SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
|X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2001
|_| Transition report under Section 13 or 15(d) of the Exchange Act.
For the transition period from ______________ to ______________
Commission file number 000-28411
Manhattan Scientifics, Inc.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 850460639
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
641 Fifth Avenue, Suite 36F, New York, New York 10022
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(212) 752-0505
- -------------------------------------------------------------------------------
Issuer's telephone number, including area code
- -------------------------------------------------------------------------------
(Former name, former address and formal fiscal year, if changed since
last report)
Indicate by check whether the registrant: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES /X/ NO /_/
The number of shares outstanding of each of the issuer's classes of
common equity as of March 31, 2001 was as follows: 106,368,258 shares of
Common Stock, 118,499 shares of Series B Preferred Stock, and 14,000 shares of
Series C Preferred Stock.
Transitional Small Business Disclosure Format: YES /_/ NO /X/
PART I
Item 1. Financial Statements
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Consolidated Balance Sheet
March 31, 2001
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 477,000
Accounts receivable 87,000
Prepaid expenses 229,000
------------
Total current assets 793,000
------------
Property and equipment, net 143,000
Patents, net 1,850,000
Security deposit 7,000
------------
$ 2,793,000
============
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 389,000
Note payable to stockholder 275,000
Note payable - other 296,000
------------
Total current liabilities 960,000
------------
Commitments
STOCKHOLDERS' EQUITY
Capital stock $.001 par value
Preferred, authorized 1,000,000 shares
Series A convertible, redeemable, 10 percent cumulative, authorized 182,525
Shares; issued and outstanding - none
Series B convertible, authorized 250,000 shares; 118,499 shares issued and
outstanding
Series C convertible, redeemable, authorized 14,000 shares; 14,000 shares issued
and outstanding
Common, authorized 250,000,000 shares, 106,368,258 shares issued,
and outstanding, 656,890 shares issuable 105,000
Additional paid-in capital 34,849,000
Deferred compensation (291,000)
Deficit accumulated during the development stage (32,830,000)
-----------
Total stockholders' equity 1,833,000
------------
$ 2,793,000
============
The accompanying notes are an integral part of these financial statements
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Consolidated Statements of Operations
(Unaudited)
Period From
Inception
Three Months Ended (July 31,1992)
March 31, Through
2001 2000 March 31, 2001
------------- ----------- -------------
Revenues $ 0 $ 0 $ 250,000
------------- ----------- -------------
Operating costs and expenses:
Salaries and employee benefits 3,000 4,432,000
Consulting fees 203,000 6,515,000
Materials and supplies 987,000
General and administrative 841,000 346,000 12,947,000
Rent and utilities 14,000 4,000 591,000
Research and development 973,000 644,000 5,689,000
------------- ------------ ----------------
Total operating costs and expenses 2,034,000 994,000 31,161,000
------------- ------------ ----------------
Loss from operations before other income and (expenses) (2,034,000) (994,000) (30,911,000)
Other income and (expenses):
Contract revenue 3,602,000
Interest and other expense (10,000) (3,000) (578,000)
Interest income 12,000 16,000 163,000
Loss of equity investee (100,000)
------------- ------------ ----------------
Net loss attributable to common shareholders $ (2,032,000) $ (981,000) $ (27,824,000)
============= ============ =============
Basic and diluted loss per share:
Weighted average number of common shares
outstanding 106,232,000 101,315,000
=========== ============
Basic and diluted loss per share $(.02) $(.01)
====== ======
The accompanying notes are an integral part of these financial statements
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Consolidated Statements of Stockholders' Equity (Capital Deficiency)
(Notes A and F)
For the Cumulative Period From July 31, 1992 (Inception) Through March 31, 2001
(Unaudited)
Preferred Stock
$.001 Par Value
------------------- Common Stock
Series A Series B $.001 Par Value
Preferred ------------------- -------------------------
Stock Shares Amount Shares Amount
--------- -------- --------- ---------- ----------
Initial issuance of shares to founders on contribution
of intangible assets at historic cost basis 14,391,627 $ 14,500
Additional founders' contribution
Issuance of 1,037,000 shares of Series A preferred
Stock, net of issuance costs $ 10,000
Net loss
--------- ---------- ----------
Balance, March 31, 1993 10,000 14,391,627 14,500
Issuance of shares to investor at approximately
$.21 per share 14,391,627 14,500
Issuance of shares on exercise of options 479,720 1,000
Services performed in exchange for Series A
Preferred stock issued in fiscal 1993
Net loss
--------- ---------- ----------
Balance, March 31, 1994 10,000 29,262,974 30,000
Services performed for Series A preferred stock
issued in fiscal 1993
Issuance of shares at approximately $.52 per share 345,399
Net loss
--------- ---------- ----------
Balance, December 31, 1994 10,000 29,608,373 30,000
Issuance of 163,000 shares of Series A
Preferred stock 2,000
Write-off of amounts receivable from stockholders
Net loss
--------- ---------- ----------
Balance, December 31, 1995 12,000 29,608,373 30,000
Issuance of shares upon exercise of option for
$15,000 14,391,627 14,000
Net loss
--------- ---------- ----------
Balance, December 31, 1996 12,000 44,000,000 44,000
Purchase and retirement of 1,200,000 shares of
Series A preferred stock (12,000)
Purchase of 7,195,814 treasury shares of common
stock for $15,000
Net loss/comprehensive loss
--------- --------- --------- ---------- ----------
Balance, December 31, 1997 (carried forward) 0 0 0 44,000,000 44,000
Deficit
Amounts Accumulated
Additional Receivable During the
Paid-in From Development Treasury
Capital Stockholders Stage Stock Total
------------ -------------- -------------- ------------ ------------
Initial issuance of shares to founders on contribution
of intangible assets at historic cost basis $ 500 $ 15,000
Additional founders' contribution 40,000 $ (40,000) 0
Issuance of 1,037,000 shares of Series A preferred
Stock, net of issuance costs 1,020,000 (286,000) 744,000
Net loss $ (543,000) (543,000)
------------ -------------- -------------- -------------
Balance, March 31, 1993 1,060,500 (326,000) (543,000) 216,000
Issuance of shares to investor at approximately
$.21 per share 2,985,500 3,000,000
Issuance of shares on exercise of options 49,000 50,000
Services performed in exchange for Series A
Preferred stock issued in fiscal 1993 127,000 127,000
Net loss (2,292,000) (2,292,000)
------------ -------------- ------------- -------------
Balance, March 31, 1994 4,095,000 (199,000) (2,835,000) 1,101,000
Services performed for Series A preferred stock
issued in fiscal 1993 159,000 159,000
Issuance of shares at approximately $.52 per share 182,000 182,000
Net loss (2,250,000) (2,250,000)
------------ -------------- ------------- -------------
Balance, December 31, 1994 4,277,000 (40,000) (5,085,000) (808,000)
Issuance of 163,000 shares of Series A
Preferred stock 161,000 163,000
Write-off of amounts receivable from stockholders (40,000) 40,000 0
Net loss (972,000) (972,000)
------------ -------------- ------------- -------------
Balance, December 31, 1995 4,398,000 0 (6,057,000) (1,617,000)
Issuance of shares upon exercise of option for
$15,000 1,000 15,000
Net loss (284,000) (284,000)
------------ -------------- ------------- -------------
Balance, December 31, 1996 4,399,000 0 (6,341,000) (1,886,000)
Purchase and retirement of 1,200,000 shares of
Series A preferred stock (58,000) (70,000)
Purchase of 7,195,814 treasury shares of common
stock for $15,000 $ (15,000) (15,000)
Net loss/comprehensive loss (335,000) (335,000)
------------ -------------- ------------- ------------ -------------
Balance, December 31, 1997 (carried forward) 4,341,000 0 (6,676,000) (15,000) (2,306,000)
The accompanying notes are an integral part of these financial statements
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Consolidated Statements of Stockholders' Equity (Capital Deficiency) (continued)
(Notes A and F)
For the Cumulative Period From July 31, 1992 (Inception) Through March 31, 2001
(continued)
(Unaudited)
Preferred Stock
$.001 Par Value
------------------------ Common Stock
Series A Series B $.001 Par Value
Preferred ------------------------ -------------------------
Stock Shares Amount Shares Amount
--------- -------- --------- ---------- ----------
Balance, December 31, 1997 (brought forward) 0 0 0 44,000,000 $ 44,000
Purchase of 7,195,813 treasury shares of common
stock for $15,000
Special distribution of 14,391,627 shares of
common stock to Projectavision, Inc.
