0001477932-18-001853.txt : 20180417 0001477932-18-001853.hdr.sgml : 20180417 20180417094611 ACCESSION NUMBER: 0001477932-18-001853 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 53 CONFORMED PERIOD OF REPORT: 20171231 FILED AS OF DATE: 20180417 DATE AS OF CHANGE: 20180417 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MANHATTAN SCIENTIFICS INC CENTRAL INDEX KEY: 0001099132 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 850460639 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-28411 FILM NUMBER: 18758055 BUSINESS ADDRESS: STREET 1: THE CHRYSLER BUILDING STREET 2: 405 LEXINGTON AVENUE, 26TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10174 BUSINESS PHONE: 212-541-2405 MAIL ADDRESS: STREET 1: THE CHRYSLER BUILDING STREET 2: 405 LEXINGTON AVENUE, 26TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10174 10-K 1 mhtx_10k.htm FORM 10-K mhtx_10k.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K

 

x

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2017

 

¨

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______ to _______.

 

MANHATTAN SCIENTIFICS, INC.

(Name of small business issuer in its charter)

 

Delaware

 

000-28411

 

85-0460639

(State of

Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

The Chrysler Building, 405 Lexington Avenue, 26th Floor, New York, New York 10174

(Address of principal executive offices) (Zip code)

 

Issuer’s telephone number: (212) 541-2405

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Securities registered pursuant to Section 12(g) of the Act:

 

Common Stock, $0.001 par value

(Title of Class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No x

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter 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 ¨ No ¨

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

¨

Smaller reporting company

x

 

 

Emerging growth company

¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

 

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the issuer as of June 30, 2017 was $21,652,045 based upon a closing price of $0.032 on June 30, 2017. For purposes of this computation, all executive officers, directors and 10% shareholders were deemed affiliates. Such a determination should not be construed as an admission that such 10% shareholders are affiliates.

 

As of April 16, 2018 there were 533,781,064 shares of common stock issued and outstanding.

    

 
 
 
 

 

TABLE OF CONTENTS

 

 

PAGE

 

PART I

 

ITEM 1.

DESCRIPTION OF BUSINESS

 

3

 

ITEM 1A.

RISK FACTORS

 

6

 

ITEM 2.

DESCRIPTION OF PROPERTIES

 

9

 

ITEM 3.

LEGAL PROCEEDINGS

 

9

 

ITEM 4.

MINE SAFETY DISCLOSURES

 

9

 

PART II

 

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

10

 

ITEM 6.

SELECTED FINANCIAL DATA

 

14

 

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

14

 

ITEM7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

17

 

ITEM 8.

FINANCIAL STATEMENTS

 

18

 

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

19

 

ITEM 9A

CONTROLS AND PROCEDURES

 

19

 

ITEM 9B.

OTHER INFORMATION

 

20

 

PART III

 

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

 

21

 

ITEM 11.

EXECUTIVE COMPENSATION

 

22

 

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 

24

 

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

25

 

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

25

 

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

26

 

SIGNATURES

 

28

 

 
2
 
 

 

PART I

 

Forward Looking Statements

 

This Form 10-K contains “forward-looking” statements including statements regarding our expectations of our future operations. For this purpose, any statements contained in this Form 10-K that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include, but are not limited to, economic conditions generally and in the industries in which we may participate, competition within our chosen industry, including competition from much larger competitors, technological advances, our ability to obtain approval from the FDA or other governmental agencies and the failure by us to successfully develop business relationships. In addition, these forward-looking statements are subject, among other things, to our successful completion of the research and development of our technologies; successful commercialization and mass production of, among other things, the advanced materials, the nanomedicine, successful protection of our licensed patents; and effective significant industry competition from various entities whose research and development, financial, sales and marketing and other capabilities far exceeds ours. In light of these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to announce publicly revisions to these forward-looking statements to reflect the effect of events or circumstances that may arise after the date of this report. All written and oral forward-looking statements made subsequent to the date of this report and attributable to us or persons acting on our behalf are expressly qualified in their entirety by this section.

 

ITEM 1. DESCRIPTION OF BUSINESS

 

OVERVIEW

 

COMPANY HISTORY AND OVERVIEW

  

Manhattan Scientifics, Inc. (the “Company” or “Manhattan Scientifics”), a Delaware corporation, was established on July 31, 1992 and has one operating wholly-owned subsidiary: Metallicum, Inc., (“Metallicum”). The Company also holds a 31%, noncontrolling interest in Imagion Biosystems, Inc. (f/k/a Senior Scientific LLC) (“Imagion”). Manhattan Scientifics is focused on technology transfer and commercialization of these transformative technologies.

  

Manhattan Scientifics, Inc. is focused on technology transfer and commercialization of these transformative technologies. The Company operates as a technology incubator that seeks to acquire, develop and commercialize life-enhancing technologies in various fields To achieve this goal, the Company continues to identify emerging technologies through strategic alliances with scientific laboratories, educational institutions, scientists and leaders in industry and government. The Company and its executives have a long-standing relationship with Los Alamos Laboratories in New Mexico.

  

In June 2008, we acquired Metallicum and its licensed patented technology. We entered into a stock purchase agreement with Metallicum to acquire all of the outstanding capital in exchange for 15,000,000 restricted shares of our common stock. An additional 15,000,000 shares of our common stock will be payable to Metallicum in the event of meeting certain milestones. At December 31, 2011, one milestone was met. Metallicum was granted an exclusive license by The Los Alamos National Laboratory on patents related to nanostructured metals. In September 2009, we entered into a technology transfer agreement and sale with Carpenter Technology Corporation, (“Carpenter”) wherein Carpenter was to fully develop, manufacture and market a new class of high strength metals. On February 11, 2015, the Company and Carpenter entered into a Settlement Agreement and Mutual Release pursuant to which the parties provided a full release of one another, Carpenter paid the Company $8,000,000, Carpenter transferred to the Company all intellectual and physical property that was part of the original agreement, Carpenter agreed to provide follow-on technical assistance and Carpenter provided a list of all customers and contacts.

   

On May 31, 2011, we entered into an Agreement and Plan of Reorganization to acquire Senior Scientific. The total purchase price was 21,668,000 restricted shares of our common stock (less 7,667,000 shares previously issued pursuant to an option agreement). As a result of this acquisition, Senior Scientific owned patented technologies that can use biosafe nanoparticles and sensitive magnetic sensors to detect and measure cancer cells in biopsies or in the human body with the potential to transform how cancer is detected and treated. On November 17, 2016, Senior Scientific merged with and into Imagion, a Nevada company. Following the merger, Imagion held all of the liabilities, obligations and assets of Senior Scientific and the Company continued as the sole equity holder of Imagion. On June 30, 2017, Imagion completed its initial public offering and listing on the Australian Stock Exchange (ASX). As of December 31, 2017, the Company owns 64,099,476 shares of Imagion, resulting in a noncontrolling interest of approximately 31% of Imagion’s issued and outstanding common stock. Based upon Imagion’s latest offering price of approximately $0.09 per share, the fair value of the Imagion shares is approximately $5,503,000.

 

 
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OUR DEVELOPMENT MODEL

 

Our goal has been to influence the future through the development of potentially life changing technologies. Our business model is to: (i) identify significant technologies, (ii) acquire them or the rights to them, (iii) secure the services of inventors, engineers or other staff who were instrumental in their creation, (iv) provide or contract for suitable work facilities, laboratories, and other aids where appropriate, (v) prototype the technologies to demonstrate “proof of principle” feasibility, (vi) secure patent and or other intellectual property protection, (vii) secure early customers for product trials where feasible and appropriate, and (viii) commercialize through licenses, sales or cooperative efforts with other manufacturing and distribution firms.

 

Since our technologies are still in their development phase, the need for operating and acquisition capital is a continuous concern requiring the ongoing efforts of our management. The Company’s success will depend in part on its ability to obtain patents and license rights, maintain trade secrets, and operate without infringing on the proprietary rights of others, both in the United States and other countries. There can be no assurance that patents issued to or licensed by the Company will not be challenged, invalidated, or circumvented, or that the rights granted thereunder will provide proprietary protection or competitive advantages to the Company.

 

We utilize the intellectual property sale/licensing model, and not a production model, though management is opportunistic and is open to explore all methods leading to commercializing our technologies. We intend to consider all appropriate avenues for the commercialization of our technologies.

 

DESCRIPTION OF TECHNOLOGIES

 

ADVANCED METALS

 

Our business model is based on licensing metals technology to metals manufacturers. Although competing commercial products are provided by existing specialty metals companies, the only competing processes for creating nanostructured metals are either limited or cannot be economically scaled. Metallicum does not yet face direct competition, but expects competition will emerge as the metal is commercialized.

 

In January 2009, we entered into a patent license agreement with Los Alamos National Security, LLC for the exclusive licensing use of certain technology relating to the manufacture and application of nanostructuring metals and alloys. Pursuant to such agreement we provided a non-refundable fee and 2,000,000 shares of our common stock with a fair market value of $33,000. Additionally, we are required to pay an annual license fee of $10,000 starting in February 2010 and royalties on future net sales.

 

The nanostructured metals technology may have wide implications for use in the medical device and prosthetics industries including dental implants, replacements for hips, shoulders, knees and cardio vascular stents. In December 2008, a manufacturing joint venture partner in Albuquerque, NM received U.S. Food and Drug Administration 510(k) clearance to market nanostructured titanium metal dental implants using our technology. This clearance positions us closer to our goal of commercializing our technology for nanostructured metals. We are in talks with many of the key manufacturers of dental implants and have signed material testing agreements with several manufacturers.

 

In September 2009, the Company entered into a contract with Carpenter to sell certain nanostructured metal technologies acquired from Metallicum, its wholly owned subsidiary, to Carpenter and to provide sub-license rights to Carpenter covering license agreements that the Company has from Los Alamos Laboratories. In January 2013, the Company entered into a licensing agreement with a party granting certain licensing rights to the Company’s nanostructured metal technology. On February 11, 2015, the Company and Carpenter entered into a Settlement Agreement and Mutual Release pursuant to which the parties provided a full release of one another, Carpenter paid the Company $8,000,000, Carpenter transferred to the Company all intellectual and physical property that was part of the original agreement, Carpenter agreed to provide follow-on technical assistance and Carpenter provided a list of all customers and contacts. Following the return of the Company’s nanostructured metal technology, the Company has commenced exploring strategic alternatives for its Metallicum division. At this time we are exploring and working with partner companies in the fields of titanium dental implants, titanium and magnesium medical devices, high voltage aluminum conductors as well as oil and gas field applications.

 

INTELLECTUAL PROPERTY / RESEARCH AND DEVELOPMENT

 

In 2008, we purchased Metallicum to acquire its licensed rights to patented technology. The technology is comprised of three US Patents (US Patent numbers 7152448, 6197129 and 6399215) for which Metallicum (subsequently, Manhattan) had been assigned an exclusive license rights by Los Alamos National Security LLC (LANL). Under the license rights, Metallicum had all rights, title and interest throughout the world in and to any and all inventions, original works of authorship, developments, concepts, know-how, and improvements on the patents or trade secrets whether or not patentable or registerable under copyright or similar laws. The purchase price paid for these licenses was $305,000, which represents its fair value. The Company obtained an exclusive license on two patents and a non-exclusive license on the third patent. The value attributable to license agreements is being amortized over the period of its estimated benefit period of 10 years.

 
 
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Our ability to compete depends in part on the protection of and our ability to defend our proprietary technology and on the goodwill associated with our trade names, service marks and other proprietary rights. However, we do not know if current laws will provide us with sufficient enough protection that others will not develop technologies similar or superior to ours, or that third parties will not copy or otherwise obtain or use our technologies without our authorization.

 

The success of our business will depend, in part, to identify technology, obtain patents, protect and enforce patents once issued and operate without infringing on the proprietary rights of others. Our success will also depend on our ability to maintain exclusive rights to trade secrets and proprietary technology we own are currently developing and will develop. We can give no assurance that any issued patents will provide us with competitive advantages or will not be challenged by others, or that the patents of others will not restrict our ability to conduct business.

 

In addition, we rely on certain technology licensed with a perpetual term from the Los Alamos National Laboratory and may be required to license additional technologies in the future. We do not know if these third-party licenses will be available or will continue to be available to us on acceptable commercial terms or at all. The inability to enter into and maintain any of these licenses could have a material adverse effect on our business, financial condition or results of our operations.

 

Policing unauthorized use of our proprietary technology and other intellectual property rights could entail significant expense. In addition, we do not know if third parties will bring claims of copyright or trademark infringement against us or claim that our use of certain technologies violates a patent or other intellectual property. Any claims of infringement, with or without merit, could be time consuming and expensive to defend, result in costly litigation, divert management attention, require us to enter into costly royalty or licensing arrangements or prevent us from using important technologies or methods, any of which could have a material adverse effect on our business, financial condition or results of our operations.

 

SALES AND MARKETING

 

Although our technologies presently are in the development stage, we are engaged in an early commercialization program intended to facilitate the transition from development to licensing, manufacturing and/or sale. This program consists of preliminary dialogues with potential strategic partners, investors, manufacturers, potential licensees and/or purchasers.

 

COMPETITION

 

As a result of our licensed technology, we do not have any direct competitors in our advanced materials operations. We may, however, face competition from leading researchers and manufacturers worldwide that develop competing technology.

 

With respect to our nanomedicine technology, our cancer detection technology will face competition primarily from companies such as Abbott Laboratories Inc., Cepheid Inc., Philips, GE Healthcare, Siemens, Gen-Probe Incorporated, MDxHealth SA, EpiGenomics AG, Roche Diagnostics and Sequenom, Inc.

