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 March 31, 2001
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: 20,224,000 shares of the
registrant's common stock were issued and outstanding as of March 31, 2000,
not including 208,000 shares issuable upon the exercise of outstanding
warrants.
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 MARCH 31, 2001 (UNAUDITED) AND
JUNE 30, 2000 (AS RESTATED) AND
FOR THE THREE MONTHS ENDED
MARCH 31, 2001 AND 2000 (UNAUDITED) AND
FOR THE NINE MONTHS ENDED
MARCH 31, 2001 AND 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
March 31, 2001 (unaudited) and June 30, 2000 (as restated)
ASSETS
March 31, June 30,
2001 2000
(unaudited) (as restated)
Assets
Cash and cash equivalents 5,686 -
Equipment $ 199,756 $ 195,506
Total assets $ 205,442 $ 195,506
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Book overdraft $ - $ 4,833
Accounts payable and accrued expenses 58,613 1,500
Total current liabilities 58,613 6,333
Commitments
Stockholders' equity
Common stock, $0.0001 par value
50,000,000 shares authorized
20,224,224 (unaudited) and 10,150,000 shares
issued and outstanding 2,022 1,015
Common stock to be issued - 260,000
Additional paid-in capital 59,316,159 32,751,677
Deficit accumulated during the development stage (59,171,352) (32,823,519)
Total stockholders' equity 146,829 189,173
Total liabilities and stockholders' equity $ 205,442 $ 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 and Nine Months Ended March 31, 2001 and March 31, 2000
(unaudited)
Three Months Ended March 31, Nine Months Ended March 31,
2001 2000 2001 2000
Costs and expenses
General and administrative expenses $ 14,903,159 $ 10,491 $ 26,385,445 $ 47,588
Research and development 600 - 600 -
Total costs and expenses 14,903,759 10,491 26,386,045 -
Loss before other income (expense) (14,903,759) (10,491) (26,386,045) (47,588)
Other income (expense)
Interest income 22 4 44 49
Other income - 78,233 30 78,234
Total other income (expense) 22 78,237 74 78,283
Net income (loss) $ (14,903,737) $ 67,746 $ (26,385,971) $ 30,695
Basic and diluted income (loss)
per share $ (1.12) $ 0.11 $ (1.99) $ 0.05
Weighted-average common shares
outstanding 13,273,992 637,720 13,273,992 637,720
The accompanying notes are an integral part of these financial statements.
MOLECULAR ROBOTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
INCEPTION (JULY 29, 1997) THROUGH MARCH 31, 2001
(unaudited)
Costs and expenses
General and administrative expenses $ 37,012,635
Research and development 22,159,760
Total costs and expenses 59,172,395
Loss before other income (expense) (59,172,395)
Other income (expense)
Interest income -
Other income 1,043
Total other income (expense) 1,043
Net loss $ (59,171,352)
Basic and diluted loss per share $ (4.46)
Weighted-average common shares
outstanding 13,273,992
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 March 31, 2001 (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 March 31, 2001 (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 March 31, 2001 (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
Common stock issued for
services (unaudited) 5,941,000 $1,485 $ 14,851,015 $ 14,852,500
Net loss (unaudited) $(14,545,132) $(14,545,132)
Balance, March 31
2001 (unaudited) 20,224,000 $2,022 - $ 59,316,159 $(59,171,352) $ 146,829
The accompanying notes are an integral part of these financial statements.
MOLECULAR ROBOTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Nine Months Ended March 31, 2001 and March 31, 2000 (unaudited)
and For the Period from July 29, 1997 (Inception) to March 31, 2001 (unaudited)
For the Nine Months Ended For the Period From
March 31, July 29, 1997 (Inception)
2001 2000 to March 31, 2001
(unaudited) (unaudited) (unaudited)
Cash flows from operating activities
Net income (loss) $ (26,385,971) $ 30,695 $ (59,171,352)
Adjustments to reconcile net loss to net cash
used in operating activities
Stock issued for acquisition of intellectual
property - - 22,142,125
Stock to be issued/issuance of stock for services 25,795,000 - 35,896,501
Issuance of options for services - - 100,000
Increase in
Accounts payable and accrued expenses - - 1,500
Loan payable - (24,200) -
Net cash used in operating activities $ (590,971) $ 6,495 (1,031,226)
Cash flows from investing activities
Purchase of equipment (4,250) (23,878) (199,609)
Net cash used in investing activities (4,250) (23,878) (199,609)
Cash flows from financing activities
Net proceeds from short-term loan payable -
related party - - 81,850
Proceeds from issuance of common stock/
Additional paid in capital 605,740 14,000 1,148,985
Net cash provided by financing activities 605,740 14,000 1,230,835
Net (decrease)/increase in cash and cash equivalents 10,519 (3,383) -
Cash and cash equivalents, beginning of period (4,833) 3,843 -
Cash and cash equivalents, end of period $ 5,686 $ 460 $ -
The accompanying notes are an integral part of these financial statements.
