UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2000
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 000-29965
MOLECULAR ROBOTICS, INCORPORATED
(Name of Small Business Issuer in its charter)
Delaware 91-1844453
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
16639 Calneva Drive Encino, CA. 91436
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (818) 817-7662
(Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years)
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 [ ] No [ ]
(Applicable only to corporate issuers)
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the last practicable date: 14,205,125 shares of the
registrant's common stock were issued and outstanding as of December 31, 2000,
not including 208,000 shares issuable upon the exercise of outstanding
warrants. There were an additional 104,000 shares of the registrant's common
stock to be issued as of December 31, 2000.
Traditional Small Business Disclosure Format (Check one): Yes [ ] No [X]
TABLE OF CONTENTS
Forward Looking Statements
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2. Plan of Operation
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
----------------------------------------
FORWARD LOOKING STATEMENTS
This report contains forward looking statements. The forward looking
statements include all statements that are not statements of historical fact.
The forward-looking statements are often identifiable by their use of words
such as "may," "expect," "believe," "anticipate," "intend," "could,"
"estimate," "continue," "plans" or the negative or other variations of those or
comparable terms. The registrant's actual results could differ materially from
the anticipated results described in the forward-looking statements. Factors
that could affect the registrant's results include, but are not limited to,
those discussed in Item 2, "Plan of Operation" and included elsewhere in this
report.
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
Financial Information
INTERIM STATEMENTS (UNAUDITED)
The Financial Statements and related notes presented below should be read in
conjunction with "PLAN OF OPERATION." In the opinion of the Management, the
interim financial statements (unaudited) include all adjustments necessary to
make these financial statements in no way misleading. The information below
may not be indicative of the Company's future results of operations.
MOLECULAR ROBOTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
AS OF JUNE 30, 2000 AND
DECEMBER 31, 2000 (UNAUDITED) AND
FOR THE THREE MONTHS ENDED
DECEMBER 31, 2000 AND 1999 (UNAUDITED)
MOLECULAR ROBOTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
June 30, 2000 and December 31, 2000 (unaudited)
FINANCIAL STATEMENTS
Balance Sheets
Statements of Operations
Statements of Stockholders' Equity
Statements of Cash Flows
Notes to Financial Statements
MOLECULAR ROBOTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
June 30, 2000 and December 31, 2000 (unaudited)
ASSETS
December 31, June 30,
2000 2000
(unaudited) (as restated)
Assets
Cash and cash equivalents 824 -
Equipment $ 199,756 $ 195,506
Total assets $ 200,580 $ 195,506
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Book overdraft $ - $ 4,833
Accounts payable and accrued expenses 29,500 1,500
Total current liabilities 29,500 6,333
Commitments
Stockholders' equity
Common stock, $0.0001 par value
50,000,000 shares authorized
14,530,530 (unaudited) and 10,150,000 shares
issued and outstanding 1,453 1,015
Common stock to be issued 306,875 260,000
Additional paid-in capital 44,097,571 32,751,677
Deficit accumulated during the development stage (44,305,784) (32,823,519)
Total stockholders' equity 100,115 189,173
Total liabilities and stockholders' equity $ 200,580 $ 195,506
The accompanying notes are an integral part of these financial statements.
MOLECULAR ROBOTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, 2000 and 1999 (unaudited) and
for the Period from July 29, 1997 (Inception) to December 31, 2000 (unaudited)
For the
Period from
July 29,
For the 1997
Three Months Ended (Inception) to
December 31, December 31,
2000 1999 2000
(unaudited) (unaudited) (unaudited)
(as restated)
Costs and expenses
General and administrative expenses $ 7,263,440 $ 24,973 $ 22,148,307
Research and development - - 22,158,860
Total costs and expenses 7,263,440 24,973 44,307,167
Loss before other income (expense) (7,263,440) (24,973) (44,307,167)
Other income (expense)
Interest income - - 272
Other income - - 1,111
Total other income (expense) - - 1,383
Net loss $(7,263,440) $ (24,973) $ (44,305,784)
Basic and diluted loss per share $ (0.57) $ (0.02) $ (13.00)
Weighted-average common shares
outstanding 12,777,563 1,293,150 3,407,979
The accompanying notes are an integral part of these financial statements.