 

Competitors may successfully challenge our licensed technology, produce similar products that do not infringe our licensed technology or produce products in countries where we have not applied for intellectual property protection. Many of these competitors may have longer operating histories and significantly greater financial, marketing and other resources than we have. Furthermore, competitors may introduce new products that address our potential markets. Competition could have a material adverse effect on our business, financial condition and results of our operations.

 

The markets in which we compete are highly competitive and constantly evolving. We believe that the principal competitive factors in our technology markets include without limitation:

 

·

capitalization;

·

cost of product;

·

first to market with product in market segment;

·

strong intellectual portfolio;

·

product reliability;

·

strong customer base; and

·

strong manufacturing and supplier relationships.

 
 
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CUSTOMERS AND SUPPLIERS

 

For the years ended December 31, 2017 and 2016, two customers generated all of our revenue. We did not have any significant suppliers.

 

EMPLOYEES

 

As of December 31, 2017, we had one full-time employee in general management. We do not expect any significant change in the total number of employees in the near future. Most of our research and development work has been performed by employees of our various research and development independent contractors (see below). We have historically indirectly funded the salaries of these individuals through our contract research and development payments to their employers. Although not technically our employees, we have considered these individuals to be an integral part of our research and development team. None of our employees or contractors is members of any union or collective bargaining organization. We consider our relationships with our employee and our independent contractor employees to be good.

 

As noted above, a significant portion of our research and development has been performed by independent contractors from whom we acquired or licensed certain technologies, and their various employees. Our independent contractors utilize a number of their own various employees to satisfy their research and development obligations to us, and their employees are considered to be part of our research and development team.

 

ITEM 1A. RISK FACTORS

 

An investment in the Common Stock involves a high degree of risk. In addition to the other information in this Report, the following risk factors should be considered carefully in evaluating the Company and our business. If you decide to buy our securities, you should be able to afford a complete loss of your investment.

 

WE MAY NOT BE ABLE TO SUCCESSFULLY DEVELOP AND COMMERCIALIZE OUR NEW TECHNOLOGIES WHICH WOULD RESULT IN CONTINUED LOSSES.

 

We are currently developing new technologies and a commercial product. We have generated our first revenues but we are unable to project when we will achieve regular profitability, if at all. As is the case with any new technology, we expect the development process to continue. We cannot assure that our resources will be able to develop and commercialize our technology fast enough to meet market requirements. We can also not assure that our technology will gain market acceptance and that we will be able to overcome regulatory obstacles. The failure to successfully develop and commercialize the technologies would result in continued losses and may require us to curtail operations.

 

THE SUCCESS OF OUR BUSINESS MAY REQUIRE CONTINUED FUNDING. IF WE CANNOT RAISE THE MONEY WE NEED TO SUPPORT OUR OPERATIONS UNTIL WE EARN SIGNIFICANT REVENUES, WE MAY BE REQUIRED TO CURTAIL OR TO CEASE OUR OPERATIONS AND YOU COULD LOSE YOUR ENTIRE INVESTMENT.

 

Our ability to develop our business depends upon our receipt of money to continue our operations while we introduce our products and a market for them develops. If this funding is not received as needed, it is unlikely that we could continue our business, in which case you would lose your entire investment. Our ability to access the capital markets has been hindered generally by the general difficult economic climate, beginning in 2008, for small technology concept companies, without significant revenues or earnings.

 

To the extent that we need additional funding, we cannot assure you that such financing will be available to us when needed, on commercially reasonable terms, or at all. If we are unable to obtain additional financing, we may be required to curtail the commercialization of our products and possibly cease our operations.

 
 
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OUR ABILITY TO EFFECTUATE OUR BUSINESS MODEL MAY BE LIMITED, WHICH WOULD ADVERSELY EFFECT OUR BUSINESS AND FINANCIAL CONDITIONS.

 

Our future performance will depend to a substantial degree upon our ability to effectuate and generate revenues from our licensing and royalty business model. As a result, we may continue to incur substantial operating losses until such time as we are able to generate revenues from the sale or license of our products. There can be no assurance that businesses and customers will adopt our technology and products, or that businesses and prospective customers will agree to pay for or license our products. In the event that we are not able to significantly increase the number of customers that purchase or license our products, or if we are unable to charge the necessary prices or license fees, our financial condition and results of operations will be materially and adversely affected.

 

WE MAY FACE STRONG COMPETITION FROM LARGER, ESTABLISHED COMPANIES.

 

We likely will face intense competition from other companies, both globally and within the United States, in the advanced metals space, virtually all of which can be expected to have longer operating histories, greater name recognition, larger installed customer bases and significantly more financial resources and research and development facilities than Manhattan Scientifics. There can be no assurance that developments by our current or potential competitors will not render our proposed products obsolete.

 

WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY OR WE COULD BECOME INVOLVED IN LITIGATION WITH OTHERS REGARDING OUR INTELLECTUAL PROPERTY. EITHER OF THESE EVENTS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.

 

We rely on a combination of intellectual property law, nondisclosure, trade secret and other contractual and technical measures to protect our proprietary right. Our success will depend, in part, on our technology’s commercial viability and on the strength of our intellectual property rights. However, we cannot assure you that these provisions will be adequate to protect our intellectual property. In addition, the laws of certain foreign countries do not protect intellectual property rights to the same extent as the laws of the United States.

 

Although we believe that our intellectual property does not infringe upon the proprietary rights of third parties, competitors may claim that we have infringed on their products.

 

We could incur substantial costs in defending ourselves in suits brought against us for alleged infringement of another party’s intellectual property rights as well as in enforcing our rights against others, and if we are found to infringe, the manufacture, sale and use of our or our customers’ or partners’ products could be enjoined. Any claims against us, with or without merit, would likely be time-consuming, requiring our management team to dedicate substantial time to addressing the issues presented. Furthermore, the parties bringing claims may have greater resources than we do.

 

OUR MANAGEMENT IS ABLE TO EXERCISE SIGNIFICANT INFLUENCE OVER ALL MATTERS REQUIRING SHAREHOLDER APPROVAL.

 

Our existing directors and executive officers are the beneficial owners of approximately 18% of the outstanding shares of common stock, excluding stock options and warrants. As a result, our existing directors, executive officers, principal shareholders and their respective affiliates, if acting together, would be able to exercise significant influence over all matters requiring shareholder approval, including the election of directors and the approval of significant corporate transactions. Such concentration of ownership may also have the effect of delaying or preventing a change in control of our company.

 
 
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THE TRADING PRICE OF OUR COMMON STOCK MAY DECREASE DUE TO FACTORS BEYOND OUR CONTROL.

 

The trading price of our common stock is subject to significant fluctuations in response to numerous factors, including without limitation:

 

·

variations in anticipated or actual results of operations;

·

announcements of new products or technological innovations by us or our competitors;

·

changes in earnings estimates of operational results by analysts;

·

inability of market makers to combat short positions on the stock;

·

an overall downturn in the financial markets and stock markets;

·

the use of stock to pay employees and consultants if sufficient working capital is not available;

·

inability of the market to absorb large blocks of stock sold into the market; and

·

developments or disputes concerning our intellectual property.

 

Moreover, the stock market from time-to-time has experienced extreme price and volume fluctuations, which have particularly affected the market prices for small technology companies without significant revenues. These broad market fluctuations may adversely affect the market price of our Common Stock. If our shareholders sell substantial amounts of their common stock in the public market, the price of our common stock could fall. These sales also might make it more difficult for us to sell equity or equity-related securities in the future at a price we deem appropriate.

 

WE HAVE NOT PAID CASH DIVIDENDS AND IT IS UNLIKELY THAT WE WILL PAY CASH DIVIDENDS IN THE FORESEEABLE FUTURE.

 

We plan to use all of our earnings, to the extent we have significant earnings, to fund our operations. We do not plan to pay any cash dividends in the foreseeable future. We cannot guarantee that we will, at any time, generate sufficient surplus cash that would be available for distribution as a dividend to the holders of our Common Stock. You should not expect to receive cash dividends on our Common Stock.

 

WE MAY NOT HAVE SUFFICIENT CAPITAL TO RUN OUR OPERATIONS.

 

If we are unable to obtain further financing, it may jeopardize our ability to continue our operations. To the extent that additional capital is raised through the sale of equity and/or convertible debt securities, the issuance of such securities could result in dilution to our shareholders and/or increased debt service commitments. If adequate funds are not available, we may be unable to sufficiently develop or maintain our existing operations.

 

WE HAVE THE ABILITY TO ISSUE ADDITIONAL SHARES OF OUR COMMON STOCK WITHOUT ASKING FOR SHAREHOLDER APPROVAL, WHICH COULD CAUSE YOUR INVESTMENT TO BE DILUTED.

 

Our Certificate of Incorporation currently authorizes the Board of Directors to issue up to 950,000,000 shares of Common Stock and 1,000,000 shares of Preferred Stock. The power of the Board of Directors to issue shares of Common Stock or warrants or options to purchase shares of Common Stock is generally not subject to shareholder approval. Accordingly, any additional issuance of our Common Stock may have the effect of further diluting your investment.

 

We require substantial working capital to fund our business. If we raise additional funds through the issuance of equity, equity-related or convertible debt securities, those securities may have rights, preferences or privileges senior to those of the holders of our Common Stock. The issuance of additional Common Stock or securities convertible into Common Stock by our management will also have the effect of further diluting the proportionate equity interest and voting power of holders of our Common Stock.

 
 
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LIMITED PUBLIC MARKET FOR OUR COMMON STOCK MAY AFFECT OUR SHAREHOLDERS’ ABILITY TO SELL OUR COMMON STOCK.

 

Our Common Stock currently is quoted on the Over-The-Counter Bulletin Board, which is generally considered to be a less efficient market than national exchanges. Consequently, the liquidity of our securities could be impaired, not only in the number of securities which could be bought and sold, but also through SEC regulations, delays in the timing of transactions, difficulties in obtaining price quotations, reduction in security analysts’ and the new media’s coverage of us, if any, and lower prices for our securities than might otherwise be attained. This circumstance could have an adverse effect on the ability of an investor to sell any shares of our common stock as well as on the selling price for such shares. In addition, the market price of our common stock may be significantly affected by various additional factors, including, but not limited to, our business performance, and industry dynamics or changes in general economic conditions.

 

APPLICABILITY OF “PENNY STOCK RULES” TO BROKER-DEALER SALES OF OUR COMMON STOCK COULD HAVE A NEGATIVE EFFECT ON THE LIQUIDITY AND MARKET PRICE OF OUR COMMON STOCK.

 

A penny stock is generally a stock that is not listed on national securities exchange and is quoted on the “pink sheets” or on the OTC Bulletin Board, has a price per share of less than $5.00 and is issued by a company with net tangible assets less than $5 million.

 

The penny stock trading rules impose additional duties and responsibilities upon broker-dealers and salespersons effecting purchase and sale transactions in Common Stock and other equity securities, including determination of the purchaser’s investment suitability, delivery of certain information and disclosures to the purchaser, and receipt of a specific purchase agreement before effecting the purchase transaction.

 

Many broker-dealers will not affect transactions in penny stocks, except on an unsolicited basis, in order to avoid compliance with the penny stock trading rules. When our Common Stock is subject to the penny stock trading rules, such rules may materially limit or restrict the ability to resell our Common Stock, and the liquidity typically associated with other publicly traded equity securities may not exist.

 

ITEM 2. DESCRIPTION OF PROPERTIES

 

Our principal executive office is at The Chrysler Building, 405 Lexington Avenue, 26th Floor, New York, New York, 10174. We lease approximately 300 square feet of office space on a month-to-month basis. The aggregate annual rent for this office space was $2,000 and $3,000 in 2017 and 2016, respectively.

 

Since October 2016, we lease an approximately 3,000 square foot office at 331 Corporate Circle, Golden, CO 80401. The lease is for one year and is set to expire in April 2018. The aggregate annual rent for this space is $41,000.

 

We believe our facilities are adequate for our current and planned business operations.

 

ITEM 3. LEGAL PROCEEDINGS

 

We are subject from time to time to litigation, claims and suits arising in the ordinary course of business. As of December 31, 2017, we were not a party to any material litigation, claim or suit whose outcome could have a material effect on our financial statements other than the litigation described above which was subsequently settled.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 
 
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PART II

 

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

We are currently trading on the OTCQB operated by www.otcmarkets.com. The following table sets forth for the periods indicated, the high and low per share bid information for our common stock for the fiscal years ended December 31, 2017 and December 31, 2016, as reported by www.otcmarkets.com. Such high and low bid information reflects inter-dealer quotes, without retail mark-ups, mark-downs or commissions and may not represent actual transactions.

  

2017

 

 

 

 

 

 

First Quarter

 

$ 0.05

 

 

$ 0.03

 

Second Quarter

 

$ 0.04

 

 

$ 0.02

 

Third Quarter

 

$ 0.04

 

 

$ 0.02

 

Fourth Quarter

 

$ 0.03

 

 

$ 0.02

 

   

2016

 

 

 

 

 

 

First Quarter

 

$ 0.07

 

 

$ 0.05

 

Second Quarter

 

$ 0.08

 

 

$ 0.05

 

Third Quarter

 

$ 0.06

 

 

$ 0.04

 

Fourth Quarter

 

$ 0.05

 

 

$ 0.02

 

 

As of March 30, 2018, there were 533,781,064 shares of common stock of the issuer issued and outstanding and approximately 643 record shareholders.