Shares deemed issued in connection
with reverse merger 11,000,000 11,000
Issuance of 182,525 shares of Series A preferred
stock and warrants exercisable into 750,000
shares of common stock at an exercise price of
$.10 per share in exchange for note payable of
$1,500,000 and accrued interest of $330,000
including deemed dividend in connection with
Beneficial conversion feature of preferred stock
Issuance of shares at $.20 per share, net of
Issuance costs 5,000,000 5,000
Issuance of shares to purchase intangible assets 7,200,000 7,000
Issuance of shares at $.58 per share for
Consulting services 1,000,000 1,000
Issuance of warrants on February 10, 1998 to
purchase 2,000,000 shares of common stock
exercisable at $.75 per share at fair value for
services resulting from cashless exercise feature
Issuance of shares at $.18 per share 275,000
Issuance of shares on conversion of 182,525 shares
of Series A preferred stock 9,435,405 10,000
Issuance of shares at $.05 per share 20,340,000 20,000
Issuance of stock options and warrants at fair value
for services
Net loss/comprehensive loss
------------ ------------ ------------ ------------ ------------
Balance, December 31, 1998
(carried forward) 0 0 0 98,250,405 98,000
Deficit
Amounts Accumulated
Additional Receivable During the
Paid-in From Development Treasury
Capital Stockholders Stage Stock Total
------------- ------------ ------------ ------------ ------------
Balance, December 31, 1997 (brought forward) $ 4,341,000 $ 0 $ (6,676,000) $ (15,000) $ (2,306,000)
Purchase of 7,195,813 treasury shares of common
stock for $15,000 (15,000) (15,000)
Special distribution of 14,391,627 shares of
common stock to Projectavision, Inc. 346,000 30,000 376,000
Shares deemed issued in connection
with reverse merger (11,000)
Issuance of 182,525 shares of Series A preferred
stock and warrants exercisable into 750,000
shares of common stock at an exercise price of
$.10 per share in exchange for note payable of
$1,500,000 and accrued interest of $330,000
including deemed dividend in connection with
Beneficial conversion feature of preferred stock 2,850,000 (1,020,000) 1,830,000
Issuance of shares at $.20 per share, net of
Issuance costs 970,000 975,000
Issuance of shares to purchase intangible assets 1,433,000 1,440,000
Issuance of shares at $.58 per share for
Consulting services 579,000 580,000
Issuance of warrants on February 10, 1998 to
purchase 2,000,000 shares of common stock
exercisable at $.75 per share at fair value for
services resulting from cashless exercise feature 660,000 660,000
Issuance of shares at $.18 per share 50,000 50,000
Issuance of shares on conversion of 182,525 shares
of Series A preferred stock (10,000)
Issuance of shares at $.05 per share 997,000 1,017,000
Issuance of stock options and warrants at fair value
for services 2,165,000 2,165,000
Net loss/comprehensive loss (4,580,000) (4,580,000)
------------ ------------ ------------ ------------ -----------
Balance, December 31, 1998
(carried forward) 14,370,000 0 (12,276,000) 0 2,192,000
The accompanying notes are an integral part of these financial statements
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Consolidated Statements of Stockholders' Equity (Capital Deficiency)(continued)
(Notes A and F)
For the Cumulative Period From July 31, 1992 (Inception) Through March 31, 2001
(continued)
(Unaudited)
Preferred Stock
$.001 Par Value
--------------------------- Common Stock
Series A Series B $.001 Par Value
Preferred --------------------------- ---------------------------
Stock Shares Amount Shares Amount
------------ ----------- ------------ ------------ ------------
(brought forward) 0 0 $ 0 98,250,405 $ 98,000
Issuance of shares in satisfaction
Of accrued expenses 78,000
Issuance of shares at $.49 per
Share for consulting services 10,000
Issuance of shares at $.49 per
Share to purchase furniture
and fixtures 100,000
Issuance of shares at market
Prices as consulting services
were performed 17,269
Issuance of shares to purchase
Intangible assets 1,000,000 1,000
Issuance of shares at $1.25 per
Share for services 1,600
Issuance of stock options
at fair value for services
Issuance of warrants on February 10, 1998
to purchase 2,000,000 shares of common
stock exercisable at $.75 per share for
consulting services resulting from
notification of warrant holder of
intent to exercise
Shares issuable at $1.27 per
Share in connection with note
payable
Issuance of shares on exercise
Of 100,000 options at $.20 per
share 100,000
Issuance of Series B convertible
Preferred shares at $6.00 per share including
deemed dividend in connection with beneficial
conversion feature of preferred stock 245,165
Issuance of shares at $.75 per share 533,000 1,000
Net loss/comprehensive loss
------------ ----------- ------------ ------------ ------------
Balance, December 31, 1999
(carried forward) 0 245,165 0 100,090,274 100,000
Deficit
Amounts Accumulated
Additional Receivable During the
Paid-in From Development Treasury
Capital Stockholders Stage Stock Total
------------ ------------ ------------ ------------ -----------
(brought forward) $ 14,370,000 $ 0 $(12,276,000) $ 0 $ 2,192,000
Issuance of shares in satisfaction
Of accrued expenses 15,000 $ 15,000
Issuance of shares at $.49 per
Share for consulting services 5,000 5,000
Issuance of shares at $.49 per
Share to purchase furniture
and fixtures 49,000 49,000
Issuance of shares at market
Prices as consulting services
were performed 15,000 15,000
Issuance of shares to purchase
Intangible assets 999,000 1,000,000
Issuance of shares at $1.25 per
Share for services 2,000 2,000
Issuance of stock options
at fair value for services 6,572,000 6,572,000
Issuance of warrants on February 10, 1998
to purchase 2,000,000 shares of common
stock exercisable at $.75 per share for
consulting services resulting from
notification of warrant holder of
intent to exercise 1,090,000 1,090,000
Shares issuable at $1.27 per
Share in connection with note
payable 191,000 191,000
Issuance of shares on exercise
Of 100,000 options at $.20 per
share 20,000 20,000
Issuance of Series B convertible
Preferred shares at $6.00 per share including
deemed dividend in connection with beneficial
conversion feature of preferred stock 2,942,000 (1,471,000) 1,471,000
Issuance of shares at $.75 per share 399,000 400,000
Net loss/comprehensive loss (9,800,000) (9,800,000)
------------ ------------ ------------ ------------ ----------
Balance, December 31, 1999
(carried forward) 26,669,000 0 (23,547,000) 0 3,222,000
The accompanying notes are an integral part of these financial statements
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Consolidated Statements of Stockholders' Equity
(Capital Deficiency) (Notes A and F) (continued)
For the Cumulative Period From July 31, 1992 (Inception) Through March 31, 2001
Preferred Stock Preferred Stock
$.001 Par Value $.001 Par Value
---------------------- -----------------------
Series A Series B Series C
Preferred ---------------------- -----------------------
Stock Shares Amount Shares Amount
----- ------ ------ --------- --------
Balance, December 31, 1999 (brought forward) 0 245,165 $ 0 0 $ 0
Issuance of shares at $.75 per share
Issuance of shares at market price for services
Issuance of common stock to Equilink, LLC on
exercise of cashless warrants
Shares issued of Series C convertible
preferred shares at $100.00 per
share including deemed dividend In
connection with beneficial
conversion feature of preferred stock 14,000
Issuance of shares in connection with Series C
Preferred stock private placement investment
Shares issuable at $2.23 per share in
connection with research and
development and license Agreement
Issuance of shares at market price for services
Issuance of options at market value for services
Issuance of options to purchase 100,000 shares
@$.40 per share for services
Amortization of deferred compensation costs
Issuance of shares to purchase furniture and fixtures
Issuance of shares in connection with Series C
Preferred stock private placement
Issuance of shares at $1.25 per share
Conversion of Series B preferred stock to common (60,000)
Issuance of shares at market price for services
Shares issuable at market price for services
Net loss/comprehensive loss
-------------- ------------ -------------- --------- -----------
Balance, December 31, 2000 (carried forward) 0 185,165 $ 0 14,000 $ 0
============== ============ ============== ========= ===========
Common Stock Amounts
$.001 Para Value Additional Receivable
------------------------ Paid-in Deferred From
Shares Amount Capital Compensation Stockholders
------ ------ ------- ------------ ------------
Balance, December 31, 1999 (brought forward) 100,090,274 $ 100,000 $ 26,669,000 $ 0
Issuance of shares at $.75 per share 515,000 1,000 385,000
Issuance of shares at market price for services 4,942
Issuance of common stock to Equilink, LLC on
exercise of cashless warrants 1,076,923 1,000 (1,000)
Shares issued of Series C convertible
preferred shares at $100.00 per
share including deemed dividend In
connection with beneficial
conversion feature of preferred stock 2,199,000
Issuance of shares in connection with Series C
Preferred stock private placement investment 700,000 1,000 600,000
Shares issuable at $2.23 per share in
connection with research and
development and license Agreement 1,115,000
Issuance of shares at market price for services 11,083 24,000
Issuance of options at market value for services 229,000
Issuance of options to purchase 100,000 shares
@$.40 per share for services 425,000 $ (425,000)
Amortization of deferred compensation costs 113,000
Issuance of shares to purchase furniture and fixtures 10,500 40,000
Issuance of shares in connection with Series C
Preferred stock private placement 10,000
Issuance of shares at $1.25 per share 1,600,050 2,000 1,998,000
Conversion of Series B preferred stock to common 600,000
Issuance of shares at market price for services 51,000 102,000
