752,499                  611,759
    Tax receivable                                                           50,572                   36,914
    Inventories                                                           1,139,497                1,001,303
    Investment receivable                                                         -                  500,000
    Notes receivable                                                        100,000                        -
    Prepaid expenses and other                                               65,008                   57,893
                                                               ---------------------    ---------------------

Total current assets                                                      2,111,646                2,248,218
                                                               ---------------------    ---------------------

Plant and equipment, net                                                  3,022,306                3,205,768
Goodwill                                                                     66,550                   66,550
                                                               ---------------------    ---------------------

Total Assets                                                            $ 5,200,502              $ 5,520,536
                                                               =====================    =====================

            LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
    Accounts payable and accrued expenses                                 $ 980,272                $ 879,153
    Notes payable                                                           909,011                2,700,000
    Deferred notes payable                                                        -                  500,000
    Deferred revenue                                                        905,992                  800,000
                                                               ---------------------    ---------------------

Total Current Liabilities                                                 2,795,275                4,879,153
                                                               ---------------------    ---------------------

Stockholders' equity:
    Preferred stock, $.0001 par value: 5,000,000
         shares authorized, 1,054 and 0 shares issued
          and outstanding at July 31, 2003 and
         October 31, 2002, respectively                                           -                        -
    Common stock, $.0001 par value: 500,000,000
         shares authorized, 405,232,593 and 388,803,300
         shares issued and outstanding at July 31, 2003 and
         October 31, 2002, respectively                                      40,523                   38,880
    Additional paid-in capital                                            4,486,212                1,503,856
    Accumulated deficit                                                  (2,121,508)                (901,353)
                                                               ---------------------    ---------------------

Total stockholders' equity                                                2,405,227                  641,383
                                                               ---------------------    ---------------------

Total Liabilities and Stockholders' Equity                              $ 5,200,502              $ 5,520,536
                                                               =====================    =====================
</TABLE>


             See the accompanying notes to the financial statements


<PAGE>
                           MERA PHARMACEUTICALS, INC.
                       Condensed Statements of Operations
                For the Three Months Ended July 31, 2003 and 2002
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                            Successor                 Predecessor
                                                        ------------------         ------------------
                                                          Three Months               Three Months
                                                              Ended                      Ended
                                                          July 31, 2003              July 31, 2002
                                                        ------------------         ------------------
Revenues
<S>                                                             <C>                        <C>
    Products, net                                               $ 217,033                  $ 162,093
    Contract Services                                              94,519                     41,577
    Royalties                                                      30,470                     16,105
                                                        ------------------         ------------------

    Total Revenues                                                342,022                    219,775
                                                        ------------------         ------------------
Costs and Expenses
    Cost of products sold                                         142,637                    152,172
    Cost of subcontract services                                  134,970                     67,170
    Research and development costs                                 31,804                    173,508
    General and administrative                                    173,416                    326,531
    Depreciation                                                   37,694                          -
                                                        ------------------         ------------------

Total costs and expenses                                          520,521                    719,381
                                                        ------------------         ------------------

Loss from operations                                             (178,499)                  (499,606)
Other income (expense):
    Interest and other income                                           -                          -
    Interest expense                                              (18,714)                   (27,989)
                                                        ------------------         ------------------

Total other income (expense)                                      (18,714)                   (27,989)
                                                        ------------------         ------------------

Net loss before reorganization items                             (197,213)                  (527,595)
                                                        ------------------         ------------------

Professional fees related to reorganization                             -                    (96,804)

Net loss before extraordinary items                              (197,213)                  (624,399)

Gain on discharge of debt                                          38,225                          -
                                                        ------------------         ------------------

Net loss before income tax provision                             (158,988)                  (624,399)

Tax expense                                                          (870)                    (7,664)
Refundable tax credit                                               4,101                    208,955
                                                        ------------------         ------------------