 

DIVIDENDS

 

We have never paid any cash dividends. We presently intend to reinvest earnings, if any, to fund the development and expansion of our business and, therefore, do not anticipate paying cash dividends on our common stock in the foreseeable future. The declaration of cash dividends will be at the discretion of our board of directors and will depend upon our earnings, capital requirements, financial position, general economic conditions and other pertinent factors.

 

RECENT SALES OF UNREGISTERED SECURITIES

 

During the past two years, we have issued unregistered shares of common stock and options and warrants for the purchase of common stock in the following transactions in reliance on an exemption from registration pursuant to Section 4(2) of the Securities Act:

 

2017

 

During the year ended December 31, 2017, we did not sell any unregistered securities.

 

2016

 

On or about August 26, 2015, the Board of Directors of the Company approved a stock repurchase program, whereby the Company is authorized to purchase shares of its common stock with a value of up to $500,000 in open market transactions at the discretion of management. During the year ended December 31, 2016, the Company repurchased 61,337 shares, for a total cost of $4,000.


 
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During the quarter ended March 31, 2016, common shares totaling 3,617,485 that were held in treasury were cancelled and returned to authorized capital.

 

On March 21, 2016, we entered into an Advisory Board Agreement, pursuant to which stock options to purchase up to 3,000,000 shares of the Company, with an exercise price of $0.05 per share with a 5-year life. The options vest in three equal installments, with the first portion of 1,000,000 immediately vested. The remaining 2,000,000 stock options vest at the achievement of milestones, which have not yet been established and for which there is no estimated time frame for vesting.

 

In June 2016, the Company awarded all members of the Company’s board of director’s stock options for 500,000 shares each for a total of 3,000,000 shares, with an exercise price of $0.06 per share with a 10 year life.

 

In June 2016, the Company granted employees of one of the Company’s subsidiaries stock options in the aggregate amount of 1,950,000 shares, with an exercise price of $0.08 per share with a 5 year life.

 

Securities Authorized for Issuance under Equity Incentive Plans

 

The 2000 Plan is administered by a committee of two or more members of the Board of Directors or, if no committee is appointed, then by the Board of Directors. The 2000 Plan allows for the issuance of incentive stock options (which, pursuant to Section 422 of the Internal Revenue Code, can only be granted to employees), non-qualified stock options, stock appreciation rights, stock awards, or stock bonuses. The committee, or the Board of Directors if there is no committee, determines the type of option granted, the exercise price, the option term, which may be no more than ten years, terms and conditions of exercisability and methods of exercise. Options must vest within ten-years. Under the 2000 Plan, the exercise price may not be less than fair market value on the date of grant for the incentive stock options. The 2000 Plan also allows for the granting of Stock Appreciation Rights. No Stock Appreciation Rights have been granted. The number of shares under the 2000 Plan available for grant at December 31, 2017 was 18,869,763.

 

In November 2004, our Board of Directors adopted the 2004 Consultant Stock Plan (the “2004 Plan”). The purpose of this 2004 Consultant Stock Plan is to advance our interests by helping us obtain and retain the services of persons providing consulting services upon whose judgment, initiative, efforts and/or services we are substantially dependent, by offering to or providing those persons with incentives or inducements affording such persons an opportunity to become owners of our capital stock. We reserved 2,000,000 shares of our Common Stock for awards to be made under the 2004 Plan. We filed a registration statement on Form S-8 with the SEC on November 26, 2004 to register the shares underlying the 2004 plan. The 2004 Plan is administered by a committee of two or more members of the Board of Directors or, if no committee is appointed, then by the Board of Directors. The committee or the Board of Directors if there is no committee, determines who is eligible to receive awards under the plan, grant awards and interpret the 2004 Plan. The number of shares under the 2004 Plan available for grant at December 31, 2017 was 500,000.

 

On May 9, 2005, our Board of Directors adopted the 2005 Equity Compensation Plan (the “2005 Plan”). The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to our success, by offering them an opportunity to participate in the our future performance through awards of Options, the right to purchase Common Stock and Stock Bonuses. We reserved 10,000,000 shares of our Common Stock for awards to be made under the 2005 Plan. The 2005 Plan is administered by a committee of two or more members of the Board of Directors or, if no committee is appointed, then by the Board of Directors. The committee, or the Board of Directors if there is no committee, determines who is eligible to receive awards under the plan, grant awards and interpret the 2005 Plan. We filed a registration statement on Form S-8 with the SEC on June 8, 2005 to register the shares underlying the 2005 plan. The number of shares under the 2006 Plan available for grant at December 31, 2017 was -0-.

 

In January 2015, our Board of Directors adopted the 2015 Incentive Stock Plan (the “2015 Plan”). The purpose of this Plan is to provide incentive stock options (which, pursuant to Section 422 of the Internal Revenue Code, can only be granted to employees), non-qualified stock options, stock appreciation rights, stock awards, or stock bonuses. The committee, or the Board of Directors if there is no committee, determines the type of option granted, the exercise price, the option term, which may be no more than ten years, terms and conditions of exercisability and methods of exercise. Options must vest within ten-years. Under the 2015 Plan, the exercise price may not be less than fair market value on the date of grant for the incentive stock options. The 2015 Plan also allows for the granting of Stock Appreciation Rights. No Stock Appreciation Rights have been granted. The number of shares under the 2015 Plan available for grant at December 31, 2017 was 4,000,000.

 
 
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Set forth in the table below is information regarding awards made through compensation plans or arrangements through December 31, 2017.

  

Equity Compensation Plan Information

 

Plan category

 

Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)

 

 

Weighted-average exercise price of outstanding options, warrants and rights

 

 

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

 

Equity compensation plans approved by security holders

 

 

 

 

 

 

 

 

 

Equity compensation plans not approved by security holders

 

 

 

 

 

 

 

 

23,369,763

 

Total

 

 

 

 

 

 

 

 

23,369,763

 

 

A summary of the Company’s stock option activity and related information is as follows:

 

 

 

Number of Options

 

 

Exercise Price Per Share

 

 

Weighted Average Exercise Price

 

 

Number of Options Exercisable

 

Outstanding as of December 31, 2015

 

 

42,855,000

 

 

 

 

 

 

 

 

 

42,855,000

 

Granted

 

 

5,950,000

 

 

$ 0.060

 

 

$ 0.040

 

 

 

5,950,000

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Expired

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Outstanding as of December 31, 2016

 

 

48,805,000

 

 

 

 

 

 

 

 

 

 

 

48,805,000

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Expired

 

 

(26,950,000 )

 

 

0.018

 

 

 

0.018

 

 

 

(26,950,000 )

Outstanding as of December 31, 2017

 

 

21,855,000

 

 

 

 

 

 

 

 

 

 

 

21,855,000

 

 
 
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Exercise prices and weighted-average contractual lives of 21,855,000 stock options outstanding as of December 31, 2017 are as follows:

 

 

 

 

 

 

 

Options Outstanding

 

 

Options Exercisable

 

Exercise Price

 

 

Number

Outstanding

 

 

Weighted Average

Remaining

Contractual Life

 

 

Weighted Average

Exercise Price

 

 

Number

Exercisable

 

 

Weighted Average

Exercise Price

 

$

0.05

 

 

 

3,000,000

 

 

 

7.49

 

 

$ 0.05

 

 

 

3,000,000

 

 

$ 0.05

 

$

0.06

 

 

 

6,000,000

 

 

 

7.55

 

 

$ 0.06

 

 

 

6,000,000

 

 

$ 0.06

 

$

0.07

 

 

 

9,250,000

 

 

 

2.35

 

 

$ 0.07

 

 

 

9,250,000

 

 

$ 0.07

 

$

0.08

 

 

 

575,000

 

 

 

2.93

 

 

$ 0.08

 

 

 

575,000

 

 

$ 0.08

 

$

0.14

 

 

 

3,000,000

 

 

 

6.49

 

 

$ 0.14

 

 

 

3,000,000

 

 

$ 0.14

 

$

0.26

 

 

 

30,000

 

 

 

1.95

 

 

$ 0.26

 

 

 

30,000

 

 

$ 0.26

 

 

The fair value for options granted were determined using the Black-Scholes option-pricing model.

 

Warrants:

 

The Company issued the following warrants at the corresponding weighted average exercise price as of December 31, 2017.

 

 

 

Warrants

 

 

Weighted average Exercise Price

 

Outstanding as of December 31, 2015

 

 

28,943,182

 

 

$ 0.07

 

Issued/Vested

 

 

-

 

 

$ -

 

Cancelled/Expired

 

 

-

 

 

 

-

 

Outstanding as of December 31, 2016

 

 

28,943,182

 

 

$ 0.07

 

Issued/Vested

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

Cancelled/Expired

 

 

-

 

 

 

-

 

Outstanding as of December 31, 2016

 

 

28,943,182

 

 

$ 0.07

 

   

Date

 

Number of Warrants

 

 

Exercise Price

 

 

Contractual Life Remaining

 

Number of Shares Exercisable

 

April 2012

 

 

6,000,000

 

 

$ 0.05

 

 

2.8 years

 

 

6,000,000

 

January 2014

 

 

909,091

 

 

$ 0.09

 

 

1.1 years

 

 

909,091

 

February 2014

 

 

9,125,000

 

 

$ 0.08

 

 

1.1years

 

 

9,125,000

 

March 2014

 

 

909,091

 

 

$ 0.09

 

 

1.2 years

 

 

909,091

 

August 2014

 

 

800,000

 

 

$ 0.08

 

 

1.7 years

 

 

800,000

 

November 2014

 

 

7,500,000

 

 

$ 0.11

 

 

1.9 years

 

 

7,500,000

 

March 2015

 

 

2,500,000

 

 

$ 0.12

 

 

2.2 years

 

 

2,500,000

 

July 2015

 

 

300,000

 

 

$ 0.05

 

 

2.5 years

 

 

300,000

 

August 2015

 

 

300,000

 

 

$ 0.05

 

 

2.6 years

 

 

300,000

 

September 2015

 

 

300,000

 

 

$ 0.05

 

 

2.7 years

 

 

300,000

 

October 2015

 

 

300,000

 

 

$ 0.05

 

 

2.8 years

 

 

300,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28,943,182

 

 

 

 

 

 

 

 

 

28,943,182

 

 
 
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The fair value for warrants granted were determined using the Black-Scholes option-pricing model.

 

ITEM 6. SELECTED FINANCIAL DATA

 

N/A

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

The following discussion and analysis should be read in conjunction with our financial statements and accompanying notes appearing elsewhere in this Form 10-K.

 

OVERVIEW

 

Manhattan Scientifics, Inc. (the “Company” or “Manhattan Scientifics”), a Delaware corporation, was established on July 31, 1992 and has one operating wholly-owned subsidiary: Metallicum, Inc., (“Metallicum”). The Company also holds a 31%, noncontrolling interest in Imagion Biosystems, Inc. (f/k/a Senior Scientific LLC) (“Imagion”). Manhattan Scientifics is focused on technology transfer and commercialization of these transformative technologies.

 

The Company operates as a technology incubator that seeks to acquire, develop and commercialize life-enhancing technologies in various fields. To achieve this goal, the Company continues to identify emerging technologies through strategic alliances with scientific laboratories, educational institutions, scientists and leaders in industry and government. The Company and its executives have a long-standing relationship with Los Alamos Laboratories in New Mexico.

 

In June 2008, we acquired Metallicum and its licensed patented technology. We entered into a stock purchase agreement with Metallicum to acquire all of the outstanding capital in exchange for 15,000,000 restricted shares of our common stock. An additional 15,000,000 shares of our common stock will be payable to Metallicum in the event of meeting certain milestones. At December 31, 2011, one milestone was met. Metallicum was granted an exclusive license by The Los Alamos National Laboratory on patents related to nanostructured metals. In September 2009, we entered into a technology transfer agreement and sale with Carpenter Technology Corporation, (“Carpenter”) wherein Carpenter was to fully develop, manufacture and market a new class of high strength metals. On February 11, 2015, the Company and Carpenter entered into a Settlement Agreement and Mutual Release pursuant to which the parties provided a full release of one another, Carpenter paid the Company $8,000,000, Carpenter transferred to the Company all intellectual and physical property that was part of the original agreement, Carpenter agreed to provide follow-on technical assistance and Carpenter provided a list of all customers and contacts.

 

On May 31, 2011, we entered into an Agreement and Plan of Reorganization to acquire Senior Scientific. The total purchase price was 21,668,000 restricted shares of our common stock (less 7,667,000 shares previously issued pursuant to an option agreement). As a result of this acquisition, Senior Scientific owned patented technologies that can use biosafe nanoparticles and sensitive magnetic sensors to detect and measure cancer cells in biopsies or in the human body with the potential to transform how cancer is detected and treated. On November 17, 2016, Senior Scientific merged with and into Imagion, a Nevada company. Following the merger, Imagion held all of the liabilities, obligations and assets of Senior Scientific and the Company continued as the sole equity holder of Imagion. On June 30, 2017, Imagion completed its initial public offering and listing on the Australian Stock Exchange (ASX). As of December 31, 2017, the Company owns 64,099,476 shares of Imagion, resulting in a noncontrolling interest of approximately 31% of Imagion’s issued and outstanding common stock. Based upon Imagion’s latest offering price of approximately $0.09 per share, the fair value of the Imagion shares is approximately US$5,505,000.

 
 
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RESULTS OF OPERATIONS

 

YEAR ENDED DECEMBER 31, 2017 COMPARED TO YEAR ENDED DECEMBER 31, 2016

 

GROSS PROFIT. In the year ended December 31, 2017, we recorded $142,000 in revenue compared to $150,000 of revenue recognized for the year ended December 31, 2016. The slight decrease is attributable to a reduction in Metallicum’s, our wholly-owned subsidiary, revenue received from a joint development agreement.