Shares issuable at market price for services 88,000
Net loss/comprehensive loss
------------- -------------- ------------ ------------ ----------
Balance, December 31, 2000 (carried forward) 104,669,772 $ 105,000 $ 33,873,000 $ (312,000) $ 0
============= ============== ============ ============ ==========
Accumulated
During the
Development Treasury
State Stock Total
----------- --------- -----
Balance, December 31, 1999 (brought forward) $ (23,547,000) $ 0 $ 3,222,000
Issuance of shares at $.75 per share 386,000
Issuance of shares at market price for services
Issuance of common stock to Equilink, LLC on
exercise of cashless warrants
Shares issued of Series C convertible
preferred shares at $100.00 per
share including deemed dividend In
connection with beneficial
conversion feature of preferred stock (1,400,000) 799,000
Issuance of shares in connection with Series C
Preferred stock private placement investment 601,000
Shares issuable at $2.23 per share in
connection with research and
development and license Agreement (1,115,000)
Issuance of shares at market price for services 24,000
Issuance of options at market value for services 229,000
Issuance of options to purchase 100,000 shares
@$.40 per share for services 113,000
Amortization of deferred compensation costs
Issuance of shares to purchase furniture and fixtures 40,000
Issuance of shares in connection with Series C
Preferred stock private placement
Issuance of shares at $1.25 per share 2,000,000
Conversion of Series B preferred stock to common
Issuance of shares at market price for services 102,000
Shares issuable at market price for services 88,000
Net loss/comprehensive loss (4,736,000) (4,736,000)
------------------ --------- -----------
Balance, December 31, 2000 (carried forward) $ (30,798,000) $ 0 $ 2,868,000
================== ========= ============
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Consolidated Statements of Stockholders' Equity
(Capital Deficiency) (Notes A and F) (continued)
For the Cumulative Period From July 31, 1992 (Inception) Through March 31, 2001
(Unaudited)
Preferred Stock Preferred Stock
$.001 Par Value $.001 Par Value
--------------------------- ---------------------------
Series A Series B Series C
Preferred --------------------------- ---------------------------
Stock Shares Amount Shares Amount
------------ ----------- ------------ ----------- ------------
Balance, December 31, 2000 (brought forward) 0 185,165 $ 0 14,000 $ 0
Issuance of options at fair value for services
Issuance of common shares at market price for services
Conversion of Series B preferred stock to common (66,666)
Issuance of common shares on exercise of 75,000
options on a cashless basis
Issuance of common shares in exchange for warrants
Issuance of common shares for services
Issuance of common shares at $.67 per share - net of
issuance cost
Issuance of common shares at $.72 per share - net of
issuance cost
Issuance of common shares for consulting services
Shares issuable at market price for services
Amortization of deferred compensation costs
Net loss/comprehensive loss
------------ ----------- ------------ ----------- ------------
Balance, March 31, 2001 118,499 $ 0 14,000 $ 0
============ =========== ============ =========== ============
Common Stock Amounts
$.001 Par Value Additional Receivable
--------------------------- Paid-in Deferred From
Shares Amount Capital Compensation Stockholders
------------ ------------ ------------ ------------ ------------
Balance, December 31, 2000 (brought forward) 104,669,772 $ 105,000 $ 33,873,000 $ (312,000) $ 0
Issuance of options at fair value for services 332,000
Issuance of common shares at market price for services 47,762
Conversion of Series B preferred stock to common 666,660
Issuance of common shares on exercise of 75,000
options on a cashless basis 73,064
Issuance of common shares in exchange for warrants 150,000 225,000
(225,000)
Issuance of common shares for services 6,000 6,000
Issuance of common shares at $.67 per share - net of
issuance cost 150,000 96,000
Issuance of common shares at $.72 per share - net of
issuance cost 200,000 138,000
Issuance of common shares for consulting services 405,000 396,000
Shares issuable at market price for services 8,000
Amortization of deferred compensation costs 21,000
Net loss/comprehensive loss
------------ ------------ ------------ ------------ ------------
Balance, March 31, 2001 106,368,258 $ 105,000 $ 34,849,000 $ (291,000) $ 0
============ ============ ============ ============ ============
Accumulated
During the
Development Treasury
Stage Stock Total
------------ ------------ ------------
Balance, December 31, 2000 (brought forward) $(30,798,000) $ 0 $ 2,868,000
Issuance of options at fair value for services 332,000
Issuance of common shares at market price for services
Conversion of Series B preferred stock to common
Issuance of common shares on exercise of 75,000
options on a cashless basis
Issuance of common shares in exchange for warrants 225,000
(225,000)
Issuance of common shares for services 6,000
Issuance of common shares at $.67 per share - net of
issuance cost 96,000
Issuance of common shares at $.72 per share - net of
issuance cost 138,000
Issuance of common shares for consulting services 396,000
Shares issuable at market price for services 8,000
Amortization of deferred compensation costs 21,000
Net loss/comprehensive loss (2,032,000) (2,032,000)
------------ ------------ ------------
Balance, March 31, 2001 $(32,830,000) $ 0 $ 1,833,000
============ ============ ============
The accompanying notes are an integral part of these financial statements
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Consolidated Statements of Cash Flows
(Unaudited)
Period From
Inception
Three Months Ended (July 31, 1992)
March 31, Through
-------------------------- March 31,
2001 2000 2001
---- ---- ---------------
Cash flows from operating activities:
Net loss $(2,032,000) $ (981,000) $(27,824,000)
Adjustments to reconcile net loss to net cash used in
operating activities:
Common stock issued for services 182,000 8,000 998,000
Preferred stock issued for services 598,000
Stock options issued for services 353,000 9,432,000
Warrants issued for services 1,750,000
Financing costs payable with common stock 191,000
Loss of equity investee 100,000
Depreciation and amortization 67,000 65,000 1,009,000
Changes in:
Prepaid expenses 12,000 (55,000)
Accounts payable and accrued expenses 148,000 (47,000) 744,000
Accounts receivable (87,000)
------------ ------------ -------------
Net cash used in operating activities (1,270,000) (1,010,000) (13,089,000)
------------ ------------ -------------
Cash flows from investing activities;
Purchase of equipment (3,000) (423,000)
Purchase of investment (11,000) (100,000)
Proceeds from sale of equipment 14,000
------------ ------------ ------------
Net cash used in investing activities (3,000) (11,000) (509,000)
------------ ------------ ------------
Cash flows from financing activities:
Purchase of treasury stock (100,000)
Proceeds from note payable to stockholders 2,149,000
Repayment of note payable - other (4,000) 296,000
Net proceeds from issuance of preferred stock 3,569,000
Net proceeds from issuance of common stock 234,000 711,000 8,329,000
Loan repayment to preferred stockholder (148,000)
Capital lease payments (13,000)
Security deposit paid (7,000)
------------ ------------ -------------
Net cash provided by financing activities 230,000 711,000 14,075,000
------------ ------------ ------------
Net (decrease) increase in cash and cash equivalents (1,043,000) (310,000) 477,000
Cash and cash equivalents, beginning of period 1,520,000 1,168,000
------------ ------------ ------------
Cash and cash equivalents, end of period $ 477,000 $ 858,000 $ 477,000
=========== =========== ============
The accompanying notes are an integral part of these financial statements
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Consolidated Statements of Cash Flows (continued)
(Unaudited)
Period From
Inception
Three Months Ended (July 31, 1992)
March 31, Through
------------------- March 31,
2001 2000 2001
---- ---- --------------
Supplemental disclosure of cash flow information:
Interest paid $ 6,000 $ 20,000
======== ===========
Supplemental disclosures of noncash investing and
Financing activities:
Fixed assets contributed to the Company in exchange for
Series A preferred stock $ 45,000
===========
Issuance of 14,391,627 common shares to
acquire intangible assets $ 15,000
===========
Special distribution of 14,391,627 shares of common
stock to stockholder in settlement of stockholder advances $ 376,000
===========
Issuance of 7,200,000 common shares to acquire
intangible assets $ 1,440,000
===========
Issuance of Series A preferred stock and warrants in
settlement of note payable and accrued interest $ 1,830,000
===========
Issuance of 1,000,000 common shares to acquire intangible assets $ 1,000,000
===========
Issuance of 100,000 common shares to acquire furniture
and Fixtures $ 49,000
===========
Issuance of 78,000 common shares in satisfaction of
accrued Expenses $ 15,000
===========
Issuance of 10,500 shares to acquire furniture and
Fixtures $ 41,000
===========
The accompanying notes are an integral part of these financial statements
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Notes to Financial Statements
March 31, 2001
(Unaudited)
NOTE A - ORGANIZATION AND OPERATIONS
Manhattan Scientifics, Inc. (formerly Grand Enterprises, Inc. ("Grand")), and
its wholly-owned subsidiary Tamarack Storage Devices, Inc. (collectively "the
Company"), a development stage enterprise, operates in a single business segment
as a technology incubator that seeks to acquire, develop and bring to market
technologies in fields with an emphasis in the area of consumer and commercial
electronics. At March 31, 2001, the Lauer Entities claim beneficial ownership of
approximately 45 percent of the Company's common stock (see Note F).