MOLECULAR ROBOTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
For the Period from July 29, 1997 (Inception) to December 31, 2000 (unaudited)
Deficit
Accumulated
Common Additional During the
Preferred Stock Common Stock Stock Paid-In Development
Shares Amount Shares Amount to be Issued Capital Stage Total
Balance, July 29, 1997
(Inception) - $ - - $ - $ - $ - $ - $ -
Common stock issued for
Cash 5,340 - 53,400 53,400
Cash 6,000 1 23,999 24,000
Services 493,000 49 4,929,951 4,930,000
Services 29,050 3 116,197 116,200
Cash and services 450,000 45 4,499,955 4,500,000
Common stock to be
issued for cash 4,987 4,987
Issuance costs (15,704) (15,704)
Net loss (9,575,570) (9,575,570)
Balance, June 30, 1998 - - 983,390 98 4,987 9,607,798 (9,575,570) 37,313
Common stock issued for
Cash 113,250 11 133,959 133,970
Cash 17,500 2 34,998 35,000
Cash 19,145 2 76,578 76,580
Cash 665 - 4,987 4,987
Services 126,200 12 502,189 502,201
Services 11,000 1 21,999 22,000
Services 56,100 6 56,094 56,100
The accompanying notes are an integral part of these financial statements.
MOLECULAR ROBOTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
For the Period from July 29, 1997 (Inception) to December 31, 2000 (unaudited)
Deficit
Accumulated
Common Additional During the
Preferred Stock Common Stock Stock Paid-In Development
Shares Amount Shares Amount to be Issued Capital Stage Total
Common stock to be
issued for cash $ $ $ (4,987) $ 4,987 $ $ -
Returned and canceled
shares (34,100) (3) (15,001) (15,004)
Net loss (727,088) (727,088)
Balance, June 30, 1999 - - 1,293,150 129 - 10,428,588 (10,302,658) 126,059
Common stock issued for
intellectual property
(as restated) 3,900,000 390 9,749,610 9,750,000
Common stock to be
issued in connection
with private placement 260,000 260,000
Forgiveness of debt 81,850 81,850
Options issued for services
(as restated) 100,000 100,000
Preferred stock reissued as
common stock for
intellectual property
(as restated) 4,956,850 496 12,391,629 12,392,125
Net loss (as restated) (22,520,861) (22,520,861)
Balance, June 30, 2000
(as restated) 10,150,000 1,015 260,000 32,751,677 (32,823,519) 189,173
Additional investment
(unaudited) 96,332 96,332
The accompanying notes are an integral part of these financial statements.
MOLECULAR ROBOTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
For the Period from July 29, 1997 (Inception) to December 31, 2000 (unaudited)
Deficit
Accumulated
Common Additional During the
Preferred Stock Common Stock Stock Paid-In Development
Shares Amount Shares Amount to be Issued Capital Stage Total
Common stock issued for
services (unaudited) $ 1,500,000 $ 150 $ $ 3,749,850 $ $ 3,750,000
Common stock to be
issued for services
(unaudited) 46,875 46,875
Options issued for services
(unaudited) 300,000 300,000
Net loss (unaudited) (4,218,825) (4,218,825)
Balance, September 30,
2000 (unaudited) 11,650,000 $1,165 $ 306,875 $ 36,897,859 $(37,042,344) $ 163,555
Common stock issued for
cash (unaudited) 4,000 $ - $ 10,000 $ 10,000
Common stock issued for
services (unaudited) 2,876,000 $ 288 $ 7,189,712 $ 7,190,000
Net loss (unaudited) $ (7,263,440) $ (7,263,440)
Balance, December 31,
2000 (unaudited) 14,530,000 $1,453 306,875 $ 44,097,571 $(44,305,784) $ 100,115
The accompanying notes are an integral part of these financial statements.
MOLECULAR ROBOTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Three Months Ended December 31, 2000 and 1999 (unaudited) and
for the Period from July 29, 1997 (Inception) to December 31, 2000 (unaudited)
For the
Period from
July 29,
For the 1997
Three Months Ended (Inception) to
December 31, December 31,
2000 1999 2000
(unaudited) (unaudited) (unaudited)
(as restated)
Cash flows from operating activities
Net loss $(7,263,440) $ (24,973) $ (44,305,784)
Adjustments to reconcile net loss to net cash
used in operating activities
Stock issued for acquisition of
intellectual property - - 22,142,125
Issuance of stock for services 7,190,000 - 21,088,226
Issuance of options for services - - 400,000
Increase in
Accounts payable and accrued expenses 28,000 1,500 29,500
Net cash used in operating activities (45,440) $ (23,473) (645,933)
Cash flows from investing activities
Purchase of equipment - - (199,756)
Net cash used in investing activities - - (199,756)
Cash flows from financing activities
Increase in book overdraft - - 5,877
Net proceeds from short-term loan payable -
related party - 77,850 81,850
Proceeds from issuance of common stock - - 683,698
Net cash provided by financing activities - 77,850 771,425
Net decrease in cash and cash equivalents - 54,729 -
Cash and cash equivalents, beginning of year - 3,842 -
Cash and cash equivalents, end of year $ - $ 58,571 $ -
The accompanying notes are an integral part of these financial statements.