 

GENERAL AND ADMINISTRATIVE. General and administrative expenses consist of consultants, contractors, accounting, legal, travel, rent, telephone and other day-to-day operating expenses. General and administrative expenses were $2,056,000 for the year ended December 31, 2017 compared with $3,155,000 for the year ended December 31, 2016. This decrease in general and administrative expenses is mostly attributable to the spin out of Imagion Biosystems and the Company no longer consolidating the operations of IBI.

 

RESEARCH AND DEVELOPMENT. Research and development expenses consist of consultants and contractors. Research and development expenses were $175,000 for the year ended December 31, 2017 compared with $3,335,000 for the year ended December 31, 2016. Research and development expenses decreased in research and development over the year was the result of no longer consolidating Imagion’s operations.

 

OTHER INCOME AND (EXPENSES). Total other expenses for the year ended December 31, 2017 totaled $3,824,000. This is primarily attributable to the spin-out of Imagion, which resulted in a change in the Company’s accounting treatment, from the consolidation method to the fair market value method, of its noncontrolling interest in Imagion. This gain on the deconsolidation of Imagion resulted in a gain of $7,940,000 during the year ended December 31, 2017. Unrealized gains or losses attributed to changes in the fair market value of the Company’s noncontrolling interest in Imagion is reflected as a component of non-operating income (losses). During the years ended December 31, 2017 and 2016, unrealized losses on fair value adjustments of its noncontrolling interest in Imagion was $(4,117,000) and $0.

 

Comparatively, the Company recognized other income of $275,000 for the year ended December 31, 2016, which is attributable to $(488,000) in interest expense and the forgiveness of $763,000 of related party debt and interest accrued thereupon.

 

NET INCOME (LOSS). We incurred a net income of $1,546,000 for the year ended December 31, 2017, compared to a net loss of $(6,108,000) for the year ended December 31, 2016.

 

LIQUIDITY AND PLAN OF OPERATIONS

 

Stockholders’ equity totaled $8,161,000 on December 31, 2017 and the working capital deficit was $(1,349,000) on such date.

 

We had a decrease of $(799,000) in cash and cash equivalents for the year ended December 31, 2017, primarily as a result of cash used in our operating activities. For the year ended December 31, 2017, cash used in operating activities was $(791,000). Cash used in investing activities for the year ended December 31, 2017 totaled $8,000 related to purchase of equipment for our research and development.

 

We experienced a $4,296,000 net decrease in cash and cash equivalents for the year ended December 31, 2016, as a result of cash used in the pursuit of our operational objectives. Cash used by operating activities was $4,558,000, during the year ended December 31, 2016. During 2016, we used a significant amount of funds in the assembly and delivery of MRX instrumentation to two university research facilities: University of Michigan Medical School and Weill Cornell Medicine.

 
 
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Based upon current projections, our principal cash requirements for the next 12 months consists of (1) fixed expenses, including payroll, investor relations services, public relations services, bookkeeping services, consultant services, and rent; and (2) variable expenses, including technology research and development, milestone payments and intellectual property protection, and additional scientific consultants. As of December 31, 2017, we had $269,000 in cash. We believe our current cash position is not sufficient to maintain our operations for the next twelve months. Unless and until we are able to generate a sufficient amount of revenue, reduce our costs and/or enter a strategic relationship, we expect to finance future cash needs through public and/or private offerings of equity securities and/or debt financings. We do not currently have any committed future funding. To the extent we raise additional capital by issuing equity securities or hybrid convertible debt securities, our stockholders could at that time experience substantial dilution. Any debt financing that we are able to obtain may involve operating covenants that restrict our business.

 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

 

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. A significant estimate includes the carrying value of our patents, fair value of our common stock, assumptions used in calculating the value of stock options, depreciation and amortization.

 

Impairment of Long-Lived Assets:

 

We assess the impairment of our long-lived assets periodically in accordance with Financial Accounting Standards Board (“FAS”) Accounting Standard Codification (“ASC”) Topic 10. Whenever events or changes in circumstances indicate that the carrying amounts of long-lived assets may not be recoverable, we will compare undiscounted net cash flows estimated to be generated by those assets to the carrying amount of those assets. When these undiscounted cash flows are less than the carrying amounts of the assets, we will record impairment losses to write the asset down to fair value, measured by the discounted estimated net future cash flows expected to be generated from the assets. To date there has been no impairment.

 

License Agreements

 

In 2008, the Company obtained licenses to the rights of certain patents regarding nano-structured materials developed by another company as a result of the acquisition of Metallicum. The purchase price paid for these licenses was $305,000, which represents its fair value. The Company obtained an exclusive license on two patents and a non-exclusive license on the third patent. The value attributable to license agreements is being amortized over the period of its estimated benefit period of 10 years. Under the terms of the agreement, the Company may be required to pay royalties, as defined, to the licensors.

 

In 2009, the Company entered into a patent license agreement with Los Alamos National Security LLC for the exclusive use of certain technology relating to the manufacture and application of nanostructuring metals and alloys. The value attributable to license agreements is being amortized over the period of its estimated benefit period of 10 years. Under the terms of the agreement the Company is required to pay an annual license fee of $10,000 and, may be required to pay royalties, as defined, to the licensors.

 
 
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Revenue Recognition

 

Revenue is recognized when the four basic criteria of revenue recognition are met: (i) a contractual agreement exists; (ii) transfer of technology (intellectual property) has been completed or services have been rendered; (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured. Service revenue is recognized when specific milestones are reached or as service is provided if there are no discernable milestones.

 

Investments: Available-for-Sale Investments

 

Investments that we designate as available-for-sale are reported at fair value, with unrealized gains and losses, net of tax, recorded in accumulated other comprehensive income (loss). We determine the cost of the investment sold based on the specific identification method. Our available-for-sale investments include Marketable equity securities. We acquire these equity investments for the promotion of business and strategic objectives. We record the realized gains or losses on the sale or exchange of marketable equity securities in gains (losses) on other equity investments, net.

 

Stock-Based Compensation:

 

The Company follows the provision of FASB ASC Topic 718 for the measurement and recognition of compensation expense for all share-based payment awards to employees, directors and non-employees. Additionally, the Company follows the SEC’s Staff Accounting Bulletin No. 107 “Share-Based Payment” (“SAB 107”), as amended by Staff Accounting Bulletin No. 110 (“SAB 110”), which provides supplemental application guidance based on the views of the SEC. The Company estimates the expected term, which represents the period of time from the grant date that the Company expects its stock options to remain outstanding, using the simplified method as permitted by SAB 107 and SAB 110. Under this method, the expected term is estimated as the mid-point between the time the options vest and their contractual terms. The Company continues to apply the simplified method because it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected terms due to the limited period of time its equity shares have been publicly traded and the limited number of its options which have so far vested and become eligible for exercise.

 

The estimated fair value of grants of stock options and warrants to our nonemployees is charged to expense, if applicable, in the financial statements. These options vest in the same manner as the employee options granted under each of the option plans as described above.

 

OFF BALANCE SHEET ARRANGEMENTS

 

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations liquidity, capital expenditures or capital resources and would be considered material to investors.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a Small Reporting Company, we are not required to provide the information under Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

 
 
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

              

REPORTS OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

F-1

 

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2017 AND 2016

 

F-2

 

CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

 

F-3

 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

 

F-4

 

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

 

F-5

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

F-6

 
 
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders of

Manhattan Scientifics, Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of Manhattan Scientifics, Inc. (the “Company”) as of December 31, 2017 and December 31, 2016 and the related statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and December 31, 2016, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has negative working capital at December 31, 2017, has incurred recurring losses and recurring negative cash flow from operating activities, and has an accumulated deficit which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ AMC Auditing                                

 

AMC Auditing

We have served as the Company’s auditor since February 15, 2017

Las Vegas, Nevada

 

April 2, 2018

  

 
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MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(AUDITED)

   

 

 

December 31,

 

 

December 31,

 

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$ 269,000

 

 

$ 1,068,000

 

Accounts receivable

 

 

-

 

 

 

44,000

 

Prepaid expenses

 

 

9,000

 

 

 

0

 

Total current assets

 

 

278,000

 

 

 

1,112,000

 

 

 

 

 

 

 

 

 

 

Investments

 

 

5,505,000

 

 

 

2,000

 

Property and equipment, net

 

 

8,000

 

 

 

165,000

 

Assets received in settlement agreement – see Note 8

 

 

5,030,000

 

 

 

5,724,000

 

Intellectual property, net

 

 

23,000

 

 

 

630,000

 

Other assets

 

 

2,000

 

 

 

2,000

 

Total assets

 

$ 10,846,000

 

 

$ 7,635,000

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$ 209,000

 

 

$ 472,000

 

Accrued expenses — related parties

 

 

1,418,000

 

 

 

968,000

 

Note payable to related party

 

 

-

 

 

 

275,000

 

Total current liabilities

 

 

1,627,000

 

 

 

1,715,000

 

 

 

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

 

 

 

Convertible notes payable, net

 

 

-

 

 

 

2,139,000

 

Total long-term liabilities

 

 

-

 

 

 

2,139,000

 

Total liabilities

 

 

1,627,000

 

 

 

3,854,000

 

 

 

 

 

 

 

 

 

 

Mezzanine equity Series D convertible preferred, authorized 105,671 shares, 105,671 and 105,671 shares issued and outstanding, respectively

 

 

1,058,000

 

 

 

1,058,000

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Capital stock $.001 par value

 

 

 

 

 

 

 

 

Preferred, authorized 1,000,000 shares

 

 

 

 

 

 

 

 

Common, authorized 950,000,000 shares, 533,781,064 shares issued, and outstanding, respectively

 

 

534,000

 

 

 

534,000

 

Additional paid-in-capital

 

 

67,289,000

 

 

 

63,527,000

 

Accumulated deficit

 

 

(59,662,000 )

 

 

(61,338,000 )

Total stockholders' equity (deficit)

 

 

8,161,000

 

 

 

2,723,000

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

$ 10,846,000

 

 

$ 7,635,000

 

   

The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.

   

 
F-2
 
Table of Contents

 

MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(AUDITED)


 

 

FOR THE YEARS ENDED

 

 

 

DECEMBER 31,

 

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

Revenue

 

$ 142,000

 

 

$ 150,000

 

 

 

 

 

 

 

 

 

 

Operating costs:

 

 

 

 

 

 

 

 

Direct cost of revenue

 

 

189,000

 

 

 

43,000

 

General and administrative expenses

 

 

2,056,000

 

 

 

3,155,000

 

Research and development

 

 

175,000

 

 

 

3,335,000

 

 

 

 

 

 

 

 

 

 

Total operating costs and expenses

 

 

2,420,000

 

 

 

6,533,000

 

 

 

 

 

 

 

 

 

 

Loss from operations before other income and expenses

 

 

(2,278,000 )

 

 

(6,383,000 )

 

 

 

 

 

 

 

 

 

Other income and (expenses):

 

 

 

 

 

 

 

 

Gain/(loss) on forgiveness of debt

 

 

-

 

 

 

763,000

 

(Loss) on fair value adjustment of investments

 

 

(4,117,000 )

 

 

-

 

Other income

 

 

1,000

 

 

 

-

 

Gain on deconsolidation of subsidiary

 

 

7,940,000

 

 

 

-

 

Interest and other expenses

 

 

-

 

 

 

(488,000 )

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

 

1,546,000

 

 

 

(6,108,000 )

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding (Basic)

 

 

533,781,064

 

 

 

534,680,493

 

 

 

 

 

 

 

 

 

 

Basic income (loss) per common share

 

$ 0.00

 

 

$ (0.01 )

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding (Diluted)

 

 

533,781,064

 

 

 

534,680,493

 

 

 

 

 

 

 

 

 

 

Diluted income (loss) per common share

 

$ 0.00

 

 

$ (0.01 )

   

The accompanying notes are an integral part of these unaudited consolidated financial statements.

   

 
F-3
 
Table of Contents

 

MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

For the Years Ended December 31, 2017 and 2016

(AUDITED)

 

 

 

Preferred Stock $0.001

Par Value

 

 

Common Stock

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

 

Series B

 

 

$0.001 Par Value

 

 

Paid-In

 

 

Treasury

 

 

Accumulated

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Deficit

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2015

 

 

49,999

 

 

$ -

 

 

 

537,398,549

 

 

$ 537,000

 

 

$ 63,617,000

 

 

$ (330,000 )

 

$ (55,230,000 )

 

$ 8,594,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

issued for services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

240,000

 

 

 

 

 

 

 

 

 

 

 

240,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock repurchased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

as treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,000 )

 

 

 

 

 

 

(3,000 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

cancelled and returned

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

to authorized

 

 

 

 

 

 

 

 

 

 

(3,617,485 )

 

 

(3,000 )

 

 

(330,000 )

 

 

333,000

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,108,000 )

 

 

(6,108,000 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

 

49,999

 

 

 

-

 

 

 

533,781,064

 

 

 

534,000

 

 

 

63,527,000

 

 

 

-

 

 

 

(61,338,000 )

 

 

2,723,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior priod adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

130,000

 

 

 

130,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deconsolidation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,762,000

 

 

 

 

 

 

 

 

 

 

 

3,762,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,546,000

 

 

 

1,546,000

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

49,999

 

 

 

-

 

 

 

533,781,064

 

 

 

534,000

 

 

 

67,289,000

 

 

 

-

 

 

 

(59,662,000 )

 

 

8,161,000

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

F-4
 
Table of Contents

 

MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(AUDITED)

  

 

 

FOR THE YEARS ENDED

 

 

 

DECEMBER 31,

 

 

 

2017

 

 

2016

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income (loss) attributable to Manhattan Scientifics, Inc.