In January 1998, Manhattan Scientifics, Inc., then a non-operating public
corporation with nominal net assets acquired all of the outstanding common stock
of Tamarack Storage Devices, Inc. ("Tamarack") by issuing 44 million shares of
its common stock including approximately 43,120,000 shares issued to
Projectavision, a public company which gave the stockholders of Tamarack actual
control of the combined company. In addition, Manhattan Scientifics, Inc. issued
182,525 shares Series A preferred stock and a warrant to purchase 750,000 shares
of its common stock at an exercise price of 10 cents per share in exchange for a
note payable of $1.5 million plus accrued interest of $330,000 due to
Projectavision from Tamarack. In connection with the legal form of this
transaction, Tamarack became a wholly-owned subsidiary of Manhattan Scientifics,
Inc. For accounting purposes, the acquisition was treated as a recapitalization
of Tamarack rather than a business combination. Tamarack as the accounting
acquiror of the public shell did not record goodwill or any other intangible
asset for this "Reverse Acquisition". The historical financial statements are
those of Tamarack. Tamarack, a development stage enterprise, was a Texas
corporation formed in July 1992. Since inception, Tamarack has been, and
continues to be, involved in the research and development of products based on
holographic data storage technology. Loss per share has been restated for all
periods prior to the acquisition to include the number of equivalent shares
received by Tamarack's stockholders in the Reverse Acquisition.
Prior to this transaction, Projectavision owned approximately 98% of Tamarack.
Projectavision through cash investments acquired approximately 65% of Tamarack
through December 31, 1996. During late 1997 and early 1998, as a result of a
treasury stock transaction between Tamarack and its two founding stockholders,
Projectavision came to own approximately 97% of the outstanding shares of
Tamarack. In lieu of repayment of certain advances made by Projectavision
amounting to approximately $376,000, Tamarack made a special dividend
distribution to Projectavision of the 14,391,627 treasury shares increasing
Projectavision's ownership of Tamarack to 98%. The value ascribed to this
transaction amounted to a reduction of the treasury stock at historical cost and
a contribution to additional paid-in capital of $346,000 as part of the reverse
acquisition.
Concurrently with the Reverse Acquisition, Tamarack merged with DKY, Inc., a
newly formed company. In connection with this transaction, Tamarack, as the
surviving entity, obtained certain license/intellectual property assignment
rights held by DKY, Inc. In addition, the Company issued 7,200,000 common shares
to acquire certain intangible assets from DKY, Inc.'s stockholder valued at $1.4
million, (see Note F).
Since its inception, Tamarack, and more recently the Company, has been engaged
primarily in directing, supervising and coordinating research and development
efforts in the continuing development of its products and raising funds. The
Company conducts its operations primarily in the United States.
There is no assurance that the Company's research and development and marketing
efforts will be successful, that the Company will ever have commercially
accepted products, or that the Company will achieve significant sales of any
such products. The Company has incurred net losses and negative cash flows from
operations since its inception. In addition, the Company operates in an
environment of rapid change in technology and is dependent upon the services of
its employees and its consultants. If the Company is unable to successfully
bring its technologies to commercialization, it is unlikely that the Company
could continue its business. The Company has obtained a commitment from a major
stockholder to provide sufficient funds if needed to support the Company's
normal operations through December 31, 2003.
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Notes to Financial Statements
March 31, 2001
(Unaudited)
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS
[1] Cash and cash equivalents:
The Company maintains cash and cash equivalents with various financial
institutions. The Company performs periodic evaluations of the relative
credit standing of the financial institutions which is considered in the
Company's investment strategy.
[2] Principles of consolidation:
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary. All material intercompany accounts and
transactions have been eliminated.
[3] Property and equipment:
Property and equipment are recorded at cost. The cost of maintenance and
repairs is charged against results of operations as incurred. Depreciation
is charged against results of operations using the straight-line method
over the estimated economic useful life.
[4] Patents:
Patents are recorded at cost. Amortization is charged against results of
operations using the straight-line method over the estimated economic
useful life. Patents related to the mid range fuel cell, micro fuel cell
and solar fuel cell technologies are estimated to have an economic useful
life of 10 years.
[5] Income taxes:
The Company recognizes deferred tax liabilities and assets for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax
liabilities and assets are determined on the basis of the differences
between the tax basis of assets and liabilities and their respective
financial reporting amounts ("temporary differences") at enacted tax rates
in effect for the years in which the differences are expected to reverse.
[6] Per share data:
The basic and diluted per share data has been computed on the basis of the
net loss available to common stockholders for the period divided by the
historic weighted average number of shares of common stock outstanding.
All potentially dilutive securities (see Note F) have been excluded from
the computations since they would be antidilutive.
[7] Research and development expenses:
Costs of research and development activities are expensed as incurred.
[8] Advertising expenses:
The Company expenses advertising costs which consist primarily of
promotional items and print media, as incurred. Advertising expenses
amounted to $1,000, $3,000, and $57,000 for the three months ended March
31, 2001, 2000 and for the cumulative period July 31, 1992 (inception)
through March 31, 2001.
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Notes to Financial Statements
March 31, 2001
(Unaudited)
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED
MATTERS (CONTINUED)
[9] Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amount of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates.
[10] Investment - NMXS. com, Inc.:
The Company initially recorded its investment in NMXS.com, Inc. at cost
and uses the equity method of accounting to record its share of income or
loss. (See Note D).
[11] Revenue recognition:
Revenue is recognized upon delivery of the order. Contract revenues
represent primarily reimbursed expenditures incurred in connection with a
government research contract. The significant aspects of this contract
were completed in 1997 and the Company does not expect any reimbursements
beyond 1997. Amounts reimbursed represent miscellaneous other income. The
Company expects to earn revenues from the sale or licensing of its
products and such revenue will be recognized in accordance with the terms
of the underlying agreements at the time such transactions are
consummated.
[12] Valuation of long-lived assets:
The Company evaluates the carrying value of long-lived assets to be held
and used on a periodic basis. Management utilizes anticipated net cash
flows to determine if impairment has occurred. Based upon these
evaluations, there were no adjustments to the carrying value of long-lived
assets during the three months ended March 31, 2001.
[13] Interim financial statements:
Financial statements as of March 31, 2001 and the three months ended March
31, 2001 and 2000 and the respective amounts included in the period from
inception July 31,1992 are unaudited but in the opinion of management, the
financial statements include all adjustments consisting of normal
recurring accruals necessary for a fair presentation of the comparative
financial position and results of operations. Results of operations for
interim periods are not necessarily indicative of those to be achieved or
expected for the entire year.
NOTE C - PROPERTY AND EQUIPMENT
Property and equipment as of March 31, 2001 consists of the following:
Useful Lives
In Years
------------
Furniture and fixtures 5 $ 98,000
Computers 5 44,000
Equipment 5 174,000
---------
316,000
Less accumulated depreciation 173,000
---------
$143,000
=========
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Notes to Financial Statements
March 31, 2001
(Unaudited)
NOTE D - INVESTMENT - NMXS.COM, INC.
On June 3, 1999, the Company entered into an agreement with NMXS.com, Inc.
(formerly New Mexico Software, Inc., a public company) and invested $100,000
($70,000 June 1999, $30,000 July 1999) for 5,416,300 shares of common stock
which resulted in the Company owning approximately 49% of NMXS. The initial
investment amount exceeded the underlying net equity by approximately $63,000.
The Company treated such excess as an expense to fund the development of
software.
During 1999, in connection with NMXS' transactions in its own common stock, the
Company's ownership was first reduced to 31% and then in August 1999, the
Company realized gains amounting to approximately $532,000 and its ownership
percentage was further diluted to 28% when NMXS entered into additional capital
transactions. The Company's equity in the net losses of NMXS during 1999
exceeded such gains. As a result of net losses through December 31, 1999,
amounting to $632,000, including the above transactions, the Company's
investment in NMXS was reduced to zero.
Similarly during 2000, the Company realized gains amounting to approximately
$305,000 resulting from NMXS' capital transactions which diluted the Company's
ownership interest to 26%. The Company's equity in the net losses of NMXS during
2000 exceeded such gain.
During the quarter ended March 31, 2001, the Company realized gains amounting to
approximately $16,000 resulting from NMXS' capital transactions. The Company's
equity in the net losses of NMXS during the quarter ended March 31, 2001
exceeded such gain.
On June 24, 2000 in connection with a private placement offering, the Company
delivered 100,000 shares of NMXS.com to the stockholder. The Company recognized
a gain of approximately $169,000 from the transaction. Such gains were offset by
operating losses amounting to $481,000 during 2000. In addition, the Company
delivered an option to purchase an additional 100,000 shares of the Company's
shareholdings in NMXS.com for a purchase price of $1 per share.
On July 27, 2000 the Company exchanged 5,000 shares of NMXS.com Inc. stock for
the purchase of furniture and fixtures.
As of March 31, 2001, the Company owns approximately 26% of NMXS.com, Inc.
The Company will not record any earnings associated with NMXS.com, Inc. until
the losses not recognized during the period the equity method was suspended have
been recovered. The cumulative losses in excess of the amount invested amounted
to $116,000 as of March 31, 2001. In addition, per the stock purchase agreement
with NMXS.com, Manhattan Scientifics provided NMXS.com with business and
management advice through August 1999 without remuneration. Also, our CEO
received a salary of $60,000 and a leased car from NMXS.com, Inc. as
consideration for his services provided to NMXS.com, Inc. through December 2000.
At the present time the CEO is not receiving any compensation.
On February 20, 2001, the Company entered into a stock swap agreement with
NMXS.com, Inc. The agreement provides for the exchange of cashless assignable
warrants to purchase 1,500,000 shares of NMXS.com, Inc.'s common stock at an
exercise price of $.50 per share for 150,000 restricted shares of the Company's
common stock. The transaction was recorded as an investment valued at $225,000,
which represents the market value of the Company's common stock exchanged on the
date of the agreement.