Net loss                                                       $ (155,757)                $ (423,108)
                                                        ==================         ==================

Loss per share                                                     (0.000)                    (0.003)
Weighted average shares outstanding                           398,477,743                122,129,419

</TABLE>


         See the accompanying notes to the financial statements


<PAGE>
                           MERA PHARMACEUTICALS, INC.
                       Condensed Statements of Operations
                For the Nine Months Ended July 31, 2003 and 2002
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                            Successor                 Predecessor
                                                        ------------------         ------------------
                                                           Nine Months                Nine Months
                                                              Ended                      Ended
                                                          July 31, 2003              July 31, 2002
                                                        ------------------         ------------------
Revenues
<S>                                                             <C>                        <C>
    Products, net                                               $ 369,010                  $ 433,700
    Contract Services                                             183,327                    224,464
    Royalties                                                     103,752                     45,179
                                                        ------------------         ------------------

    Total Revenues                                                656,089                    703,343
                                                        ------------------         ------------------

Costs and Expenses
    Cost of products sold                                         178,980                    226,151
    Cost of subcontract services                                  281,831                    385,117
    Research and development costs                                318,401                    506,811
    General and administrative                                  1,031,091                    926,413
    Depreciation                                                   98,041                          -
                                                        ------------------         ------------------

Total costs and expenses                                        1,908,344                  2,044,492
                                                        ------------------         ------------------

Loss from operations                                           (1,252,255)                (1,341,149)

Other income (expense):
    Interest and other income                                       1,319                          -
    Interest expense                                              (91,235)                   (63,476)
                                                        ------------------         ------------------

Total other income (expense)                                      (89,916)                   (63,476)
                                                        ------------------         ------------------

Net loss before reorganization items                           (1,342,171)                (1,404,625)
                                                        ------------------         ------------------

Professional fees related to reorganization                             -                   (190,369)

Net loss before extraordinary items                            (1,342,171)                (1,594,994)

Gain on discharge of debt                                         109,234                          -
                                                        ------------------         ------------------

Net loss before income tax provision                           (1,232,937)                (1,594,994)

Tax expense                                                          (876)                    (7,664)
Refundable tax credit                                              13,657                    208,955
                                                        ------------------         ------------------

Net loss                                                     $ (1,220,156)              $ (1,393,703)
                                                        ==================         ==================

Loss per share                                                     (0.003)                    (0.011)
Weighted average shares outstanding                           395,526,458                122,131,641

</TABLE>


             See the accompanying notes to the financial statements

<PAGE>
                 MERA PHARMACEUTICALS, INC.
             CONDENSED STATEMENTS OF CASH FLOWS
      FOR THE NINE MONTHS ENDED JULY 31, 2003 AND 2002
                        (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     Successor                      Predecessor
                                                             -------------------------        -------------------------
                                                                 Nine Months Ended                Nine Months Ended
                                                                  July 31, 2003                    July 31, 2002
                                                             -------------------------        -------------------------
<S>                                                                      <C>                                <C>
Cash Flows from Operating Activities:
Net loss                                                                 $ (1,220,156)                      $ (970,595)
Adjustments to reconcile net loss to net cash
used in operating activities:
      Depreciation                                                            187,381                          124,017
      Gain on discharge of debt                                              (109,234)                               -
Changes in assets and liabilities:
      Accounts receivable                                                    (140,740)                          49,664
      Tax receivable                                                          (13,658)                               -
      Inventories                                                            (138,194)                         (25,204)
      Other current assets                                                     (7,509)                         (33,853)
      Accounts payable and accured expenses                                   210,353                          304,741
      Deferred revenue                                                        105,992
                                                             -------------------------        -------------------------
Net cash used by operating activities                                      (1,125,765)                        (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                                2,225,000                                -
      Proceeds from notes payable                                             402,232                                -
      Payment of notes payable                                             (2,193,221)                               -
                                                             -------------------------        -------------------------
Net cash provided by financing activities                                   1,093,011                          500,000
                                                             -------------------------        -------------------------