 

$ 1,546,000

 

 

$ (6,108,000 )

Adjustments to reconcile net income/(loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Stock options issued/vested for services

 

 

-

 

 

 

240,000

 

Depreciation and amortization

 

 

857,000

 

 

 

995,000

 

Treasury stock cancelled and returned to authorized

 

 

-

 

 

 

3,000

 

(Gain)/Loss on forgiveness of debt

 

 

-

 

 

 

(450,000 )

Loss on fair value adjustment of investments

 

 

4,117,000

 

 

 

-

 

Gain on deconsolidation of subsidiary

 

 

(7,940,000 )

 

 

-

 

Changes in:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

44,000

 

 

 

(44,000 )

Prepaid expenses

 

 

(9,000 )

 

 

-

 

Accounts payable and accrued expenses

 

 

38,000

 

 

 

506,000

 

Accrued interest and expenses, related parties

 

 

556,000

 

 

 

300,000

 

 

 

 

 

 

 

 

 

 

Net cash provided by/(used in) operating activities

 

 

(791,000 )

 

 

(4,558,000 )

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchase of fixed assets

 

 

(8,000 )

 

 

(13,000 )

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

(8,000 )

 

 

(13,000 )

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from note payable - related party

 

 

-

 

 

 

275,000

 

Payments on notes payable other

 

 

-

 

 

 

-

 

Proceeds from issuance of common stock

 

 

-

 

 

 

-

 

Repurchase of common stock for treasury

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net cash (used in)/provided by financing activities

 

 

-

 

 

 

275,000

 

 

 

 

 

 

 

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

 

 

(799,000 )

 

 

(4,296,000 )

Cash and cash equivalents, beginning of year

 

 

1,068,000

 

 

 

5,364,000

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, END OF YEAR

 

$ 269,000

 

 

$ 1,068,000

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Interest paid

 

$ -

 

 

$ -

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Conversion of debt to preferred stock by shareholder

 

$ -

 

 

$ -

 

Loss on forgiveness of debt

 

$ -

 

 

$ (450,000 )

Gain in change in accounting treatment

 

$ (7,940,000 )

 

$ -

 

  

The accompanying notes are an integral part of these unaudited consolidated financial statements.

  

F-5
 
Table of Contents

 

MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

(AUDITED)

 

NOTE 1 – ORGANIZATION AND OPERATIONS

 

Manhattan Scientifics, Inc., a Delaware corporation (formerly Grand Enterprises, Inc) (“Grand”) was established on July 31, 1992 and has a wholly-owned subsidiary: Metallicum, Inc. (“Metallicum”). On June 12, 2008, the Company acquired Metallicum, Inc, for 15,000,000 shares of Company’s common stock, Manhattan Scientifics, Inc., operates as a technology incubator that seeks to acquire, develop and commercialize life-enhancing technologies in various fields, with emphasis in the areas of nano-technologies and nano-medicine. In this capacity, the Company continues to identify emerging technologies through strategic alliances with scientific laboratories, educational institutions, and scientists and leaders in industry and government. The Company has a long standing relationship with Los Alamos Laboratories in New Mexico. During 2008, the Company refocused its efforts from the development of its fuel cell technologies to its current focus on the development of nanomaterials through the acquisition of Metallicum.

 

Metallicum is a nanotechnology start-up company located in Colorado. Metallicum Inc. has focused on the development and manufacture of nanostructured metals for medical implants and other applications. Metallicum intends to establish manufacturing partner relationships with major Fortune 500 metals companies and strategic partnering with significant customers in the medical device & prosthetics industries as well as in auto, truck, & aircraft manufacturing industries. Metallicum’s initial products include nanostructured bulk metals and alloys in the form of rod, bar, wire and foil. The Company conducts its operations primarily in the United States.

 

Manhattan Scientifics purchased Metallicum to acquire its licensed rights to patented technology. The technology is comprised of three US Patents (US Patent numbers 7152448, 6197129 and 6399215) for which Metallicum (subsequently, Manhattan) had been assigned an exclusive license rights by Los Alamos National Security LLC (LANL). Under the license rights, Metallicum had all rights, title and interest throughout the world in and to any and all inventions, original works of authorship, developments, concepts, know-how, and improvements on the patents or trade secrets whether or not patentable or registrable under copyright or similar laws.

 

In January 2009, the Company entered into a patent license agreement with Los Alamos National Security, LLC for the exclusive licensing use of certain technology relating to the manufacture and application of nanostructuring metals and alloys. Pursuant to such agreement the Company provided a non-refundable fee and 2,000,000 shares of common stock. Additionally, the Company is required to pay an annual license fee starting in February 2010 and royalties on future net sales.

 

In September 2009, the Company entered into a technology transfer agreement with Carpenter Technologies Corporation (“Carpenter”). Wherein Carpenter will fully develop, manufacture and market a new class of high strength metals under an exclusive technology transfer agreement from Manhattan Scientifics and the Los Alamos National Laboratory. The proprietary process will enable super-strength metals and alloys to make products that weigh far less than in the past and without significant cost premiums. On February 11, 2015, the Company entered into a Settlement Agreement and Mutual General Releases (the “Settlement Agreement”) with Carpenter Technology Corporation related to the agreement discussed in Note 7, pursuant to which the parties settled and released each other from any and all liabilities and claims related to the Carpenter Agreements.

 

On May 31, 2011, the Company entered into an Agreement and Plan of Reorganization (“Nanomedicine Agreement”) by and among the Company, Scientific Nanomedicine, Inc. (“Nanomedicine”), Edward, R. Flynn (“Flynn”) and Edward R. Flynn and Maureen A. Flynn, as Co-Trustees of the Edward R. Flynn and Maureen A. Flynn Revocable Trust u/t/a dated 10/25/2006 (“Trust”); and entered into a Purchase Agreement (“Senior Scientific Agreement”) by and among the Company, Senior Scientific LLC, (“Senior Scientific”) and Flynn.

 

Under the Nanomedicine Agreement, the Company has agreed to purchase all of the common stock of Nanomedicine. The purchase price for the common stock of Nanomedicine is 21,667,000 restricted shares of the Company’s voting common stock (less 7,667,000 shares already issued) pursuant to the Acquisition Option Agreement, dated February 8, 2010, among the Company, Nanomedicine, Flynn and Senior Scientific. Nanomedicine holds the commercial rights to technology and intellectual property with respect to the early detection of diseases using nanotechnologies.

 

Under the Senior Scientific Agreement, the Company has agreed to purchase all of the membership interests of Senior Scientific. The purchase price for the membership interests of Senior Scientific is 1,000 restricted shares of the Company’s voting common stock. Senior Scientific operates a research laboratory in New Mexico.

 

 
F-6
 
Table of Contents

 

MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

(AUDITED)

 

On November 17, 2016, Senior Scientific merged with and into Imagion Biosystems, Inc., a Nevada corporation (“Imagion”). Following the merger, Imagion held all of the liabilities, obligations and assets of Senior Scientific and the Company continued as the sole equity holder of Imagion. On June 30, 2017, Imagion completed an IPO and listing on the Australian Stock Exchange (ASX). As of December 31, 2017, the Company owns 64,099,476 shares of Imagion, resulting in a noncontrolling interest of approximately 31% of Imagion’s issued and outstanding common stock. The Company elected to record the investment at fair value.

 

Manhattan Scientifics success will depend in part on its ability to obtain patents and product license rights, maintain trade secrets, and operate without infringing on the proprietary rights of others, both in the United States and other countries. There can be no assurance that patents issued to or licensed by the Company will not be challenged, invalidated, or circumvented, or that the rights granted thereunder will provide proprietary protection or competitive advantages to the Company.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS

 

BASIS OF CONSOLIDATION:

 

The consolidated financial statements include the accounts of Manhattan Scientific, Inc. and its wholly owned subsidiary, Metallicum. All significant intercompany balances and transactions have been eliminated.

 

The fiscal year end of the Company is December 31.

 

GOING CONCERN:

 

As of December 31, 2017 the Company has cumulative losses totaling $(59,662,000) and negative working capital of $1,350,000. The Company had a net income of $1,546,000 for the year ended December 31, 2017. Because of these conditions, the Company will require additional working capital to develop business operations. The Company intends to raise additional working capital through the continued licensing of its technology as well as to generate revenues for other services. The Company is also contemplating the spin-off of one of its subsidiaries. There are no assurances that the Company will be able to achieve the level of revenues adequate to generate sufficient cash flow from operations to support the Company’s working capital requirements. To the extent that funds generated are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available, the Company may not continue its operations.

 

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

USE OF ESTIMATES:

 

The preparation of consolidated financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the amounts in the financial statements and accompanying notes. Actual results could differ from those estimates.

 

Management makes estimates that affect, carrying value of the Company’s patents, deferred income tax assets, estimated useful lives of property and equipment, useful lives of intangible assets, accrued expenses, fair value of equity instruments and reserves for any other commitments or contingencies. Any adjustments applied to estimates are recognized in the year in which such adjustments are determined.

 

CASH AND CASH EQUIVALENTS:

 

The Company considers all highly liquid investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents for the purposes of the statement of cash flows.

 

 
F-7
 
Table of Contents

 

MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

(AUDITED)

 

CASH CONCENTRATION:

 

The Company’s cash accounts are fully insured up to $250,000. As of December 31, 2017 and 2016, the Company had cash accounts exceeding insured amount totaling $0 and $750,000, respectively.

 

PROPERTY AND EQUIPMENT:

 

Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized, and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes.

 

IMPAIRMENT OF LONG-LIVED ASSETS:

 

The Company applies the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360-10, Property, Plant and Equipment, where applicable to all long lived assets. FASB ASC 360-10 addresses accounting and reporting for impairment and disposal of long-lived assets. The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with FASB ASC 360-10. FASB ASC 360-10 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.

 

INTANGIBLE ASSETS:

 

License Agreements

 

In 2008, the Company obtained licenses to the rights of certain patents regarding nanostructured materials developed by another company as a result of the acquisition of Metallicum. The purchase price paid for these licenses was $305,000, which represented its fair value. The Company obtained an exclusive license on two patents and a non-exclusive license on the third patent. The value attributable to license agreements is being amortized over the period of its estimated benefit period of 10 years. At December 31, 2017 and 2016, accumulated amortization was $285,000 and $255,000, respectively. Under the terms of the agreement, the Company may be required to pay royalties, as defined, to the licensors.

 

In 2009, the Company entered into a patent license agreement with Los Alamos National Security LLC for the exclusive use of certain technology relating to the manufacture and application of nanostructuring metals and alloys. The purchase price paid for this license agreement was $33,000 based on the fair market value of 2,000,000 shares of common stock issued. The value attributable to license agreements is being amortized over the period of its estimated benefit period of 10 years. At December 31, 2017 and 2016, accumulated amortization was $29,000 and $26,000, respectively. Under the terms of the agreement, the Company is required to pay an annual license fee of $10,000 starting in February 2010 and, may be required to pay royalties, as defined, to the licensors.

 

 
F-8
 
Table of Contents

 

MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

(AUDITED)

 

INCOME TAXES

 

The Company accounts for income taxes under an asset and liability approach. This process involves calculating the temporary and permanent differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The temporary differences result in deferred tax assets and liabilities, which would be recorded on the Company’s consolidated balance sheets in accordance with ASC 740, which established financial accounting and reporting standards for the effect of income taxes. The Company must assess the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent the Company believes that recovery is not likely, the Company must establish a valuation allowance. Changes in the Company’s valuation allowance in a period are recorded through the income tax provision on the consolidated statements of operations.

 

ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return.

 

Under ASC 740-10, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, ASC 740-10 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As a result of the implementation of ASC 740-10, the Company recognized no material adjustment in the liability for unrecognized income tax benefits.

 

BASIC AND DILUTED LOSS PER SHARE

 

In accordance with FASB ASC 260, “Earnings Per Share,” the basic loss per share is computed by dividing the loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Basic net loss per share excludes the dilutive effect of stock options or warrants and convertible notes Diluted net earnings (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of shares that might be issued upon exercise of common stock options and warrants. In periods where losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. As of December 31, 2017 and 2016, 51,198,182 and 77,748,182 dilutive shares were excluded from the calculation of diluted loss per common share.

 

RESEARCH AND DEVELOPMENT:

 

Research and development costs are expensed as incurred and amounted to $175,000 and $3,335,000 for the years ended December 31, 2017 and 2016.

 

REVENUE RECOGNITION:

 

To date the only revenue generated is from the sale of field technology developed by Metallicum related to the Company’s nanotechnology, services provided and sample materials.

 

Revenue is recognized when the four basic criteria of revenue recognition are met: (i) a contractual agreement exists; (ii) transfer of technology (intellectual property) has been completed or services have been rendered; (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured. Service revenue is recognized when specific milestones are reached or as service is provided if there are no discernible milestones.

 

 
F-9
 
Table of Contents

 

MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

(AUDITED)

 

STOCK-BASED COMPENSATION:

 

The Company accounts for stock-based compensation based on the fair value of all option grants or stock issuances made to employees or directors on or after its implementation date (the beginning of fiscal 2006), as well as a portion of the fair value of each option and stock grant made to employees or directors prior to the implementation date that represents the unvested portion of these share-based awards as of such implementation date, to be recognized as an expense, as codified in ASC 718. The Company calculates stock option-based compensation by estimating the fair value of each option as of its date of grant using the Black-Scholes option pricing model. These amounts are expensed over the respective vesting periods of each award using the straight-line attribution method. Compensation expense is recognized only for those awards that are expected to vest, and as such, amounts have been reduced by estimated forfeitures. The Company has historically issued stock options and vested and non-vested stock grants to employees and outside directors whose only condition for vesting has been continued employment or service during the related vesting or restriction period.