MOLECULAR ROBOTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Three Months Ended December 31, 2000 and 1999 (unaudited) and
for the Period from July 29, 1997 (Inception) to December 31, 2000 (unaudited)
Supplemental schedule of non-cash investing and financing activities
During the year ended June 30, 2000 and the period from July 29, 1997
(inception) to June 30, 2000, the Company issued preferred and common stock in
exchange for intellectual property for $22,142,125 (unaudited). During the
quarter ending December 31, 2000, the company agreed to reissue the preferred
stock exchanged for intellectual property as common stock.
During the period from July 29, 1997 (inception) to December 31, 2000, the
Company issued 5,541,350 shares (unaudited) of common stock to management and
others for consulting and employment services rendered valued at $10,986,725
(unaudited).
During the period from July 29, 1997 (inception) to December 31, 2000, the
Company issued options to purchase 266,667 shares (unaudited) of common stock
for legal services rendered valued at $400,000 (unaudited).
The accompanying notes are an integral part of these financial statements.
MOLECULAR ROBOTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 and December 31, 2000 (unaudited)
NOTE 1 - BUSINESS AND ORGANIZATION
Molecular Robotics, Inc. (the "Company") was incorporated under its former name
of NTech Corporation in the State of Delaware on July 29, 1997 for the primary
purpose of developing, manufacturing, and marketing nano-scale products ("nano
technology"). Nano technology is the concept of miniaturizing products to a
point that there becomes a practical commercial application of the products.
Effective March 23, 2000, NTech Corporation's name was changed to Molecular
Robotics, Inc. The Company's offices are located in Los Angeles, California,
and the Company intends to use independent third parties to manufacture its
products.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Unaudited Financial Information
The unaudited financial information furnished herein reflects all adjustments,
consisting only of normal recurring adjustments, which in the opinion of
management, are necessary to fairly state the Company's financial position, the
results of operations, and cash flows for the periods presented. The results
of operations for the three months ended December 31, 2000 are not necessarily
indicative of results for the entire fiscal year ending June 30, 2001.
The information with respect to three months ended December 31, 2000 and 1999
is unaudited.
Going Concern
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles that contemplate continuation of the
Company as a going concern. As shown in the accompanying financial statements,
the Company had losses and negative cash flows from operations and needs to
raise additional funds to accomplish its objectives. In addition, the
Company's sole reason for the positive equity balance is the continuing effort
of Company personnel to sell preferred and common stock. There is no certainty
they will be able to continue to do so. Management plans to rely on the sales
of securities to sustain operations. These financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Development Stage Enterprise
The Company is a development stage company as defined in Statement of Financial
Accounting Standards ("SFAS") No. 7, "Accounting and Reporting by Development
Stage Enterprises." The Company is devoting substantially all of its present
efforts to establish a new business, and its planned principal operations have
not yet commenced. All losses accumulated since inception have been considered
as part of the Company's development stage activities.
MOLECULAR ROBOTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 and December 31, 2000 (unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements.
Such estimates affect the reported amounts of revenues and expenses during the
reported period. Actual results could materially differ from these estimates.
Fair Value of Financial Instruments
The Company measures its financial assets and liabilities in accordance with
generally accepted accounting principles. For certain of the Company's
financial instruments, including cash and cash equivalents and accounts payable
and accrued expenses, the carrying amounts approximate fair value due to their
short maturities.
Loss per Share
The Company calculates loss per share in accordance with SFAS No. 128,
"Earnings per Share." Basic loss per share is computed by dividing loss
available to common stockholders by the weighted-average number of common
shares outstanding. Diluted loss per share is computed similar to basic loss
per share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were
dilutive. Because the Company has incurred net losses, basic and diluted loss
per share are the same.