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Notes to Financial Statements
March 31, 2001
(Unaudited)
NOTE D - INVESTMENT - NMXS.COM, INC. (CONTINUED)
The following is a summary of financial data regarding financial position and
results of operations of NMXS.com, Inc. as of March 31, 2001 and for the three
months ended March 31, 2001:
Current assts (including cash of
$14,000) $ 967,000
Furniture and equipment 384,000
Goodwill 120,000
Other assets 13,000
-----------
$ 1,484,000
===========
Liabilities $ 635,000
Stockholders' equity 849,000
-----------
$ 1,484,000
===========
Revenue $ 275,000
===========
Net loss $ (471,000)
===========
NOTE E - NOTES PAYABLE
In August 2000, the Company obtained a line of credit from a financial
institution in the amount of $300,000. This line of credit bears interest at a
rate of the 30 day Dealer Commercial paper rate plus 2.60% (7.60% at March 31,
2001). The line of credit will terminate on July 31, 2001. As of March 31, 2001,
the Company was indebted in the amount of $296,000 which includes interest for
the month of March 2001. This line of credit is guaranteed by the CEO of the
Company. Interest expense for the three months ended March 31, 2001 amounted to
$6,000.
In August 1999, the Company borrowed $275,000 from the Chief Operating Officer.
The loan bears interest at the rate of 5.5% per annum and is due upon the
earlier of 18 months or the date of a private placement raising at least
$1,500,000. Repayment of the loan was extended for a three month term until June
30, 2001. The loan may be prepaid at any time. The Chief Operating Officer had
originally delivered to the Company $275,000 to exercise options each
exercisable to purchase common stock but such exercise was rescinded and the
options have been treated as if not exercised. No shares were delivered as a
result of this transaction. Interest expense for the three months ended March
31, 2001 amounted to $4,000.
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Notes to Financial Statements
March 31, 2001
(Unaudited)
NOTE F - CAPITAL TRANSACTIONS
Common Stock:
The following common stock transactions include the effects of restating of
stockholders' equity for the shares received in the recapitalization/merger as a
result of the reverse acquisition. The exchange rate of such shares was 9.59
Manhattan Scientifics, Inc. common shares for each Tamarack common share.
Accordingly, the Company's financial statement presentation indicates that there
were 44,000,000 common shares outstanding immediately prior to consummating the
reverse merger.
Effective July 31, 1992, the Company issued 14,391,627 shares of common stock to
the founders for certain intangible assets.
During 1994, the Company effected the following stock transactions:
Issued 14,391,627 shares of common stock to Projectavision, Inc. at
approximately $.21 per share in accordance with a stock purchase agreement.
Issued 479,720 shares of common stock on exercise of options at a price of
approximately $.10 per share.
Issued 345,399 shares of common stock at a price of approximately $.52 per
share.
During 1996, the Company issued 14,391,627 shares of common stock for $15,000.
During 1997, the Company repurchased 7,195,814 shares of common stock for
$15,000.
During 1998, the Company effected the following transactions:
In January 1998, repurchased 7,195,813 shares of common stock for $15,000.
In January 1998, the Company made a special distribution to Projectavision of
14,391,627 common shares held in treasury.
In January 1998, in accounting for the reverse merger transaction, the
Company was deemed to have issued 11 million common shares for the net
monetary assets of Grand which was nominal.
In January 1998, issued 5,000,000 shares of common stock for $.20 per share
in a private placement offering.
In January 1998, issued 7,200,000 shares of common stock at $.20 per share to
acquire certain intangible assets.
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Notes to Financial Statements
March 31, 2001
(Unaudited)
NOTE F - CAPITAL TRANSACTIONS (CONTINUED)
In February 1998, issued 1,000,000 shares of common stock with a market value
of $.58 per share for consulting services.
In April 1998, issued 275,000 shares of common stock at $.18 per share to an
accredited investor in a private placement offering.
In July 1998, issued 9,435,405 shares of common stock on conversion of
182,525 shares of Series A convertible preferred stock, and included 309,155
of common shares representing payment in satisfaction of accumulated dividend
of approximately $100,000 at date of conversion.
In July 1998, as part of the private placement transaction described below,
the Company issued 10 million common stock purchase warrants at an exercise
price of $.05 per share to the "Lauer Entities". In addition, the Company
arranged for this third party to purchase 43,170,512 shares of the Company's
common stock from Projectavision, Inc. Furthermore, the Company agreed to
issue 20 million shares of common stock to this third party at a price of
$.05 per share, together with rights to assign such shares to certain other
third parties. Such rights were assigned to the certain other third parties
as noted directly below.
From August 1998 through December 1998, issued 20,340,000 shares of its
common stock at $.05 per share in a private placement offering.
During 1999, the Company effected the following transactions:
In August 1999, issued 1,000,000 shares of common stock for $1.00 per
share to acquire certain intangible assets.
In October 1999, issued 78,000 shares in satisfaction of accrued
expenses.
In October 1999, issued 100,000 shares at $.49 per share to acquire
furniture and fixtures that were issuable in May.
In October 1999, issued 10,000 shares at $.49 per share for consulting
services that were issuable in May.
In October 1999 issued 17,269 shares at market prices from April through
September as consulting services were performed.
In October 1999, exercised 100,000 options into 100,000 shares of common
stock at $.20 per share.
In December 1999, issued 1,600 shares of its common stock at $1.25 per
share for services rendered.
In December 1999, issued 533,000 shares of common stock at $.75 per share
in a private placement offering.
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Notes to Financial Statements
March 31, 2001
(Unaudited)
NOTE F - CAPITAL TRANSACTIONS (CONTINUED)
During 2000, the Company effected the following transactions:
In January 2000, issued 515,000 shares of common stock at $.75 per share
in a private placement offering.
In January 2000, issued 4,942 shares of common stock, at market price,
for consulting services performed.
In January 2000, issued 1,076,923 shares of common stock, pursuant to the
July 28, 1999 exercise of warrants by Equilink, LLC.
In April 2000, issued 1,500 shares of common stock, at market price, for
consulting services performed.
In June 2000, issued 700,000 shares of common stock in connection with
the private placement offering of Series C preferred shares.
In July 2000 issued 5,833 shares of common stock, at market price, for
consulting services performed.
In July 2000 issued 5,000 shares of common stock, at market price, to
acquire furniture and fixtures.
In August 2000 issued 10,000 shares of common stock in connection with
the private placement offering of Series C preferred shares (completed
June 2000).
In August 2000, the Company issued 100,000 options to purchase stock at
$.40 per share for services rendered.
In September 2000 issued 5,500 shares of its common stock to acquire
furniture and fixtures.
In October 2000, issued 3,750 shares of common stock, at market price,
for services rendered.
In October 2000, issued 1,000 shares of common stock, at market price,
for services rendered.
On October 20, 2000, the Board of Directors of the Company authorized to
increase the total number of authorized shares of common stock from
150,000,000 to 250,000,000.
In November 2000, issued 800,050 shares of common stock at $1.25 per
share in a private placement offering.
In December 2000, issued 600,000 shares of common stock in connection
with the conversion of Series B preferred shares at a rate of 1 Series B
preferred share to 10 common shares.
In December 2000, issued 50,000 shares of common stock, at market price,
for services rendered.
In December 2000, issued 800,000 shares of common stock at $1.25 per
share in a private placement offering.
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Notes to Financial Statements
March 31, 2001
(Unaudited)
NOTE F - CAPITAL TRANSACTIONS (CONTINUED)
During 2001, the Company effected the following transactions:
In January 2001, issued 47,762 shares of common stock at market price for
services rendered.
In January 2001, issued 666,660 shares of common stock in connection with
the conversion of Series B preferred shares at a rate of 1 Series B
preferred share to 10 common shares.
In January 2001, 75,000 options were exercised for 73,064 shares of
common stock on cashless basis.
In February 2001, issued 150,000 shares of common stock in exchange for
1,500,000 warrants of NXMS.com (see Note D)
In March 2001, issued 6,000 shares of common stock at market price for
services rendered.
In March 2001, issued 150,000 shares of common stock at $.67 per share in
a private placement offering.
In March 2001, issued 200,000 of common stock at $.72 per share in a
private placement offering.
In March 2001, issued 405,000 shares of common stock at market price for
consulting services performed.
Preferred Stock:
During 1993, in accordance with a Share Purchase Agreement, the Company issued
1,037,000 shares of its Series A preferred stock in exchange for consideration
of $1,037,000 in cash, goods and services provided to the Company by an
unrelated third party.
During 1995, the Company issued an additional 163,000 shares of its Series A
preferred stock in settlement of all amounts due to the above mentioned third
party in exchange for services value at $163,000.
During 1997, the Company repurchased all outstanding shares of its Series A
preferred stock from the above mentioned third party for $70,000. In conjunction
with this transaction, the Board of Directors canceled and retired the then
existing Series A preferred stock.
On January 8, 1998, the Board of Directors of the Company authorized 1,000,000
shares of preferred stock having a par value of $.001 per share to be issued in
such series and to have such rights, preferences and designations as determined
by the Board of Directors.