 

FAIR VALUE OF FINANCIAL INSTRUMENTS

 

Effective January 1, 2008, the Company adopted FASB ASC 820, Fair Value Measurements and Disclosures, Pre Codification SFAS No. 157, “Fair Value Measurements”, which provides a framework for measuring fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The standard also expands disclosures about instruments measured at fair value and establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

 

Level 1 — Quoted prices for identical assets and liabilities in active markets;

 

Level 2 — Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

 

Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

 

The Company designates cash equivalents (consisting of money market funds) and investments in securities of publicly traded companies as Level 1. The total amount of the Company’s investment classified as Level 3 is de minimis.

 

The fair value of the Company’s debt as of December 31, 2017 and 2016 approximated their fair value at those times.

 

Fair value of financial instruments: The carrying amounts of financial instruments, including cash and cash equivalents, short-term investments, accounts payable, accrued expenses and notes payables approximated fair value as of December 31, 2017 and 2016 because of the relative short term nature of these instruments. At December 31, 2017 and 2016, the fair value of the Company’s debt approximates carrying value.

 

During the year ended December 31, 2017, the Company elected fair value option for its investment in Imagion Biosystems, Inc. a Nevada company (“Imagion”) based on triggering event of dilution of ownership from 100% to approximately 31%, which lead to the deconsolidation of Imagion. Investments in Imagion are measured at fair value as opposed to equity method based on ASC 825-10. The guidance allows entities to elect to measure certain financial assets and financial liabilities (as well as certain nonfinancial instruments that are similar to financial instruments) at fair value. Investments over which an investor has the ability to exercise significant influence are eligible for the fair value option as they represent recognized financial assets. When the fair value option is elected for an instrument, all subsequent changes in fair value for that instrument are reported in earnings.

 

Management determined that it was appropriate to carry its investment in Imagion at fair value because the investment is traded on the Australian stock exchange and has daily trading activity and is a better indicator of value. The investments are re-measured at the end of each quarter based on the trading price and converted from AUD to USD. Any change in the value is reported on the income statement as an unrealized gain or loss.

 

 
F-10
 
Table of Contents

 

MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

(AUDITED)

 

RECENT ACCOUNTING PRONOUNCEMENTS

 

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.

 

NOTE 3 – RELATED PARTY AND FORMER OFFICERS NOTES PAYABLE

 

The former Chief Operating Officer has a notes payable balance totaling $450,000 at December 31, 2015. The loan bears interest at 5.5% per annum and was initially due December 31, 2002 and have been mutually extended. Under the terms of the note extension dated December 12, 2007, the loan bears interest at 5% per annum and are now due. On December 31, 2016, the Company wrote off the entire $450,000 balance of the note payable and $313,000 of interest accrued, thereupon. The Company therefore recognized a gain on forgiveness of debt in the amount of $763,000.

 

NOTE 4 – CONVERTIBLE NOTES PAYABLE

 

During 2014 and 2013, the Company issued convertible notes for $2,500,000 through its formerly wholly-owned subsidiary, Imagion Biosystems (fka Senior Scientific, LLC). During the year ended December 31, 2017, Imagion completed a spin out from the Company and assumed responsibility for the entire balance of the convertible notes. After Imagion assumed the convertible debt the entire amount of the debt was paid in cash and converted into shares of Imagion. The carrying net value of these notes at December 31, 2017 and 2016 totals $0 and $2,139,000, respectively.

 

NOTE 5 – CAPITAL TRANSACTIONS

 

Preferred Stock

 

The Company has a total of 1,000,000 shares of authorized preferred shares which are segregated into four classes of preferred stock.

 

The Company has 182,525 authorized shares of convertible, redeemable, 10 percent cumulative, Class A, Preferred Stock with $0.001 par value. One Class A, Preferred share is convertible into 50 restricted common shares and will be entitled to the number of votes equal to the number of shares of common stock into which such holder’s shares of Series A Preferred stock could be converted at the time of the vote. Class A, Preferred Stock is redeemable by the Company at $15 per share. Upon liquidation the holders of Series A Preferred stock will be entitled to be paid out of the assets available for distribution of the corporation an amount equal to $10 per share, before any payment will be made to the common shareholders. As of December 31, 2017 and 2016, no shares of Preferred Stock were issued and outstanding.

 

The Company has 250,000 authorized shares of Class B, Preferred Stock with $0.001 par value. As of December 31, 2017 and 2016, 49,999 shares of Preferred Stock were issued and outstanding. Class B preferred shares are convertible at a rate of 1 Series B preferred share to 10 common shares.

 

The Company has 14,000 authorized shares of redeemable, convertible, Class C, Preferred Stock with $100 stated value. Class C, Preferred Stock is not entitled to receive dividends unless dividends are paid on common stock. Upon liquidation Class C, Preferred Stock shall be treated as if it were converted to common stock prior to liquidation. Class C, Preferred Stock is convertible at $100 divided by the 10 day average closing price of common stock. The Class C, Preferred Stock is redeemable by the Company at the stated value. As of December 31, 2017 and 2016, no shares of Preferred Stock were issued and outstanding.

 

On November 5, 2013, the Company entered into a Conversion Agreement with Marvin Maslow (the “Holder”) pursuant to which the Company agreed to convert $1,057,608 of debt (the “Debt”), including principal and interest, currently owed to Holder into 105,761 shares of Series D Preferred Shares of the Company. The Debt has been outstanding since 2007.

 

 
F-11
 
Table of Contents

 

MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

(AUDITED)

 

The above transactions were approved by the Board of Directors of the Company. The Series D Preferred Stock does not pay dividends and does not have a liquidation preference. The Holder of the Series D Preferred Stock will be entitled to 20 votes for each share of common stock that the Series D Preferred Stock are convertible into. The Series D Preferred Stock has a conversion price of $0.055 (the “Conversion Price”) and a stated value of $10.00 (the “Stated Value”) per share. Each share of Series D Preferred Stock is convertible, at the option of the Holder, into such number of shares of common stock of the Company as determined by dividing Stated Value by the Conversion Price.

 

Holder may only convert the Series D Preferred Stock upon certain Convertible Promissory Notes, whether presently outstanding or to be issued, issued to three accredited investors (the “Note Investors”) in accordance with those certain Convertible Note Purchase Agreements between the Company and the Note Investors dated April 3, 2013, have either (i) been converted in full or in part by the Note Investors into shares of common stock of the Company, (ii) the Note Investors have sold or assigned all or a part of their Convertible Promissory Notes to third parties, or (iii) the Note Investors have been paid in full or in part. The Holder will only be permitted to convert such number of Series D Preferred Stock equal to the pro rata amount of the Convertible Promissory Notes converted, assigned or paid. In the event the Note Investors agree in writing that these restrictions may be terminated, then the Holder will be entitled to convert the Series D Preferred Stock at the Holder’s election and the above restrictions will be null and void. Additionally, Holder may not convert the Series D Preferred Stock until the ten day average daily trading volume is greater than $20,000.

 

In the event the Holder terminates its consulting agreement or violates a non-compete covenant, then the Series D Preferred Shares shall be returned to the Company for cancellation and the Company shall be obligated on the Debt. As the Series D Preferred Stock is conditionally redeemable, the Company has recorded the Series D Preferred Stock as mezzanine equity in the accompanying consolidated balance sheet.

 

The Company has 447,804 and 447,804 undesignated blank check preferred stock, $0.001 par value, authorized as of December 31, 2017 and 2016. The preferred shares are to be issued in such series and to have such rights, preferences, and designation as determine by the Board of Directors of the Company.

 

Common Stock

 

The Company has a total of 950,000,000 shares of authorized common shares. As of December 31, 2017 and 2016, 533,781,064 and 533,781,064 shares of common stock were issued and outstanding, respectively.

 

Stock activity during 2017

 

The Company did not issue and shares of common stock during the year ended December 31, 2017.

 

Stock activity during 2016

 

On or about August 26, 2015, the Board of Directors of the Company approved a stock repurchase program, whereby the Company is authorized to purchase shares of its common stock with a value of up to $500,000 in open market transactions at the discretion of management. Through the year ended December 31, 2016, the Company repurchased a total of 3,617,485 shares for $333,952. As of March 31, 2016, the Board of Directions of the Company retired all 3,617,485 shares held in treasury.

 

Options

 

In 2000, the Company’s Board of Directors adopted the 2000 Equity Incentive Plan (the “2000 Plan”). The 2000 Plan authorizes the issuance of options, right to purchase Common Stock and stock bonuses to officers, employees, directors and consultants. The Company reserved 30,000,000 shares of common Stock for awards to be made under the 2000 Plan.

 

On September 14, 2001, the Company filed a registration statement on Form S-8 to register 900,000 of these shares. On November 19, 2001, an additional 550,000 shares of common stock were registered for issuance under the 2000 Plan. On January 30, 2002, an additional 975,000 shares of common stock were registered for issuance under the 2000 Plan. On March 22, 2002, an additional 925,000 shares of common stock were registered for issuance under the 2000 Plan. On July 12, 2002, an additional 990,000 shares of common stock were registered for issuance under the 2000 Plan. On January 17, 2003, the Company registered an additional 8,000,000 of common stock for issuance under the 2000 Plan.

 

 
F-12
 
Table of Contents

 

MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

(AUDITED)

 

The 2000 Plan is administered by a committee of two or more members of the Board of Directors or, if no committee is appointed, then by the Board of Directors. The 2000 Plan allows for the issuance of incentive stock options (which, pursuant to Section 422 of the Internal Revenue Code, can only be granted to employees), non-qualified stock options, stock appreciation rights, stock awards, or stock bonuses. The committee, or the Board of Directors if there is no committee, determines the type of option granted, the exercise price, the option term, which may be no more than ten years, terms and conditions of exercisability and methods of exercise. Options must vest within ten-years. Under the 2000 Plan, the exercise price may not be less than fair market value on the date of grant for the incentive stock options. The 2000 Plan also allows for the granting of Stock Appreciation Rights. No Stock Appreciation Rights have been granted. The number of shares under the 2000 Plan available for grant at December 31, 2017 and 2016 was 18,869,763 and 18,869,763.

 

In November 2004, the Company’s Board of Directors adopted the 2004 Consultant Stock Plan (the “2004 Plan”). The purpose of this 2004 Consultant Stock Plan is to advance the Company’s interests by helping the Company obtain and retain the services of persons providing consulting services upon whose judgment, initiative, efforts and/or services we are substantially dependent, by offering to or providing those persons with incentives or inducements affording such persons an opportunity to become owners of our capital stock. The Company reserved 2,000,000 shares of Common Stock for awards to be made under the 2004 Plan. A registration statement on Form S-8 was filed with the SEC on November 26, 2004 to register the shares underlying the 2004 plan. The 2004 Plan is administered by a committee of two or more members of the Board of Directors or, if no committee is appointed, then by the Board of Directors. The committee or the Board of Directors if there is no committee, determines who is eligible to receive awards under the plan, grant awards and interpret the 2004 Plan. The number of shares under the 2004 Plan available for grant at December 31, 2017 and 2016 was 500,000.

 

On May 9, 2005, the Company’s Board of Directors adopted the 2005 Equity Compensation Plan (the “2005 Plan”). The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to our success, by offering them an opportunity to participate in the Company’s future performance through awards of Options, the right to purchase Common Stock and Stock Bonuses. The Company reserved 10,000,000 shares of Common Stock for awards to be made under the 2005 Plan. The 2005 Plan is administered by a committee of two or more members of the Board of Directors or, if no committee is appointed, then by the Board of Directors. The committee or the Board of Directors if there is no committee, determines who is eligible to receive awards under the plan, grant awards and interpret the 2005 Plan. A registration statement on Form S-8 was filed with the SEC on June 8, 2005 to register the shares underlying the 2005 plan. The number of shares under the 2005 Plan available for grant at December 31, 2017 and 2016 was -0-.

 

In January 2015, our Board of Directors adopted the 2015 Incentive Stock Plan (the “2015 Plan”). The purpose of this Plan is to provide incentive stock options (which, pursuant to Section 422 of the Internal Revenue Code, can only be granted to employees), non-qualified stock options, stock appreciation rights, stock awards, or stock bonuses. The committee, or the Board of Directors if there is no committee, determines the type of option granted, the exercise price, the option term, which may be no more than ten years, terms and conditions of exercisability and methods of exercise. Options must vest within ten-years. Under the 2015 Plan, the exercise price may not be less than fair market value on the date of grant for the incentive stock options. The 2015 Plan also allows for the granting of Stock Appreciation Rights. No Stock Appreciation Rights have been granted. The number of shares under the 2015 Plan available for grant at December 31, 2017 and 2016 was 4,000,000.

 

 
F-13
 
Table of Contents

 

MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

(AUDITED)

 

Set forth in the table below is information regarding awards made through compensation plans or arrangements through December 31, 2017, the most recently completed fiscal year.

 

At December 31, 2017, the 21,855,000 outstanding options had an aggregate intrinsic value of $1,597,000.