Net increase (decrease) in cash and cash equivalents                          (36,673)                         (51,230)
Cash and cash equivalents, beginning of the period                             40,743                           47,398
                                                             -------------------------        -------------------------
Cash and cash equivalents, end of the period                                  $ 4,070                         $ (3,832)
                                                             =========================        =========================
Supplemental non-cash information
      Assumption of promissory note in exchange for                         $ 100,000
        common stock
</TABLE>


               See the accompanying notes to the financial statements

<PAGE>

                           MERA PHARMACEUTICALS, INC.
             NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

1. GENERAL

         BASIS OF PRESENTATION: - The interim financial statements presented
herein have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC"). Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States of America
have been condensed or omitted pursuant to such rules and regulations. The
interim financial statements should be read in conjunction with the Company's
annual financial statements, notes and accounting policies included in the
Company's annual report on Form 10-KSB for the year ended October 31, 2002 as
filed with the SEC. In the opinion of management, all adjustments (consisting
only of normal recurring adjustments) which are necessary to provide a fair
presentation of financial position as of July 31, 2003 and the related operating
results and cash flows for the interim period presented have been made. The
results of operations for the period presented are not necessarily indicative of
the results to be expected for the year.


         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 $2,121,508 through the quarter
ended July 31, 2003 and current liabilities exceeded current assets by $683,629.
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 July 31, 2003
inventories consisted of $845,787 of work in process and $293,710 of finished
goods and are stated at their net realizable value.


                                       7
<PAGE>


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. Royalty revenues are recognized when received. 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.

5. LOSS PER SHARE

         The Company computed basic and diluted loss per share amounts for July
31, 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

         In December 2002, the Company issued a promissory notes totaling
$794,000 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. On July 2, 2003, $150,000 of the note was repaid. The
repaid funds were reinvested into the Company as part of a total investment of
$225,000 (see Note 8). Upon receiving the repayment, the balance of the note was
cancelled, and all related interest was forgiven. The total amount of interest
forgiven was $38,225. A new promissory note was negotiated by the parties and
issued on July 2, 2003 by the Company for the balance of $644,000. Interest
accrued on the new promissory note was $3,220.

         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 agreement has a term of one year. During the
quarter ended July 31, 2003 the Company borrowed $4,000 and owed a total of
$53,000 under the agreement. 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 July 31, 2003, the number of warrants issuable under this
agreement was 1,060,000, although no warrants had been issued.

         During the month of June 2003, the Company issued a promissory note in
the face amount of $50,000 in exchange for a loan made in that amount to the
Company. The outstanding principal amount of the loan accrues interest at the
rate of 10% per annum. The note matures on March 31, 2004. In addition to
repayment of principal and interest, the note calls for issuance to the lender
of warrants to purchase 400,000 shares of the Company's common stock at a price
of $0.05 per share. The term of the warrants is five years. A portion of the
principal and the interest accrued on the note through July 16, 2003 were
prepaid that date, leaving an outstanding principal balance on this note of
approximately $40,000.


                                       8
<PAGE>

7. COMMON STOCK AND STOCK PURCHASE WARRANTS

     On July 9, 2003, the Company agreed to accept assignment of a $100,000
promissory note made by Ancile Pharmaceuticals and held by Ancile Opportunity
Partners in exchange for the issuance of 3,703,704 shares of its common stock to
the partners in Ancile Opportunity Partners. Among the partners of Ancile
Opportunity Partners are Richard D. Propper, MD and Daniel P. Beharry, each of
whom was an officer and a director of the Company at the time of the assignment.
The assigned note reflected an investment by Ancile Opportunity Partners into
Ancile Pharmaceuticals as required under the memorandum of understanding by
which Mera was to acquire Ancile through a reverse triangular merger. This
transaction was exempt from registration under the Securities Act of 1933, as
amended, pursuant to Section 4(2).