On January 8, 1998, the Board of Directors of the Company authorized 182,525
shares of Series A convertible redeemable preferred stock having a par value of
$.001. Dividends, which are cumulative, are paid semi-annually in cash or common
stock at the Company's option at a rate of ten percent per share based on a
liquidation value of $10 per share. The Series A shares are convertible at the
rate of fifty shares of the Company's common stock for each Series A preferred
share, are redeemable at the option of the Company at $15 per share, have
preference in case of liquidation, and have voting rights equal to fifty votes
per share.
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Notes to Financial Statements
March 31, 2001
(Unaudited)
NOTE F - CAPITAL TRANSACTIONS (CONTINUED)
On January 8, 1998, in connection with the reverse merger transaction, the
Company issued 182,525 shares of its Series A convertible redeemable preferred
stock and a warrant to purchase 750,000 shares of the Company's common stock at
a price of $.10 per share in settlement of a note payable due to Projectavision,
Inc. in the amount of $1,500,000 plus accrued interest of $330,000. The note
required interest at 6% per annum. Interest expense related to this note payable
for 1997 amounted to $90,000. The Company recorded a deemed dividend of
$1,020,000 in accordance with EITF D-60 as a result of the beneficial conversion
feature of such preferred shares at the date of issuance with a corresponding
increase to additional paid-in capital. The amount of the deemed dividend was
computed based upon the excess of the market value of equivalent common shares
which approximated $2,737,000 plus the fair value of the warrant of $113,000,
over the deemed proceeds in the exchange for the settlement of the obligation
with Projectavision. The warrant was valued using the Black-Scholes option
pricing model. The following assumptions were used computing the fair value of
the warrant; weighted risk free interest rate of 5.49%; zero dividend yield;
volatility of Company common stock of 43% and an expected life of the warrant of
ten years.
On July 28, 1998, the holder of the Series A convertible redeemable preferred
stock converted their shares into 9,435,405 shares of the Company's common
stock.
In December 1999, the Company issued 245,165 shares of Series B convertible
preferred stock at $6.00 per share in a private placement offering. The shares
are convertible at a rate of ten common shares for each preferred share. These
shares have voting rights and dividend rights as if each share had been
converted to common stock.
In June 2000, the Company authorized 14,000 shares of Series C convertible,
redeemable preferred stock at $100 per share. The Series C shares are
convertible into common shares after 180 days, such conversion is based upon a
formula dividing the product of the stated value of the preferred stock by the
number of shares of Series C preferred stock to be converted on the date of
conversion by the average closing price. The average closing price is the
product of $.50 and the average closing bid price of the Company's common stock
as reported by the quotation system on which the common stock is quoted, for the
ten trading days immediately preceding the date that notice of conversion of the
shares is furnished to the Company. In no event shall the Series C preferred
stock be converted into more than an aggregate of 2,800,000 shares of common
stock or less than an aggregate of 933,334 shares of common stock. For the
purposes of determining the conversion ratio, the average closing price shall
not be less than $.50 or greater than $1.50. The Series C shares were redeemable
for the stated value of the stock at the option of the Company from time to time
on or prior to 180 days from June 21, 2000, any or all of the outstanding
shares.
The 2000 financial statements reflect the deemed dividend on the Series C
preferred stock of $1,400,000 in accordance with EITF 98-5 resulting from the
calculation of the beneficial conversion feature based on the quoted market
price of the common stock. The amount of the deemed dividend was computed based
upon the excess of the market value of equivalent common shares deemed issued
over the proceeds received from the sale of the convertible preferred stock. The
amount of the deemed dividend has been limited to the offering proceeds.
Stock Options:
The Company has elected to account for its employee stock options in accordance
with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees ("APB No. 25"). Under APB No. 25, generally, no compensation expense
is recognized in the accompanying financial statements in connection with the
awarding of stock option grants to employees provided that, as of the grant
date, all terms associated with the award are fixed and the quoted market price
of the Company's stock, as of the grant date, is not more than the amount an
employee must pay to acquire the stock as defined; however, to the extent that
stock options are granted to non employees, for goods or services, the fair
value of these options are included in operating results as an expense.
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Notes to Financial Statements
March 31, 2001
(Unaudited)
NOTE F - CAPITAL TRANSACTIONS (CONTINUED)
A summary of the Company's stock option activity and related information is as
follows:
Weighted Number of
Number of Average Common
Common Exercise Shares
Shares Price Exercisable
--------- -------- -----------
Outstanding as of December 31, 1997 0 0
Granted 21,325,000 $ .20 21,325,000
Canceled (15,000,000) $ .20 (15,000,000)
----------- ----------
Outstanding as of December 31, 1998 6,325,000 $ .20 6,325,000
Granted 16,250,000 $ .05 16,250,000
Exercised (100,000) (100,000)
Canceled 0 0
----------- ----------
Outstanding as of December 31, 1999 22,475,000 22,475,000
Granted 610,000 $ .73 210,000
Canceled 0 0
----------- ----------
Outstanding as of December 31, 2000 23,085,000 22,685,000
Granted 200,000 $ 1.25
Exercised (75,000) (75,000)
Canceled 0 0
----------- -----------
Outstanding as of March 31, 2001 23,210,000 22,610,000
=========== ===========
All options issued during 2001, 2000 and 1999 and 1998 vested after 90 days,
except for options granted in connection with an employment agreement (see Note
H[3]) and expire at various dates from 2008 through 2011.
Tamarack Storage Devices, Inc. 1992 Stock Option Plan was terminated in
connection with the reverse merger transaction. All options outstanding were
canceled at that time.
In 2000, the Company adopted its 2000 Stock Option Plan (the "Plan"). Under the
Plan, incentive and non-qualified stock options, SAR's and restricted stock may
be granted to key employees and consultants at the discretion of the Board of
Directors. Any incentive option granted under the Plan will have an exercise
price of not less than 110% of the fair market value of the shares on the date
on which such option is granted. With respect to an incentive option granted to
a Participant who owns more than 10% of the total combined voting stock of the
Company or of any parent or subsidiary of the Company, the exercise price for
such option must be at least 110% of the fair market value of the shares subject
to the option on the date on which the option is granted. A non-qualified option
granted under the Plan (i.e., an option to purchase the common stock that does
not meet the Internal Revenue Code's requirements for incentive options) must
have an exercise price of not less than 100% of the fair market value of the
stock on the date of grant. The directors determine the vesting of the options
under the Plan at the date of grant. A maximum of 30,000,000 options can be
awarded under the Plan. The terms of grant permit a noncash exercise.
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Notes to Financial Statements
March 31, 2001
(Unaudited)
NOTE F - CAPITAL TRANSACTIONS (CONTINUED)
SAR's entitle a participant to receive a cash payment equal to the difference
between the fair market value of a share of common stock on the exercise date
and the exercise price of the SAR. The terms of the SAR are determined by the
board of directors at the date of grant.
Awards of restricted stock are grants of shares of common stock that are subject
to a restricted period during which such shares may not be sold, assigned,
transferred or gifted.
Disclosures required by Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation ("SFAS No. 123"), including pro forma
operating results had the Company prepared its financial statements in
accordance with the fair value based method of accounting for stock-based
compensation are shown below.
Exercise prices and weighted-average contractual lives of stock options
outstanding as of March 31, 2001 are as follows:
Options Outstanding Options Exercisable
--------------------------------------- ---------------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Price Outstanding Life Price Exercisable Price
----- ----------- ----------- --------- ------------- ---------
$ .05 16,125,000 8.1 $ .05 16,125,000 $ .05
$ .20 6,275,000 7.5 $ .20 6,275,000 $ .20
$ .40 500,000 9.5 $ .40 100,000 $ .40
$2.25 110,000 6.2 $ 2.25 110,000 $2.25
$1.25 200,000 9.8 $ 1.25
Warrants:
The Company issued the following warrants at the corresponding weighted average
exercise price as of March 31, 2001
Outstanding as of December 31, 1997 0
Issued 17,750,000 $.16
------------
Outstanding as of December 31, 1998 17,750,000
Converted into stock options (2,500,000) $.05
------------
Outstanding as of December 31, 1999 15,250,000
Converted into common stock (2,000,000) $.75
------------
Outstanding as of December 31, 2000
and March 31, 2001 13,250,000
============
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Notes to Financial Statements
March 31, 2001
(Unaudited)
NOTE F - CAPITAL TRANSACTIONS (CONTINUED)
Number of Exercise Contractual Number of
Date Warrants Price Life Shares
--------------- ---------- -------- ----------- ----------
January 8, 1998 750,000 $.10 10 years 750,000
July 28, 1998 12,500,000 $.05 10 years 12,500,000
---------- ----------
13,250,000 13,250,000
========== ==========
In January 2000, the Company issued 1,076,923 shares of common stock, pursuant
to the July 28, 1999 exercise of warrants by Equilink, LLC.
In March 2001, the Company executed a warrant agreement with an existing
stockholder. The agreement allows the stockholder to purchase a variable
quantity of common stock (between 200,000 and 1,000,000 shares) at a variable
strike price (between $.01 and $1.25) based upon market share price formula at
time of exercise. The fair value associated with a minimum exercise of 200,000
warrants was computed using the Black-Scholes option pricing model which
approximated $150,000, which is included as a charge for financing costs in the
statement of operations for the three months ended March 31, 2001.