 

Equity Compensation Plan Information

 

Plan category

 

Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)

 

 

Weighted-average exercise price of outstanding options, warrants and rights

 

 

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

 

Equity compensation plans approved by security holders

 

 

 

 

 

 

 

 

 

Equity compensation plans not approved by security holders

 

 

 

 

 

 

 

 

23,369,763

 

Total

 

 

 

 

 

 

 

 

23,369,763

 

 

A summary of the Company’s stock option activity and related information is as follows:

 

 

 

Number of

Options

 

 

Exercise Price Per Share

 

 

Weighted Average Exercise Price

 

 

Number of Options Exercisable

 

Outstanding as of December 31, 2015

 

 

42,855,000

 

 

 

 

 

 

 

 

 

42,855,000

 

Granted

 

 

5,950,000

 

 

$ 0.060

 

 

$ 0.040

 

 

 

5,950,000

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Expired

 

 

-

 

 

 

0.078

 

 

 

0.078

 

 

 

-

 

Outstanding as of December 31, 2016

 

 

48,805,000

 

 

 

 

 

 

 

 

 

 

 

48,805,000

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Expired

 

 

(26,950,000 )

 

 

0.018

 

 

 

0.018

 

 

 

(26,950,000 )

Outstanding as of December 31, 2017

 

 

21,855,000

 

 

 

 

 

 

 

 

 

 

 

21,855,000

 

  

 
F-14
 
Table of Contents

 

MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

(AUDITED)

 

Exercise prices and weighted-average contractual lives of 21,855,000 stock options outstanding as of December 31, 2017 are as follows:

 

 

 

 

 

 

 

Options Outstanding

 

 

Options Exercisable

 

Exercise Price

 

 

Number Outstanding

 

 

Weighted Average Remaining Contractual Life

 

 

Weighted Average Exercise Price

 

 

Number

Exercisable

 

 

Weighted Average

Exercise Price

 

$

0.05

 

 

 

3,000,000

 

 

 

7.49

 

 

$ 0.05

 

 

 

3,000,000

 

 

$ 0.05

 

$

0.06

 

 

 

6,000,000

 

 

 

7.55

 

 

$ 0.06

 

 

 

6,000,000

 

 

$ 0.06

 

$

0.07

 

 

 

9,250,000

 

 

 

2.35

 

 

$ 0.07

 

 

 

9,250,000

 

 

$ 0.07

 

$

0.08

 

 

 

575,000

 

 

 

2.93

 

 

$ 0.08

 

 

 

575,000

 

 

$ 0.08

 

$

0.14

 

 

 

3,000,000

 

 

 

6.49

 

 

$ 0.14

 

 

 

3,000,000

 

 

$ 0.14

 

$

0.26

 

 

 

30,000

 

 

 

1.95

 

 

$ 0.26

 

 

 

30,000

 

 

$ 0.26

 

 

The fair value for options granted were determined using the Black-Scholes option-pricing model.

 

Warrants:

 

The Company issued the following warrants at the corresponding weighted average exercise price as of December 31, 2017.

   

 

 

Warrants

 

 

Weighted average Exercise Price

 

Outstanding as of December 31, 2015

 

 

28,943,182

 

 

$ 0.07

 

Issued/Vested

 

 

-

 

 

$ -

 

Cancelled/Expired

 

 

-

 

 

 

-

 

Outstanding as of December 31, 2016

 

 

28,943,182

 

 

$ 0.07

 

Issued/Vested

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

Cancelled/Expired

 

 

-

 

 

 

-

 

Outstanding as of December 31, 2017

 

 

28,943,182

 

 

$ 0.07

 

   

Date

 

Number of Warrants

 

 

Exercise Price

 

 

Contractual Life Remaining

 

Number of Shares Exercisable

 

April 2012

 

 

6,000,000

 

 

$ 0.05

 

 

2.8 years

 

 

6,000,000

 

January 2014

 

 

909,091

 

 

$ 0.09

 

 

1.1 years

 

 

909,091

 

February 2014

 

 

9,125,000

 

 

$ 0.08

 

 

1.1years

 

 

9,125,000

 

March 2014

 

 

909,091

 

 

$ 0.09

 

 

1.2 years

 

 

909,091

 

August 2014

 

 

800,000

 

 

$ 0.08

 

 

1.7 years

 

 

800,000

 

November 2014

 

 

7,500,000

 

 

$ 0.11

 

 

1.9 years

 

 

7,500,000

 

March 2015

 

 

2,500,000

 

 

$ 0.12

 

 

2.2 years

 

 

2,500,000

 

July 2015

 

 

300,000

 

 

$ 0.05

 

 

2.5 years

 

 

300,000

 

August 2015

 

 

300,000

 

 

$ 0.05

 

 

2.6 years

 

 

300,000

 

September 2015

 

 

300,000

 

 

$ 0.05

 

 

2.7 years

 

 

300,000

 

October 2015

 

 

300,000

 

 

$ 0.05

 

 

2.8 years

 

 

300,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28,943,182

 

 

 

 

 

 

 

 

 

28,943,182

 

 

The fair value for warrants granted were determined using the Black-Scholes option-pricing model.

 

 
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MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

(AUDITED)

 

NOTE 6 – INCOME TAXES

 

The provision for income taxes on the statements of operations consists of $-0- and $-0- for the years ended December 31, 2017 and 2016, respectively. Deferred tax assets are comprised of the following at December 31:

 

 

 

2017

 

 

2016

 

Net operating loss carryforward

 

$ 9,946,000

 

 

$ 10,564,000

 

Temporary differences

 

 

6,988,000

 

 

 

6,688,000

 

Less valuation allowance

 

 

(16,934,000 )

 

 

(17,252,000 )

Deferred tax asset, net

 

 

-

 

 

 

-

 

 

Deferred taxes arise from temporary differences in the recognition of certain expenses for tax and financial reporting purposes. At December 31, 2017 and 2016, management determined that realization of these benefits is not assured and has provided a valuation allowance for the entire amount of such benefits. At December 31, 2017 and 2016, net operating loss carryforwards were approximately $41,801,000 and $43,347,000, respectively, for federal tax purposes that expire at various dates through 2031 and for state tax purposes expire through 2025.

 

Utilization of net operating loss carryforwards may be subject to substantial annual limitations due to the “change in ownership” provisions of the Internal Revenue Code of 1986, as amended, and similar state regulations. The annual limitation may result in the expiration of substantial net operating loss carryforwards before utilization.

 

For December 31, 2017 and 2016, the provision for income taxes differs from the amount computed by applying the U.S. federal statutory tax rate (40% in 2017 and 2016) to income taxes as follows:

 

 

 

2017

 

 

2016

 

Tax benefit computed at 40%

 

$ (300,000 )

 

$ 96,000

 

Change in valuation allowance

 

 

618,000

 

 

 

2,347,200

 

Change in carryovers and tax attributes

 

 

318,000

 

 

 

(2,443,200 )

Income tax provision

 

 

-

 

 

 

-

 

 

NOTE 7 – COMMITMENTS

 

Operating Leases

 

Our principal executive office is at The Chrysler Building, 405 Lexington Avenue, 26th Floor, New York, New York, 10174. We lease approximately 300 square feet of office space on a month-to-month basis. The aggregate annual rent for this office space was $2,000 and $3,000 in 2017 and 2016, respectively.

 

Since October 2016, we lease an approximately 3,000 square foot office at 331 Corporate Circle, Golden, CO 80401. The lease is for one year and is set to expire in April 30th 2018. The aggregate annual rent for this space is $40,980.

 

Litigation

 

The Company is subject from time to time to litigation, claims and suits arising in the ordinary course of business. As of December 31, 2017 and 2016, the Company was not party to any material litigation, claims or suit whose outcome could have material effect to the financial statements.

 

 
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MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

(AUDITED)

 

License Agreement

 

As discussed in Note 1, the Company entered into a patent license agreement with Los Alamos National Security LLC for the exclusive use of certain technology relating to the manufacture and application of nanostructuring metals and alloys. Under the terms of the agreement, the Company may be required to pay royalties, as defined, to the licensors. The license rights also require the Company to meet certain milestones. Twelve months from the effective date of the license rights agreement Manhattan will initiate negotiations with at least five companies regarding manufacture and distribution of licensed products. Within twenty-four months Manhattan will establish capability for manufacturing a licensed product in New Mexico and within thirty-six months Manhattan will either manufacture a licensed product or close a sublicense agreement, or initiate a request for required government approval for a licensed product.

 

Institut Straumann AG

 

In January 2013, the Company entered into a licensing agreement with a party granting certain licensing rights to the Company’s nanostructured metal technology. Pursuant to the party is obligated to pay the Company in accordance with the following schedule: $180,000 during January 2013; $30,000 by June 1, 2013; $30,000 by December 31, 2013; $30,000 by December 1, 2014; and $30,000 upon commercial launch by the party or the latest December 1, 2015, which final payment has not been received. For the years ended December 31, 2017 and 2016, the Company recorded the receipt of $0 as revenue.

 

In November 2015, the Company entered into a Material Transfer Agreement with a party in the dental implant business, whereby the Company will apply its technology for use in sample materials the party provided to MSI. Pursuant to the Agreement, party is obligated to pay MSI in accordance with the following schedule: $30,000 within 7 days of execution of the Agreement; $14,000 within 7 days of delivery of the Material from the first iteration; and the final $14,000 within 7 days of delivery of the Material from the second iteration. Through the years ended December 31, 2017 and 2016, MSI earned $0 and $105,000, respectively, and recorded such amount as revenue.

 

NOTE 8 – IMAGION BIOSYSTEMS SPIN-OUT

 

On November 17, 2016, Senior Scientific, a wholly owned subsidiary of the Company, merged with and into Imagion Biosystems, Inc., a Nevada company (“Imagion”). Following the merger, Imagion held all of the liabilities, obligations and assets of Senior Scientific and the Company continued as the sole equity holder of Imagion. Imagion is the surviving entity.

 

On November 22, 2016, Imagion issued a Promissory Note in the principal amount of $6,900,000 to the Company (the “Intercompany Note”) payable on the one year anniversary. The Intercompany Note did not accrue interest, provided, however, in the event of a default, interest would have accrued at 10% per annum. During the six months ended June 30, 2017, the Company forgave $6,739,000 of the Note based upon the condition for Imagion to complete their IPO, which was recorded to the income statement. During the year ended December 31, 2017, the Company converted the remaining balance of the Note into shares of Imagion’s common stock.

 

As of December 31, 2017, the Company owns 64,099,476 shares of Imagion, resulting in a noncontrolling interest of approximately 31% of Imagion’s issued and outstanding common stock. Based upon Imagion’s trading price on December 31, 2017, approximately $0.09 per share, the fair value of the Imagion shares is approximately US$5,503,000. During the year ended December 31, 2017, the Company recorded unrealized loss in its investment iof $4,117,000.

 

 
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MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

(AUDITED)

 

NOTE 9 – DECONSOLIDATION OF IMAGION BIOSYSTEMS

 

Imagion Biosystems, previously a related-party entity and wholly-owned subsidiary of the Company, completed its initial public offering. As a result of the offering, the Company’s ownership in Imagion became diluted from 100% to 31%. As of December 31, 2017, we no longer have a controlling interest in Imagion. Imagion and the Company will remain related-party entities due to the Company’s equity stake in Imagion. The Company’s ongoing involvement with Imagion is solely as a shareholder of Imagion.

 

Due to the spin-off of Imagion, the Company changed its accounting treatment from the consolidation method to the fair value method. During the year ended December 31, 2017, the Company is no longer consolidating the operations of Imagion into the Company’s condensed consolidated financial statements. This change in accounting treatment resulted in a gain of $7,940,000 and reported on the income statement during the year ended December 31, 2017. The gain on deconsolidation includes the following:

 

Fair value of the Company’s retained noncontrolling interest

 

$ 9,615,000

 

Carrying amount of the Company’s noncontrolling interest

 

 

-

 

Derecognition of Imagion’s net assets

 

 

(1,675,000 )

 

 

 

 

 

Gain from change in accounting treatment of investment

 

$ 7,940,000

 

 

The Company elected to record its investment in Imagion at fair value based on the trading price in the Australian stock market. The investments are re-measured at the end of each quarter based on the trading price and converted from AUD to USD. Unrealized gains or losses attributed to changes in the fair market value of the Company’s noncontrolling interest in Imagion are reflected as a component of other income (expenses). During the year ended December 31, 2017 and 2016, unrealized losses attributable to the investment in Imagion was $4,117,000 and $0, respectively.

 

As of December 31, 2017, the summary of financial information of Imagion is listed below.

 

 

 

AUD

 

 

Conversion Rate

 

 

USD

 

Total Assets

 

$ 7,641,326

 

 

 

0.78049

 

 

$ 5,963,979

 

Total Liabilities

 

 

688,770

 

 

 

0.78049

 

 

 

537,578

 

Total Equity

 

 

6,952,556

 

 

 

0.78049

 

 

 

5,426,401

 

Net Loss

 

 

(7,733,027 )

 

 

0.75010

 

 

 

(5,800,544 )

 

NOTE 10 – SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through the date these financial statement were available to be issued and there were no material subsequent events to disclose.


 
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

 

None

 

ITEM 9T. CONTROLS AND PROCEDURES

 

(a) Evaluation of Disclosure Controls and Procedures

 

Our principal executive and principal financial officers have evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a – 15(e) and 15d – 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that arc designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC’s rules and forms and that the information is gathered and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure.

 

Our principal executive officer and principal financial officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(c) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report.

 

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission.

 

Management’s Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(t) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

 

1. Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

 

2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and

 

3. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2015. Based on this assessment, management concluded that the Company did not maintain effective internal controls over financial reporting as a result of the identified material weakness in our internal control over financial reporting described below. In making this assessment, management used the framework set forth in the report entitled Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication. and (v) monitoring.

 
 
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Identified Material Weakness

 

A material weakness in our internal control over financial reporting is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement or the financial statements will not be prevented or detected.