Stock-Based Compensation
The Company accounts for employee stock compensation arrangements in accordance
with provisions of Accounting Principles Board Opinion No. 25 ("APB 25"),
"Accounting for Stock Issued to Employees," and complied with the disclosure
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." Under
APB 25, compensation expense is based on the difference, if any, on the date of
grant between the fair value of the Company's common stock and the exercise
price. Unearned compensation is amortized over the vesting period of the
related options.
MOLECULAR ROBOTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 and December 31, 2000 (unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of Long-Lived Assets
During the year ended June 30, 2000, the Company adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of." Under the provisions of this statement, the Company has
evaluated its long-lived assets for financial impairment and will continue to
evaluate them as events or changes in circumstances indicate that the carrying
amount of such assets may not be fully recoverable.
The Company evaluates the recoverability of long-lived assets not held for sale
by measuring the carrying amount of the assets against the estimated
undiscounted future cash flows associated with them. At the time such
evaluations indicate that the future undiscounted cash flows of certain
long-lived assets are not sufficient to recover the carrying value of such
assets, the assets are adjusted to their fair values. Based on these
evaluations, the Company recorded an impairment loss of $13,825,275 for the
year ended June 30, 2000 on the intellectual property acquired during the year.
Income Taxes
The Company accounts for income taxes under the asset and liability method of
accounting. Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. A
valuation allowance is required when it is less likely than not that the
Company will be able to realize all or a portion of its deferred tax assets.
Comprehensive Income
The Company utilizes SFAS No. 130, "Reporting Comprehensive Income." This
statement establishes standards for reporting comprehensive income and its
components in a financial statement. Comprehensive income as defined includes
all changes in equity (net assets) during a period from non-owner sources.
Examples of items to be included in comprehensive income, which are excluded
from net income, include foreign currency translation adjustments and
unrealized gains and losses on available-for-sale securities. Comprehensive
income is not presented in the Company's financial statements since the Company
did not have any of the items of comprehensive income in any period presented.
MOLECULAR ROBOTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 and December 31, 2000 (unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently Issued Accounting Pronouncements
In December 1999, the Securities and Exchange Commission staff released Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition," to provide guidance
on the recognition, presentation, and disclosure of revenue in financial
statements. Changes in accounting to apply the guidance in SAB No. 101 may be
accounted for as a change in accounting principle effective January 1, 2000.
Management has not yet determined the complete impact of SAB No. 101 on the
Company; however, management does expect that application of SAB No. 101 will
have a material effect on the Company's revenue recognition and results of
operations.
In March 2000, the FASB issued FASB Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation," (an Interpretation of
Accounting Principles Bulletin Opinion No. 25 ("APB 25")) ("FIN 44"). FIN 44
provides guidance on the application of APB 25, particularly as it relates to
options. The effective date of FIN 44 is July 1, 2000, and the Company has
adopted FIN 44 as of that date.
In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities, a replacement
of FASB Statement No. 125." This statement is not applicable to the Company.
NOTE 3 - COMMITMENTS
During the year ended June 30, 2000, the Company entered into an employment
agreement, expiring in May 2005, with the following compensation commitments:
Year Ended
June 30,
2001 $ 80,000
2002 $ 80,000
2003 $ 80,000
2004 $ 80,000
2005 $ 70,000
MOLECULAR ROBOTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 and December 31, 2000 (unaudited)
NOTE 3 - COMMITMENTS (Continued)
In connection with the acquisition of intellectual property, the Company agreed
to issue an additional 1,000,000 shares of its common stock vesting as follows:
100,000 shares in 2001, 200,000 shares in 2002, 300,000 shares in 2003, and
400,000 shares in 2004. The vesting of the shares is contingent upon
performance of the intellectual property. Accordingly, the cost of the
intellectual property will be measured based on the fair value of the shares at
the vesting dates in accordance with Emerging Issues Task Force 96-18,
"Accounting for Equity Instruments That are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods, or Services."
In May 1998, the Company entered into an agreement to construct a piece of
equipment. The expenditures associated with this contract will be capitalized
to equipment and will be depreciated upon completion of the contract. The
Company is required to pay the consultant upon completion of various phases, at
a pre-determined fee schedule. The total estimated expenditure is $199,000.
As of June 30, 2000, the Company has paid $190,398. On July 1, 2000, the
Company entered into a two-year consulting agreement totaling $36,000 per year.