MOLECULAR ROBOTICS, INC.
(formerly NTECH CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Years Ended June 30, 2000 and 1999 and
for the Period from July 29, 1997 (Inception) to June 30, 2000
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. The cost of
intellectual property acquired has been recorded as research and development
costs in accordance with paragraph 9 of Statement of Financial Accounting
Standards ("SFAS") No. 2, "Accounting for Research and Development Costs."
During the period from July 29, 1997 (inception) to June 30, 2000, the
Company issued 1,165,350 shares of common stock to management and others for
consulting and employment services rendered valued at $10,126,501.
During the period from July 29, 1997 (inception) to June 30, 2000, the Company
issued options to purchase 66,667 shares of common stock for legal services
rendered valued at $100,000.
The accompanying notes are an integral part of these financial statements.
MOLECULAR ROBOTICS, INC.
(formerly NTECH CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 1 - BUSINESS AND ORGANIZATION
Molecular Robotics, Inc. (formerly NTech Corporation) (the "Company") was
incorporated under its former name 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
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 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.
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.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all highly
liquid investments purchased with original maturities of three months or less
to be cash equivalents.
Equipment
Equipment is stated at cost. The Company provides for depreciation and
amortization using the straight-line method over the estimated useful lives of
the assets of three to five years.
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.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Stock Split
On April 3, 2000, the Company effected a 10-for-one reverse stock split of its
common stock. All share and per share data have been retroactively restated
to reflect this stock split.
Research and Development Costs
Research and development costs are expensed as incurred. Research and
development projects acquired from others that were commenced but not yet
completed, which have no alternative uses in research and development
activities or otherwise are charged to expense.
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.
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.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Advertising and Promotional Expenses
Advertising and promotional expenses are charged to expense as incurred.
Advertising and promotional expenses for the years ended June 30, 2000 and
1999 were $3,424 and $1,028, respectively.
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.
Recently Issued Accounting Pronouncements
In June 2000, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 138, "Accounting for Certain Instruments and Certain Hedging Activities."
This statement is not applicable to the Company.
In June 2000, the FASB issued SFAS No. 139, "Rescission of FASB Statement No.
53 and Amendments to Statements No. 63, 89, and 121." This statement is not
applicable to the Company.
NOTE 3 - EQUIPMENT
Equipment at June 30, 2000 consisted of the following:
Constructed equipment $ 190,398
Computer equipment 5,108
Total $ 195,506
NOTE 4 - 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
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." The value of
these contingent shares will be expensed when the shares are issued.
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.
NOTE 5 - STOCKHOLDERS' EQUITY
Preferred Stock
The Company's preferred stock has a par value of $0.0001. There are 5,000,000
shares authorized and 4,956,850 shares issued and outstanding. The holders of
the preferred stock have voting rights.
NOTE 5 - STOCKHOLDERS' EQUITY (Continued)
Preferred Stock (Continued)
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. The cost of intellectual property acquired has been recorded as
research and development costs in accordance with paragraph 9 of SFAS No. 2.
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. The cost
of intellectual property acquired has been recorded as research and
development costs in accordance with paragraph 9 of SFAS No. 2.
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 legal services to purchase 400,000 shares of common stock at
an exercise price of $1. The shares vest over a six-month period commencing
in June 2000. The Company recorded a $100,000 expense for the period,
representing the fair value of the options of $1.50. 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 6%, expected
volatility of 0%, and an expected life of six months.
NOTE 6 - INCOME TAXES
As of June 30, 2000, the Company had approximately $23,866,000 in net
operating loss carryforwards that may be offset against future taxable income.
No provision for income taxes for the year ended June 30, 2000 has been made
since the Company incurred a loss during the period. The deferred income tax
benefit of the loss carryforward is the only significant deferred income tax
asset or liability of the Company. It has been offset by a valuation
allowance of the same amount since management does not believe the
recoverability of this deferred tax asset is more likely than not.