     On July 11, 2003, the Company issued 6,428,571 shares of common stock at a
price of $0.035 per share, for aggregate consideration of $225,000, to a
Delaware limited liability company. $150,000 of that consideration was the
result of the conversion of debt to equity (see Note 6). The company to whom the
stock was issued is managed by Richard D. Propper, MD and Daniel P. Beharry,
both officers and directors of the Company at the time of the issuance, 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).

         The following is a summary of the Company's outstanding common stock
purchase warrants as of July 31, 2003:

<TABLE>
<CAPTION>
-------------------- -------------------------- ----------------- --------------- ----------------------------
  Exercise Price      Outstanding at October         Issued         Exercised       Outstanding at July 31,
                             31, 2002                                                        2003
-------------------- -------------------------- ----------------- --------------- ----------------------------
<S>           <C>                                      <C>                                          <C>
              $0.05                          -         4,900,600               -                    4,900,600

                     -------------------------- ----------------- --------------- ----------------------------
                                             -         4,900,600               -                    4,900,600
                     -------------------------- ----------------- --------------- ----------------------------
</TABLE>
         The Company has reserved a sufficient number of shares of its
authorized common stock for issuance upon exercise of the outstanding warrants.

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
<PAGE>

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 July 31,
2003, an estimated $50,000 was receivable by the Company for such credits
related to eligible research and development activities. Subsequent to that
date, the Company received a payment of approximately $44,000 against the total
amount receivable.

10. 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. In exchange for the Company's agreement to pay
certain pre-reorganization expenses totaling less than $4,000, Mr. Sherman has
agreed to release the Company from its obligation to pay him the balance due him
under this agreement prior to its termination in February 2003.

         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. During the three months ended July 31, 2003,
the Company recognized approximately $18,000 in revenue under this arrangement.


                                       10
<PAGE>

11. 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 nine months ended July 31, 2003, no amounts
were paid under the research agreement or the license agreement.

         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. The construction
of the Chinese Facility will commence when demand for the Company's products
warrants that additional capacity. In view of the uncertain date for the start
of payments under this contract, no amount has been accrued for payments to be
received.

12. 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.

13. SUBSEQUENT EVENTS

        On May 23, 2003, the Company's board of directors agreed to compensate
one of its members, Gregory F. Kowal, for his successful efforts in assisting
the Company in raising capital during fiscal 2003. The compensation is in the
form of issuance to Mr. Kowal of that number of shares of common stock of the
Company equal to 7% of the total amount raised in each offering divided by the
per share price of such offering. As of July 31, 2003 the total number of shares
of stock issuable to Mr. Kowal under this agreement was 411,333. On August 28,
2003 these shares were issued. The Company will recognize an expense of


                                       11
<PAGE>

$28,793 on this transaction based on the fair value of $0.07 per share (the
price at which the stock was trading on the date of issue). This transaction is
exempt from registration under the Securities Act of 1933, as amended, pursuant
to Section 4(2).













                                       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 July 31, 2003 we
had an accumulated deficit of $2,121,508. 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 July 31, 2003 and 2002, product
sales totaled $217,033 and $162,093, respectively. During the nine months ended
July 31, 2003 and 2002, product sales totaled $369,010 and $433,700
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 in this revenue source will always exist. In
addition, during the quarter ended July 31, 2003, the Company issued a credit
for $28,000 to an account that returned expired product for replacement with
current product. If adjusted for this return, the revenue from product sales
during the nine months ended July 31, 2003 and 2002, respectively, would have
been essentially unchanged.

         We earned revenues of $94,519 and $41,577 for the quarters ended July
31, 2003 and 2002, respectively, from a subcontract for work on a U.S.
Department of Energy ("DOE") project. For the nine months ended July 31, 2003
and 2002, revenues from the DOE project were $183,327 and $224,464 respectively.
The changes in revenues under this research agreement relate to changes in the
number of personnel assigned to perform work under this project at various
times.