The Company also agreed to issue the consultant 150,000 shares of common stock
upon completion of the two years. As a result, the Company will record
compensation expense of approximately $187,500 per year over the next two
years.
NOTE 4 - STOCKHOLDERS' EQUITY
Common Stock
During the year ended June 30, 2000, the Company issued 3,900,000 shares of
common stock in exchange for intellectual property for $9,750,000.
During the year ended June 30, 2000, the Company issued 4,956,850 shares of
preferred stock in exchange for certain intellectual property acquired for
$12,392,125. Subsequently, the Company has reissued this preferred stock
as common stock.
MOLECULAR ROBOTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 and December 31, 2000 (unaudited)
NOTE 4 - STOCKHOLDERS' EQUITY (Continued)
Private Placement
In June 2000, the Company entered into a private placement agreement to offer
up to $5,000,000 worth of units at $2.50 per unit to accredited investors. As
of June 30, 2000, $260,000 was received, and the Company had committed 104,000
units. Each unit consists of one share of the Company's common stock and two
warrants at an exercise price of $5 per share. The warrants will be immediately
detachable from the common shares for separate transfer and will be exercisable
from the closing date of the offering for a period of 12 months thereafter.
There was no effect on pro forma results of operations as a result of the
issuance of stock purchase warrants as the fair value of the warrants was $0.
The fair value was computed using the Black-Scholes option valuation model with
the following assumptions: dividend yield of 0%, risk-free interest rate of 7%,
expected volatility of 0%, and an expected life of one year.
In connection with the offering, the Company issued 208,000 warrants subsequent
to June 30, 2000.
Options
During the year ended June 30, 2000, the Company entered into an agreement to
issue options for 400,000 shares of common stock for services rendered at an
exercise price of $1. The shares vest over a six-month period commencing June
2000. The fair value of the stock of $2.50 per share was used to record the
expense. Accordingly, the Company recorded $300,000 for the three months ended
December 31, 2000.
NOTE 5 - RELATED PARTY TRANSACTIONS
During the year ended June 30, 2000 and the three months ended December 31,
2000, the Company paid consulting fees to stockholders of the Company. Total
fees paid during the year ended June 30, 2000 and the three months ended
December 31, 2000 were for services rendered in relation to the development of
a business plan and the running of daily operations and amounted to $150,333
and $48,400 (unaudited), respectively.
MOLECULAR ROBOTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 and December 31, 2000 (unaudited)
NOTE 6 - SUBSEQUENT EVENTS
On January 09, 2001, a dismissal was filed in the Superior Court of Alameda
County, State of California, Case No. 813370-6 regarding the action against
former officer Ezekiel Kruglick. In return for the Company's dismissal,
Kruglick returned 324,000 shares of common stock.
ITEM 2. PLAN OF OPERATION.
The following Plan of Operation should be read in conjunction with the
financial statements and accompanying notes appearing elsewhere in this Report.
OVERVIEW
Since inception, the Company has developed technologies, acquired technologies
from third parties, directed, supervised and coordinated research and
development efforts, raised capital and initiated marketing activities with
potential customers. The Company will continue to focus in these areas in its
daily operations in the near future.
At December 31, 2000, the Company had an accumulated net loss since inception
(July 1997) of (44,305,784) (unaudited; restated). Of this accumulated loss,
($22,158,860) has been derived from the cost of research and development and
($22,148,307) from general and administrative expenses. The Company expects
operating losses to continue for the foreseeable future from research and
development efforts and general and administrative expenses prior to receiving
any revenues from its technologies.
The Company does not know if its research and development or marketing efforts
will be successful, that it will ever have commercially acceptable products or
if it will achieve significant sales of any such products. The Company
operates in a highly competitive environment of rapid changes in technologies
and is dependent upon the services of its employees, consultants and
independent contractors. If the Company is unable to successfully
commercialize its technologies, it would likely have to significantly alter its
business operations.
RESULTS OF OPERATIONS
Comparison of the three months ended December 31, 2000 to the three months
ended December 31, 1999.
Net Loss. The Company reported a net loss of ($7,263,440), or ($.57) per
share, basic and diluted, for operations for the three months ended December
31, 2000 compared to a net loss of ($24,973), or ($.02) per share, basic and
diluted, for the three months ended December 31, 1999. The increase of
($7,238,467) is primarily a result of the recording of ($7,263,440) in general
and administrative expenses related to the Company's daily operations.