NOTE G - INCOME TAXES
There is no provision for federal, state or local income taxes for the periods
ended March 31, 2001 and 2000, since the Company has incurred net operating
losses.
The Company's deferred tax asset as of March 31, 2001 represents benefits from
equity related compensation charges and net operating loss carryforwards of
approximately $4,367,000 and $4,822,000, respectively which is reduced by a
valuation allowance of approximately $9,189,000 since the future realization of
such tax benefit is not presently determinable.
As of March 31, 2001, the Company has a net operating loss carryforward of
approximately $19,295,000 expiring in 2008 through 2020 for federal income tax
purposes and 2004 for state income tax purposes. As a result of ownership
changes, internal revenue code Section 382 limits the amount of such net
operating loss carryforward available to offset future taxable income to
approximately $9,646,000 in the aggregate.
The difference between the statutory federal income tax rate applied to the
Company's net loss and the Company's effective income tax rate for the three
months ended March 31, 2001 and 2000 is summarized as follows:
Three Months
Ended
March 31,
------------------
2001 2000
---- ----
Statutory federal income tax rate 34.0% 34.0%
Increase in valuation allowance (34.0)% (34.0)%
----- -----
0.0% 0.0%
===== =====
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Notes to Financial Statements
March 31, 2001
(Unaudited)
NOTE H - COMMITMENTS
- --------------------------------------------------------------------------------
[1] License and development agreements:
In March 1997, the Company entered into a Cooperative Research and
Development Agreement (the "CRADA Agreement") with the Regents of the
University of California to develop a polymeric based recording media that
will satisfy all of the requirements for a holographic media storage
device. The work was to be completed within 25 months from the original
date of execution. Each party had the first option to retain title to any
subject inventions made by its employees during the work under this
agreement. The agreement provided that the Company's contribution to
funding will be $264,000. The CRADA research and development expenses
charged to the statement of operations for the year ended December 31,
1999 and for the cumulative period July 31, 1992 through March 31, 2001
amounted to $29,000 and $83,000, respectively. The agreement was
terminated in 1999.
On January 11, 1998, the Company entered into a research and development
agreement with Energy Related Devices, Inc. ("ERDI"). The term of the
agreement is for the later of three years from the commencement date as
defined in the agreement or the delivery of a prototype suitable for
commercial sale or license regarding the fuel cell product defined in the
agreement. The Company is obligated to fund up to $1 million in accordance
with certain milestones as defined in the agreement. Upon the delivery of
a prototype suitable for commercial sale or license regarding the fuel
cell product, the Company's obligation will be to pay ERDI $10,000 per
month until the Company funds or determines not to fund the research and
development of ERDI's solar cell invention. Through March 31, 2001, the
Company has provided $1,000,000 to ERDI for research and development
activities. In addition, the Company is providing for key-man life
insurance coverage on the primary stockholder of ERDI. In May 1999, the
Company committed to additional funding of ERDI. As of March 31, 2001, the
Company has funded an additional $760,000.
In August 1999, the Company entered into a license option agreement with
the Regents with the University of California for Cyclodextrin Polymer
Separation materials. The agreement grants the Company an exclusive option
to negotiate an exclusive world-wide license under University's patent
rights. The initial term expired on February 29, 2000 and was extended for
a second term to February 28, 2001. The Company decided not to renew the
license option agreement beyond February 28, 2001. The Company paid
$10,000 in 1999 and 2000.
On March 7, 2000, the Company entered into a license option agreement with
a third party for nanoporous polymer molecular filter technologies. The
agreement grants the Company an exclusive option to negotiate an exclusive
world-wide license under the third party's patent rights. The initial term
expired on September 15, 2000 and was renewed for an additional six
months. The Company paid $10,000 to execute the license option agreement
and another $10,000 for its renewal. The Company has decided not to renew
the agreement.
In June 2000, the Company entered into agreements with a third party to
exclusively and perpetually license a development stage computer software
technology on a worldwide basis, to fund the continuing research and
development of such technology, and to exchange certain securities
(subject to return provisions), among other things. As of March 31, the
Company has funded $1,150,000 of an initial commitment of $1.5 million
toward research and development of the technology, pursuant to a milestone
timetable. It is intended that additional research and development not
covered by the initial $1.5 million commitment, if any, will be funded
primarily out of certain royalties payable by the Company to the third
party, or, to the extent that such royalties are insufficient, from
additional financings by the Company. The Company believes that it is
premature to offer any assessment as to the ultimate commercial viability
of any products that might be derived from this technology should it be
successfully developed.
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Notes to Financial Statements
March 31, 2001
(Unaudited)
NOTE H - COMMITMENTS (CONTINUED)
[2] Consulting agreements:
During 1998, the Company entered into a consulting agreement (the
"Agreement") with a former stockholder of Tamarack to provide research
related activities. In connection with the Agreement, the consultant
receives approximately $2,300 per month for such services and is eligible
for a lump sum payment of $50,000 upon the attainment of a revenue
milestone as defined in the Agreement. In accordance with the Agreement,
the Company issued stock options to purchase 250,000 shares of the
Company's common stock at $.20 per share.
200,000 of such options are subject to conditional vesting and are not
currently exercisable. The vesting of these options is based upon the
attainment of certain milestones as follows; 50,000 options upon
successful testing and acceptance by a third party of the holographic
storage media; 50,000 options upon commencement of commercial production
of devices incorporating holographic storage media; 100,000 options upon
attainment of $250,000 of gross revenues resulting from sales of devices
incorporating the holographic storage media. These options are subject to
variable plan accounting treatment in accordance with APB No. 25 and as
such, the Company will record a charge to operations if the criteria for
vesting are attained. The measurement date will be determined based upon
the vesting.
In February 2001, the Company entered into a marketing and management
consulting agreement. In connection with the agreement, among other
things, the consulting firm will receive fees payable in stock. The term
of the agreement is for one year plus a one year automatic renewal. In
March 2001, the Company issued 200,000 shares of common stock to the
consulting firm as compensation for services rendered and to be rendered.
The market value on the date of issuance was $1.25 per share. This is
reflected in prepaid expenses and is being amortized over the initial term
of the agreement. In addition, through March 31, 2001, the Company issued
205,000 additional shares valued at $147,000 for services rendered.
[3] Employment agreement:
On August 30, 1999, the Company entered into an employment and
noncompetition agreement with an individual to provide research related
activities. The term of the agreement was for one year commencing on
September 1, 1999 and was renewed. The agreement allows for four one year
renewal options unless terminated by either party. The employment
agreement was renewed for an additional year effective September 1, 2000.
Base salary is $90,000 per annum with available additional cash
compensation as defined in the agreement. In addition, the employee
received stock options to purchase 500,000 shares of common stock at $.40
per share. The market price of the Company's common shares was $1.25 per
share on the date of grant. The total intrinsic value of such options
approximated $425,000. In accordance with the agreement, 100,000 options
vest each year on the anniversary date. The charge for the 100,000 options
that vested during 2000 approximated $113,000. The change for the three
months ended March 31, 2001 approximated $21,000.
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Notes to Financial Statements
March 31, 2001
(Unaudited)
NOTE H - COMMITMENTS (CONTINUED)
[4] Intangible asset acquisition:
On August 6, 1999, the Company entered into an agreement with Novars
Gesellschaft Furneve Technologies mbh ("Novars") to acquire all of the
intellectual property rights of Novars. As compensation, the Company
issued 1,000,000 shares of its common stock. 500,000 of such shares were
treated as if issuable and will be held in escrow pending administrative
issuance of certain patents as defined in the agreement. The initial
purchase price was estimated at $1,000,000 based upon the value of the
common shares issued at the date of the transaction as determined by
management. However, the eventual purchase price can not be determined
until such time the shares held in escrow have been released to the third
party. In addition, the Company is obligated to pay a three percent
royalty in perpetuity on the revenues earned by the Company as defined in
the agreement.
In conjunction with the above, the Company entered into a three year
research and development agreement with Novars with automatic one year
renewals unless terminated by either party. In accordance with this
agreement, the Company advanced $200,000 in August 1999. The Company has
amended the research and development agreement to provide for additional
funding based on a milestone timetable. As of March 31, 2001, the Company
has funded an additional $1,530,000.
[5] Leases:
The Company is obligated under two separate operating leases for office
space located in Los Alamos, New Mexico and New York City. Both leases
expire in 2001. The Company received reimbursement of $10,000 against rent
charges for the three months ended March 31, 2001 from related parties.
Rent expense charged to operations was approximately $14,000 for the three
months ended March 31, 2001 and $4,000 for the three months ended March
31, 2000. A related party reimbursed the Company approximately $10,000 for
rental expense during the period. Minimum future rental payments under
these leases is $48,000 through 2001.
NOTE I - RELATED PARTY TRANSACTIONS
The law firm of one director received $34,000 and $64,000 in compensation for
legal services rendered to the Company during the three months ended March 31,
2001 and 2000.
The accounting firm of one of our directors received $25,000 and $51,000
compensation for accounting services rendered to the Company during the three
months ended March 31, 2001 and 2000.
NMXS.com, Inc. pays our CEO a yearly salary of $60,000 and leases a car for our
CEO as consideration for his services.