         Royalty revenues for the quarters ended July 31, 2003 and 2002 were of
$30,470 and $16,105 respectively. For the nine months ended July 31, 2003 and
2002, royalty revenues were $103,752 and $45,179 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 "Chinese Facility"). 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 Chinese Facility is not
expected to begin until demand for the Company's products justifies adding that
capacity 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 Chinese Facility begins. The Company's accumulated
inventory, together with its existing production capacity in Kona, is sufficient
to meet projected customer demands.


                                       14
<PAGE>


         COST OF PRODUCTS SOLD. Cost of products sold include manufacturing and
production costs associated with ASTAFACTOR(R), as well as the cost of sales of
raw materials and certain other products Cost of products sold was $142,637 and
$152,172 for the quarters ended July 31, 2003 and 2002, respectively. This
resulted in a gross profit margin of approximately 34% for the current fiscal
year as compared to 6% for the same quarter in the previous year. The low
margins in the third quarter of 2002 were as a result of a large volume sale
made to a single customer during that period.

         Cost of products sold was $178,980 and $226,151 for the nine months
ended July 31, 2003 and 2002, respectively. This resulted in a gross profit
margin of 51% for the nine months ended July 31, 2003, as compared to 48% for
the same period of the preceding fiscal year. In the third quarter of 2002 a
large volume sale made to a single customer during that period which carried a
lower than normal profit margin. This sale reduced the overall profit margin for
the first three fiscal quarters of 2002 as compared to the same period in fiscal
2003.
         Cost of contract services include costs associated with the U.S.
Department of Energy project. During the quarters ended July 31, 2003 and 2002,
the cost of contract services was $134,970 and $67,170 respectively. During the
nine months ended July 31, 2003 and 2002, the cost of contract services was
$281,831 and $385,117 respectively. The changes in costs under this research
agreement relate to changes in the number of personnel assigned to perform work
under this project at various times.

         RESEARCH AND DEVELOPMENT COSTS. Research and development costs include
salaries, research supplies and materials and other expenses related to product
development, exclusive of those costs for which the company is reimbursed..
Research and development costs for the quarter ended July 31, 2003 were $31,804
as compared to $173,508 for the same period in 2002. During the nine months
ended July 31, 2003 research and development costs were $318,401 as compared to
$506,811 the same period in 2002. The decrease in costs in fiscal year 2003
resulted from a shifting of resources to the U.S Department of Energy project,
which is not included in this figure, and from general 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 third quarter of fiscal year 2003 were $173,416
as compared to $326,531 for the respective period of fiscal year 2002, a
decrease of 47%. 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.


                                       15
<PAGE>

         For the nine months ended July 31, 2003, general and administrative
expenses were $1,031,091 as compared to $926,413 for the respective period of
fiscal year 2002. The increase in overall general and administrative expenses in
fiscal 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. As a result of continuing efforts to minimize costs,
general and administrative expenses decreased from $312,885 in the second
quarter of fiscal 2003 to $173,416 in the third quarter of fiscal 2003, a
reduction of 45%.

         INTEREST EXPENSE. For the quarters ended July 31, 2003 and 2002,
interest expense was $18,714 and $27,989, respectively. For the nine months
ended July 31, 2003 and 2002, interest expense was $91,235 and $63,476,
respectively. The amount of interest expense incurred in any particular period
varies with the amount of debt outstanding.

         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 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 agreement has a term of one year. During the
quarter ended July 31, 2003 the Company borrowed $4,000 and owed a total of
$53,000 under the agreement. 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 July 31, 2003, the number of warrants issuable under this
agreement was 1,060,000, although no warrants had been issued.