Revenues. The Company had no revenues for the three months ended December 31,
2000 nor since its inception. The Company anticipates that it will realize
revenues within the next twelve months from sales of its coded microtaggant and
optical reader, but there is no assurance that this indeed will occur.
Operating Costs and Expenses. Operating costs and expenses for the three
months ended December 31, 2000 totaled ($7,263,440) compared to operating
costs and expenses of ($24,973) for the three months ended December 31, 1999.
These operating costs and expenses were a result of general and administrative
expenses of ($7,263,440) for the three months ended December 31, 2000, which
consisted of consultant fees, accounting, travel, legal, telephone and other
day to day operating expenses, compared to general and administrative expenses
of ($24,973) for the three months ended December 31, 1999. This increase was
primarily the result of the issuance of stock for services. The Company does
not anticipate any significant change in general and administrative expenses in
the near future.
Research and Development. The Company expects research and development
expenses to increase as it furthers the development of its existing
technologies and acquires and/or licenses new technologies. The future
research and development will be funded primarily from additional financings
the Company expects to consummate. There is no assurance that the Company will
consummate such additional financing.
For the next twelve months, the Company anticipates the hiring of an additional
15 employees, comprised of both scientific/technical and administrative
positions.
LIQUIDITY
As a development stage company, Molecular Robotics needs to continue to raise
capital to continue its operations. The Company has relied primarily upon its
management, private placements and subscription sales of stock to fund its
continuing operations. Until the Company can generate revenue from sales and
licensing of its technologies, or receive a large infusion of cash from a
potential strategic partner, it intends to rely upon these methods of funding
operations during the next year. The Company's fundings to date have been
allocated to the taggant/reader development, as well as general business set up
and operating expenses. The Company will use additional capital raised in the
next twelve months to further the development of its taggant and optical reader
and other products in development, as well as general operating expenses. The
Company has not entered into any outside funding commitments to date.
Stockholders' equity totaled $100,115 on December 31, 2000.
Based upon current projections, the Company's principal cash requirements for
the next twelve months consist of (1) fixed expenses, including rent (new lease
projected), payroll, investor relations services, public relations services,
consultant services and (2) variable expenses, including technology research
and development, intellectual property protection, utilities and telephone,
office supplies, and legal and accounting services. The Company intends to
satisfy its capital requirements for the next twelve months by continuing to
pursue private placements to raise capital, using stock as payment for services
in lieu of cash where appropriate and borrowing as appropriate. The Company
does not know if these resources will be adequate to cover its capital
requirements.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
On January 09, 2001, a dismissal was filed in the Superior Court of Alameda
County, State of California, Case No. 813370-6 regarding the action against
former officer Ezekiel Kruglick. In return for the Company's dismissal,
Kruglick returned 324,000 shares of common stock.
ITEM 2. Changes in Securities.
Recent Sales of Unregistered Securities; Use of Proceeds From Registered
Securities
a. Securities Sold
Between October 1, 2000 and December 31, 2000 the Company issued 2,876,000
shares of common stock for services to several parties for consideration of
$2.50 per share. The Company also issued 4,000 shares of common stock for
cash at $2.50 per share to one investor under Exemption 506.
With respect to the sales of these unregistered securities by Molecular
Robotics, the Company believes that these transactions did not involve any
public offering, in as much as all these shares were issued to the Company's
Officers, Directors and others, who purchased the shares for investment
purposes only and not with a view to further public distribution. Further, no
commissions were paid to any persons in connection with such sales, no
advertising of any nature was made in connection with the sale of said shares,
all Company information was made available to said purchasers, and said
purchasers were required to execute a subscription agreement restating the
aforementioned, among other things. Accordingly, the Company believes that the
aforementioned transactions were exempt from registration pursuant to Section
4(2) of the Securities Act of 1933, as amended.
b. Use of Proceeds From Registered Securities
Funds raised from the sale of securities were allocated to general working
capital.
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. The following exhibits are attached hereto:
Exhibit Number Description of Exhibit
27.1 Financial Data Schedule
b. The Company filed the following reports on Form 8-K during the quarter
ended December 31, 2000: None
Signatures
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
Molecular Robotics, Inc.
(Registrant)
Date: February 19, 2001 By:/s/SUSAN M. ALT
Susan M. Alt
Chairman of the Board