During 1998, the Company entered into a research and development agreement with
Energy Related Devices, Inc. ("ERDI"), ERDI is majority-owned by a shareholder
of the Company (see Note H[1]).
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARY
(a development stage enterprise)
Notes to Financial Statements
March 31, 2001
(Unaudited)
NOTE J - SUBSEQUENT EVENTS
[1] Common stock:
In April 2001, the Company issued 112,500 shares of common stock at $.62
per share to one accredited investor in a private placement offering.
In May 2001, the Company agreed to issue 200,000 shares of common stock at
$.60 per share to one accredited investor in a private placement offering.
In May 2001, the Company issued 100,000 shares of common stock at $.80 per
share to one accredited investor in a private placement offering.
The Company has issued or agreed to issue, 293,000 shares of common stock
as a consulting fee at the corresponding per share prices. (See Note
H[2]).
[2] Commitment:
In April 2001, the Company entered into a consulting agreement to develop
the necessary infrastructure for the commercialization of several of its
products for a term of one year. In connection with the agreement, the
consulting firm will receive monthly fees and warrants based upon
performance.
Item 2. Management's Discussion and Analysis of Financial condition and Results
of Operations.
Certain statements in this Report constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause our actual results, performance
or achievements to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. Factors
that might cause such a difference include, among others, uncertainties relating
to general economic and business conditions; industry trends; announcements or
changes in our pricing policies or those of our competitors; unanticipated
delays in the development, market acceptance or installation of products;
availability of management and other key personnel; availability, terms and
deployment of capital; relationships with third-parties; and worldwide political
stability and economic growth. The words "believe", "expect", "anticipate",
"intend" and "plan" and similar expressions identify forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements. Which speak only as of the date the statement was made.
The following discussion and analysis should be read in conjunction with
our financial statements and accompanying notes appearing elsewhere in this Form
10-QSB.
Overview
In January 1998, Manhattan Scientifics, Inc., then a non-operating
public corporation with nominal net assets, acquired all of the outstanding
common stock of Tamarack Storage Devices, Inc. by issuing 44 million shares of
its common stock, including approximately 43,120,000 shares issued to
Projectavision, Inc., a public company which gave the stockholders of Tamarack
actual control of the combined company. In addition, we issued 182,525 shares of
Series A preferred stock and a warrant to purchase 750,000 shares of our common
stock at an exercise price of 10 cents per share in exchange for a note payable
of $1.5 million plus accrued interest of $330,000 due to Projectavision from
Tamarack. In connection with the legal form of this transaction, Tamarack became
our wholly-owned subsidiary. For accounting purposes, the acquisition was
treated as a recapitalization of Tamarack rather than a business combination.
Tamarack, as the accounting acquiror of the public shell, did not record
goodwill or any other intangible assets for this "Reverse Acquisition". The
historical financial statements are those of Tamarack. Tamarack, a development
stage enterprise, was a Texas corporation formed in July 1992. Since inception,
Tamarack has been, and continues to be, involved in the research and development
of products based on holographic data storage technology. Loss per share has
been restated for all periods prior to the acquisition to include the number of
equivalent shares received by Tamarack's stockholders in the Reverse
Acquisition.
Since the reverse merger we have been acquiring technologies, directing,
supervising and coordinating our research and development efforts, raising
capital, and initiating marketing activities and dialogue with potential
customers.
As of March 31, 2001, we had an accumulated loss since inception, 1992,
of $27,824,000. Of this accumulated loss, approximately $13 million was derived
from non-cash charges that were required by generally accepted accounting
principles and approximately $6,800,000 from Tamarack prior to our acquisition
of Tamarack. We expect operating losses to continue for the foreseeable future
because we will be continuing to fund research and development efforts as well
as general and administrative expenses prior to receiving any revenues from our
technologies.
We do not know if our research and development and marketing efforts
will be successful, that we will ever have commercially acceptable products, or
that we will achieve significant sales of any such products. We operate in an
environment of rapid change in technology and we are dependent upon the services
of our employees, consultants and independent contractors. If we are unable to
successfully bring our technologies to commercialization, we would likely have
to significantly alter our business plan and may cease operations.
Results of Operations
Comparison of three months ended March 31, 2001 to three months ended
March 31, 2000.
Net Loss. We reported a net loss of $2,032,000 or $.02 per common
share, basic and diluted, for operations for the three months ended March 31,
2001 versus a net loss of $981,000, or $.01 per common share, basic and diluted,
for the three months ended March 31, 2000. The increase of $1,051,000 or 107% is
primarily a result of our recording, in 2001, a charge for the issuance of stock
and stock options for services and an increase in research and development
costs.
Revenues. We had no revenues for the three months ended March 31, 2001
and no revenues during the three months ended March 31, 2000.
Operating Costs and Expenses. Operating costs and expenses for the
three months ended March 31, 2001 totaled $2,034,000, an increase of $1,040,000
or 105%, versus costs and expenses of $994,000 for the three months ended March
31, 2000. These costs and expenses are detailed below.
Salaries and Employee Benefits. Salaries related to research and
development and employee benefits were approximately $52,000 for the three
months ended March 31, 2001 consisting of salary and a compensation charge of
$21,000 for stock options to our Chief Polymer Scientist, which is included in
research and development for such period, versus salaries and employee benefits
of $32,000 for the three months ended March 31, 2000. We anticipate an increase
in these costs as we intend to enter into an employment agreement with our
currently uncompensated executive officer and implement certain employee benefit
plans, including a healthcare plan.
General and Administrative. General and administrative expenses were
$841,000 for the three months ended March 31, 2001, which consisted of
accounting, travel, legal, rent, telephone and other day to day operating
expenses, versus general and administrative expenses of $346,000 for the three
months ended March 31, 2000. This increase of $495,000, or 143%, was primarily a
result of issuance of stock and stock options for services. We anticipate no
significant change in general and administrative expenses in the near future.
Research and Development. Research and development expenses were
$973,000 for the three months ended March 31, 2001, which consisted of payments
under research and development agreements with various contractors, amortization
of patents, and salary to our Chief Polymer Scientist. Research and development
expenses amounted to $644,000 for the three months ended March 31, 2000. This
increase of $329,000, or 51%, resulted from increased research and development
payments to various third party contractors. We expect research and development
costs to increase as we continue to develop our existing technologies and
acquire or license new technologies.
Liquidity and Plan of Operations
We are a development stage company and are in the technology
acquisition and development phase of our operations. Accordingly, we have relied
primarily upon private placements and subscription sales of stock to fund our
continuing activities and acquisitions. To a limited extent, and as described
below, we have also relied upon borrowing from non-traditional lenders who are
also shareholders of ours. Until we generate revenue from sales and licensing of
technology, or receive a large infusion of cash from a potential strategic
partner, we intend to continue to rely upon these methods of funding our
operations during the next year.
Our significant assets include our portfolio of intellectual property
relating to the various technologies, our contracts with third parties
pertaining to technology development, acquisition, and licensing, our holdings
of approximately 5.2 million shares of common stock in NMXS.Com, Inc.; our cash
on hand; and our strategic alliances with various scientific laboratories,
educational institutions, scientists and leaders in industry and government.
Stockholders' equity totaled $1,833,000 on March 31, 2001 and the
working capital was a deficit of $167,000 on such date.
In April 2001, we raised $66,000 through the sale of 113,000 shares of
common stock to one accredited investor at $.62 per share.
In May 2001, we raised $115,000 through the sale of 200,000 shares of
common stock to one accredited investor at $.60 per share.
In May 2001, we raised $76,000 through the sale of 100,000 shares of
common stock to one accredited investor at $.80 per share.
We do not expect any significant change in the total number of
employees in the near future. We intend to continue to identify and target
appropriate technologies for possible acquisition or licensing over the next 12
months, although we have no agreements regarding any such technologies as of the
date of this Report.
Based upon current projections, our principal cash requirements for the
next 12 months consists of (1) fixed expenses, including rent, payroll, investor
relations services, public relations services, bookkeeping services, graphic
design services, consultant services, and reimbursed expenses; and (2) variable
expenses, including technology research and development, milestone payments,
intellectual property protection, utilities and telephone, office supplies,
additional consultants, legal and accounting. As of March 31, 2001, we had
$477,000 in cash. As of March 31, 2000, we had $858,000 in cash. We intend to
satisfy our capital requirements for the next 12 months by our cash on hand,
continuing to pursue private placements to raise capital, using our common stock
as payment for services in lieu of cash where appropriate, and borrowing as
appropriate. However, we do not know if those resources will be adequate to
cover our capital requirements. We have obtained a commitment from a major
stockholder to provide sufficient funds if needed to support our normal
operations through December 31, 2003.
Recently Issued Accounting Standards
We do not believe any recently issued accounting standards have had or
will have a material impact on our operations.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
In the first quarter of 2001, the Company sold 150,000 shares of its
common stock at a price of $0.67 per share and 200,000 shares of its
common stock at a price of $0.72 per share to one accredited
investor.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
None
(b) Reports on Form 8-K
None.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
MANHATTAN SCIENTIFICS, INC.
Dated: May 15, 2001 By: /s/ Marvin Maslow
-------------------------- -------------------------------
Marvin Maslow
President, Chief Executive
Officer, and Chairman of
the Board