         During the month of June 2003, the Company issued a promissory note in
the face amount of $50,000 in exchange for a loan made in that amount to the
Company. The outstanding principal amount of the loan accrues interest at the
rate of 10% per annum. The note matures on March 31, 2004. In addition to
repayment of principal and interest, the note calls for issuance to the lender
of warrants to purchase 400,000 shares of the Company's common stock at a price
of $0.05 per share. The term of the warrants is five years. A portion of the
principal and the interest accrued on the note through July 16, 2003 were
prepaid that date, leaving an outstanding principal balance on this note of
approximately $40,000.


                                       16
<PAGE>


         On July 11, 2003, the Company issued 6,428,571 shares of common stock
at a price of $0.35 per share to a Delaware limited liability company, for
aggregate consideration of $225,000. $150,000 of that consideration was the
result of the conversion of debt to equity. The company to whom the stock was
issued is managed by Richard D. Propper, MD and Daniel P. Beharry, both officers
and directors of the Company at the time of the issuance, 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).

         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.

         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.





                                       17
<PAGE>


PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS - None

ITEM 2.  CHANGES IN SECURITIES  -

     On July 9, 2003, the Company agreed to accept assignment of a $100,000
promissory note made by Ancile Pharmaceuticals and held by Ancile Opportunity
Partners in exchange for the issuance of 3,703,704 shares of its common stock to
the partners in Ancile Opportunity Partners. Among the partners of Ancile
Opportunity Partners are Richard D. Propper, MD and Daniel P. Beharry, each of
whom was an officer and a director of the Company at the time of the assignment.
The assigned note reflected an investment by Ancile Opportunity Partners into
Ancile Pharmaceuticals as required under the memorandum of understanding by
which Mera was to acquire Ancile through a reverse triangular merger. This
transaction was exempt from registration under the Securities Act of 1933, as
amended, pursuant to Section 4(2).

     On July 11, 2003, the Company issued 6,428,571 shares of common stock at a
price of $0.035 per share, for aggregate consideration of $225,000, to a
Delaware limited liability company. That company is managed by Richard D.
Propper, MD and Daniel P. Beharry, both officers and directors of the Company at
the time of the issuance, 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).
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES - None.

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

ITEM 5.  OTHER INFORMATION -

     CHANGE IN OFFICERS AND DIRECTORS

     Effective July 16, 2003, Richard D. Propper resigned as chief executive
officer of the Company and from his position as a director and chairman. Dr.
Propper's resignation was to allow him to pursue other interests, and it was not
motivated by any disagreements with respect to any of the Company's operations,
policies and practices. He remains a consultant to the Company on a
month-to-month basis, in which capacity he will remain directly involved in a
number of international projects in process at the time of his resignation, as
well as on new initiatives as they arise.

     Effective July 16, 2003, Daniel P. Beharry was elected as chief executive
officer of the Company. Effective August 21, 2003, Gregory F. Kowal, then a
sitting member of the board, was elected chairman to replace Dr. Propper. The
vacancy on the board of directors resulting from Dr. Propper's resignation has
not yet been filled.




                                       18
<PAGE>


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

a. EXHIBITS

99.1 Certification of Daniel P. Beharry 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

The following reports on Form 8-K were filed during the quarter for which this
report is filed:

September 2, 2003 (filed September 9, 2003) reporting changes in certifying
accountant.

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: 9/10/03                                    by: /S/ DANIEL P. BEHARRY
      ---------------                            ---------------------------
                                                  Daniel P. Beharry
                                                  Chief Executive Officer




                                       19
<PAGE>
                                  CERTIFICATION


I, Daniel P. Beharry, 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: 9/10/03
     ------------------

/s/DANIEL P. BEHARRY
-----------------------
Daniel P. Beharry
Chief Executive Officer



                                       20
<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:  9/10/03
     ---------------


/s/ ANTHONY E. APPLEBAUM
------------------------------------------
Anthony E. Applebaum
Controller and Principal Financial Officer



                                       21
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