Accordingly, no deferred income tax benefit has been recognized in these
financial statements.
NOTE 7 - RELATED PARTY TRANSACTIONS
During the year ended June 30, 2000, the Company paid consulting fees to
stockholders of the Company. Total fees paid during the year ended June 30,
2000 of $101,933 were for services rendered in relation to the development of
a business plan and the running of daily operations.
NOTE 8 - RESTATEMENT
The additional paid-in capital for the year ended June 30, 2000 has been
increased by $8,856,850 to restate the value of stock issued for the
acquisition of certain intellectual property, reflecting a revised fair value
of $2.50 per share.
The net loss for the year ended June 30, 1999 has been increased by $555,158
to restate the value of stock issued for services, reflecting revised fair
values ranging from $1 to $4. As a result, the accumulated deficit and the
additional paid-in capital as of June 30, 1999 increased by the same amount.
The accumulated deficit and the additional paid-in capital as of June 30, 1998
have also been increased by $9,489,482 to restate the value of stock issued
for services during the year ended June 30, 1998, reflecting revised fair
values ranging from $4 to $10.
Summary of restatement
For the Period from
For the Year Ended July 29, 1997 (inception)
June 30, to June 30,
1999 1999 2000 2000
(as restated) (as restated)
Net Loss (727,114) (171,930) (32,823,519) (23,866,669)
Basic and Diluted
Loss per Share (0.65) (0.15) (23.92) (13.27)
For the Year Ended
June 30,
2000 2000
(as restated)
Net Loss (22,520,861) (13,564,011)
Basic and Diluted
Loss per Share (11.50) (4.44)
NOTE 9 - FORGIVENESS OF DEBT
During the years ended June 30, 2000 and 1999, the Company was developing
intellectual property for another company owned by a Company stockholder. The
cash flows needed to support the research activities were provided by this
related party and were recorded as a liability when received. No revenues for
the research activities were to be recorded until completion of the
intellectual property. During the year ended June 30, 2000, the related party
was dissolved, and the debt owed to the related party was forgiven in
consideration for past research efforts. This forgiveness of debt has been
recorded as additional paid-in capital.
NOTE 10 - PRO FORMA ADJUSTMENT
On October 12, 2000, the Company recalled all outstanding shares of preferred
stock as of June 30, 2000 and reissued the stockholder an equal amount of
common stock.
The preferred stock issued during the year ended June 30, 2000 has the same
rights as the common stock. The preferred stock has no liquidation
preferences, dividends, or redemption rights. Accordingly, the preferred
stock has been restated as common stock for the purpose of computing pro forma
basic and diluted loss per share. As a result of this recall, there has been
no change in total stockholders' equity.
NOTE 11 - SUBSEQUENT EVENTS
Subsequent to June 30, 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.
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 March 31, 2001, the Company had an accumulated net loss since inception
(July 1997) of $ (59,171,352) (unaudited). Of this accumulated loss,
($22,159,760) has been derived from the cost of research and development and
($37,011,592) 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 nine months ended March 31, 2001 to the nine months ended
March 31, 2000.
Net Loss. The Company reported a net loss of $ (26,385,971) or ($1.09) per
share, basic and diluted, for operations for the nine months ended March 31,
2001 compared to a net income of $ 30,695 or $.05 per share, basic and
diluted, for the nine months ended March 31, 2000. The increase in loss of
($26,416,666) is primarily a result of the recording of ($26,385,445) in
general and administrative expenses related to the Company's daily operations.
Revenues. The Company had no revenues for the nine months ended March 31,
2001 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 nine
months ended March 31, 2001 totaled $ (26,385,971) compared to operating costs
and expenses of $ 30,695 for the nine months ended March 31, 2000. These
operating costs and expenses were a result of general and administrative
expenses of ($26,385,445) for the nine months ended March 31, 2001, which
consisted of consultant fees, accounting, travel, legal, telephone and other
day to day operating expenses, compared to general and administrative expenses
of ($47,588) for the nine months ended March 31, 2000. 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 $146,829 on March 31, 2001.
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.
None
ITEM 2. Changes in Securities.
Recent Sales of Unregistered Securities; Use of Proceeds From Registered
Securities
a. Securities Sold
Between July 1, 2000 and March 31, 2001 the Company issued 10,318,000 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
Any 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 March 31, 2001: 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: May 21, 2001 By:/s/SUSAN M. ALT
Susan M. Alt
Chairman of the Board