 

Management identified the following material weakness during its assessment of internal controls over financial reporting as or December 31, 2017:

 

Resources: As of December 31, 2017, we had one full-time employee in general management and no full-time employees with the requisite expertise in the key functional areas of finance and accounting. As a result, there is a lack of proper segregation of duties necessary to insure that all transactions are accounted for accurately and in a timely manner.

 

Written Policies & Procedures: We need to prepare written policies and procedures for accounting and financial reporting to establish a formal process to close our books monthly on an accrual basis and account for all transactions, including equity transactions, and prepare, review and submit SEC filings in a timely manner.

 

Audit Committee: We do not have, and are not required, to have an audit committee. An audit committee would improve oversight in the establishment and monitoring of required internal controls and procedures.

 

Management’s Remediation Initiatives

 

We plan to prepare written policies and procedures for accounting and financial reporting to establish a formal process to close our books monthly on an accrual basis and account for all transactions, including equity transactions. We also plan to add an audit committee financial expert to our board and create an audit committee made up of our independent directors.

 

(b) Changes in Internal Control Over Financial Reporting

 

There were no changes in our internal controls over financial reporting during this fiscal quarter that materially affected, or is reasonably likely to have a materially affect, on our internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION

 
 
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PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

 

The names, ages and biographical information of each of our directors and executive officers as of March 30, 2018 are set forth below. There are no existing family relationships between or among any of our executive officers or directors.

 

NAME

 

AGE

 

POSITION

 

Emmanuel Tsoupanarias

 

65

 

Chairman of the Board, President and Chief Executive Officer

Frank Georgiou

 

67

 

Director

Marvin Maslow

 

80

 

Director

 

Members of the Board serve until the next annual meeting of stockholders and until their successors are elected and qualified. Officers are appointed by and serve at the discretion of the Board. There are no family relationships among any of our directors or officers.

 

None of our directors or executive officers has, during the past ten years:

 

·

been convicted in a criminal proceeding and none of our directors or executive officers is subject to a pending criminal proceeding,

·

been subject to any order, judgment, or decree not subsequently reversed, suspended or vacated of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities, or

·

been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

 

EMMANUEL TSOUPANARIAS has served as our chief executive officer and chairman of the Board since November 1, 2007. Mr. Tsoupanarias is the president, founder and editor of FuelCellsWorks.com, a weekly trade publication that has become the voice of the fuel cell industry. He is internationally recognized as an expert in fuel cell development. Prior to his tenure at FuelCellsWorks.com, Mr. Tsoupanarias was an executive in the power generation manufacturing sector. From 1992 to 2007 Mr. Tsoupanarias has served as a Project Manager in the power generation sector and from 2000 has served as a consultant in the fuel cell industry. His technical and engineering background and his 7-year tenure as the Company’s CEO qualify him for the Company’s Board.

 

FRANK GEORGIOU has served as a director since October 2007. Since 1993, Mr. Georgiou has been the President of Three Diamond Diner Corp., a private company that owns and operates the Mount Kisco Coach Diner. He is the former President of the Upper New York Pangregorian, a consortium of restaurant owners. Mr. Georgiou’s business experience as president of a private company is valuable to the Company’s Board.

 

MARVIN MASLOW served as the CEO of Manhattan Scientifics from January 1998 until November 2007. On March 13, 2015, Mr. Maslow was appointed as a director of the Company. From June 1990 through September 1996, Mr. Maslow served as chief executive officer of Projectavision, Inc., a company he co-founded to develop and market video projection technology. For more than 20 years, Mr. Maslow has been President of Normandie Capital Corp., a private investment and consulting company. Mr. Maslow is credited with the starting up and financing of more than 20 enterprises during his career. Mr. Maslow received an A.A.S. degree from the Rochester Institute of Technology in 1957 and an honorable discharge from the U.S. Army Signal Corps in 1963. Mr. Maslow serves as a paid consultant to the Company, attends board meetings and serves as a special advisor to the Board of Directors. He also serves as a Manager of the Company’s Senior Scientifics LLC subsidiary.

 

SECCTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who own more than ten percent of our common stock to file reports of ownership and change in ownership with the Securities and Exchange Commission and the exchange on which the common stock is listed for trading. Executive officers, directors and more than ten percent stockholders are required by regulations promulgated under the Exchange Act to furnish us with copies of all Section 16(a) reports filed. Based solely on our review of copies of the Section 16(a) reports filed for the fiscal year ended December 31, 2016, we believe that our executive officers, directors and ten percent stockholders complied with all reporting requirements applicable to them.

 
 
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CODE OF ETHICS

 

On March 31, 2005, we adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the Company’s Code of Ethics can be viewed obtained free of charge by sending a written request to the attention of the Company’s Chief Executive Officer, Emmanuel Tsoupanarias at The Chrysler Building, 405 Lexington Avenue, 26th Floor, New York, New York, 10174.

 

CORPORATE GOVERNANCE

 

We do not have a separately-designated standing audit committee. The entire Board of Directors of the Company acts as the audit committee. The Board of Directors of the Company has determined that it does not have an “audit committee financial expert” as such term is defined in the rules adopted by the SEC requiring companies to disclose whether or not at least one member of the audit committee is an “audit committee financial expert.” The Board of Directors believes that the aggregate technical, commercial and financial experience of its members, together with their knowledge of the Company, provides the Board with the ability to monitor and direct the goals of the Company and to protect the best interests of its shareholders. Four of the five members of the Board of Directors are “independent,” as that term is defined in Section 10A(m) of the Securities Exchange Act of 1934, and that the members’ independence qualifies it to monitor the performance of management, the public disclosures by the Company of its financial condition and performance, the Company’s internal accounting operations and its independent auditors. In addition, the Board of Directors is authorized to engage independent financial consultants, auditors and counsel whenever it believes it is necessary and appropriate.

 

ITEM 11. EXECUTIVE COMPENSATION

 

The following tables set forth all compensation awarded by us to our executive officers for the fiscal years ended December 31, 2017 and 2016. Other than the Employment Agreement entered into between the Company and Emmanuel Tsoupanarias, our CEO, we do not have employment agreements with any of our other officers.

 

Name

 

Year

 

Salary

($)

 

 

Bonus

($)

 

 

Stock

Awards

($)

 

 

Option Awards

($)

 

 

Non-Equity Incentive Plan Compensation ($)

 

 

Changes in Pension Value and Nonqualified Deferred Compensation Earnings

($)

 

 

All Other Compensation ($)

 

 

Total

($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Emmanuel Tsoupanarias

 

2017

 

 

186,000

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

186,000

 

CEO and Chairman

 

2016

 

 

150,000

 

 

 

--

 

 

 

--

 

 

 

30,000

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

180,000

 

 

Prior to entering an Employment Agreement with the Company on March 28, 2013, Mr. Emmanuel Tsoupanarias, our Chief Executive Officer, did not have an employment agreement. His salary, was originally set at $100,000, was set by the Board of Directors in 2007. On March 28, 2013, the Company entered into an Employment Agreement with Emmanuel Tsoupanarias, our CEO. The agreement is for a term of five years and Mr. Tsoupanarias shall receive an annual salary of $150,000 per year and additional cash incentive consideration as determined by the Board. In the event the employment agreement is terminated by the Company without cause, then the Mr. Tsoupanarias shall receive 50% of the base salary remaining on the term and all options and other securities he would have been entitled to for an additional three months shall vest.

 

The independent members of the Company’s board of directors, acting as a compensation committee, reviewed the compensation policies and practices relating to the compensation provided to the Company’s employees to determine whether such policies and practices are reasonably likely to have a material adverse effect on the Company. Based on the review and the compensation paid by the Company to its only employee, the Company determined that any risks associated with the Company’s compensation practices were not reasonably likely to have a material adverse effect on the Company.

 
 
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Director Compensation

 

For the year ended December 31, 2017, for their service as directors, each of the directors received $1,250 per month.

 

Compensation Committee Interlocks and Insider Participation

 

Our entire board currently acts as our compensation committee. Emmanuel Tsoupanarias is the sole executive officer of our company. No member of the compensation committee is employed by or serving as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving as a member of our board.

 

OUTSTANDING EQUITY AWARDS

 

Name

 

Grant Date

 

Number of Securities Underlying Unexercised Warrants (#) Exercisable

 

 

Number of Securities Underlying Unexercised Warrants (#) Unexercisable (1)

 

 

Warrant Exercise Price ($)

 

 

Warrant Expiration Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Emmanuel Tsoupanarias, Chairman and CEO

 

08/5/2011

 

 

6,000,000

 

 

 

-

 

 

$ 0.070

 

 

08/5/2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Emmanuel Tsoupanarias, Chairman and CEO

 

06/30/2014

 

 

500,000

 

 

 

-

 

 

$ 0.140

 

 

06/30/2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frank Georgiou, Director

 

06/30/2014

 

 

500,000

 

 

 

-

 

 

$ 0.140

 

 

06/30/2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chris Theoharis, Former Director (2)

 

06/30/2014

 

 

500,000

 

 

 

-

 

 

$ 0.140

 

 

06/30/2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leonard Friedman, Former Director (1)

 

06/30/2014

 

 

500,000

 

 

 

-

 

 

$ 0.140

 

 

06/30/2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marvin Maslow, Director

 

06/30/2014

 

 

500,000

 

 

 

-

 

 

$ 0.140

 

 

06/30/2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leonard Friedman, Former Director (1)

 

06/30/2015

 

 

500,000

 

 

 

-

 

 

$ 0.08

 

 

06/30/2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marvin Maslow, Director

 

06/30/2015

 

 

500,000

 

 

 

-

 

 

$ 0.08

 

 

06/30/2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Saraklis, Inc. (Emmanuel Tsoupanarias)

 

06/30/2015

 

 

500,000

 

 

 

-

 

 

$ 0.08

 

 

06/30/2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frank Georgiou, Director

 

06/30/2015

 

 

500,000

 

 

 

-

 

 

$ 0.08

 

 

06/30/2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chris Theoharis, Former Director (2)

 

06/30/2015

 

 

500,000

 

 

 

-

 

 

$ 0.08

 

 

06/30/2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leonard Friedman, Former Director (1)

 

06/30/2016

 

 

500,000

 

 

 

-

 

 

$ 0.06

 

 

06/30/2026

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marvin Maslow, Director

 

06/30/2016

 

 

500,000

 

 

 

-

 

 

$ 0.06

 

 

06/30/2026

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Saraklis, Inc. (Emmanuel Tsoupanarias)

 

06/30/2016

 

 

500,000

 

 

 

-

 

 

$ 0.06

 

 

06/30/2026

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frank Georgiou, Director

 

06/30/2016

 

 

500,000

 

 

 

-

 

 

$ 0.06

 

 

06/30/2026

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chris Theoharis, Former Director (2)

 

06/30/2016

 

 

500,000

 

 

 

-

 

 

$ 0.06

 

 

06/30/2026

 

______________

(1) Mr. Friedman resigned as a director on January 3, 2018.

 

 

(2) Mr. Theoharis resigned as a director on July 10, 2017.

 

 
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Grant of Plan Based Awards

 

No plan-based awards were made during the fiscal year ended December 31, 2017.

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth, as of March 30, 2018, the names, addresses and number of shares of common stock beneficially owned by (i) all persons known to us to be the beneficial owners of more than 5% of the outstanding shares of common stock, (ii) each of our directors, (iii) each of our executive officers, and (iv) all of our directors and executive officers as a group. Except as indicated, each beneficial owner listed exercises sole voting power and sole dispositive power over the shares beneficially owned. Share ownership in each case includes shares issuable upon exercise of options exercisable within 60 days of the date of this Annual Report that would be required to be reported pursuant to Rule 13d-3 of the Securities Exchange Act of 1934 for purposes of computing the percentage of common stock owned by such person but not for purposes of computing the percentage owned by any other person. Unless otherwise indicated, the address of the below-listed persons is our address, The Chrysler Building, 405 Lexington Avenue, 26th Floor, New York, New York 10174.

 

Name and Address of Beneficial Owner

 

Number of

Shares

Beneficially

Owned

 

 

Percent of

Class (1)

 

 

 

 

 

 

 

 

Emmanuel Tsoupanarias (2)

 

 

17,700,106

 

 

 

3.3 %

Leonard C. Friedman (3)

 

 

11,923,641

 

 

 

2.2 %

Frank Georgiou (4)

 

 

23,937,075

 

 

 

4.5 %

Chris Theoharis (4)

 

 

5,945,334

 

 

 

1.1 %

 

 

 

 

 

 

 

 

 

Marvin Maslow (5)(6)

 

 

74,757,545

 

 

 

14.0 %

Directors and Executive Officers as a group (5 persons)

 

 

134,263,701

 

 

 

27.2 %

 

 

 

 

 

 

 

 

 

Total

 

 

145,263,701

 

 

 

27.2 %

____________

(1) This tabular information is intended to conform to Rule 13d-3 promulgated under the Securities Exchange Act of 1934 relating to the determination of beneficial ownership of securities. The percent of class is based on 533,781,064 shares and, for each beneficial owner, gives effect to the exercise of warrants or options exercisable within 60 days of the date of this table owned, in each case, by the person or group whose percentage ownership is set forth herein.
(2) Includes 10,200,106 shares owned by Saraklis Inc. (“Saraklis”), a corporation controlled by Mr. Tsoupanarias, options for Saraklis to purchase 8,000,000 shares.
(3) Mr. Friedman resigned as a director on January 3, 2018. Includes 2,500,000 shares owned in joint tenancy with his wife, options to purchase 1,500,000 shares.
(4) Mr. Theoharis resigned as a director on July 10, 2017. Includes options to purchase 1,500,000 shares.
(5) Includes 28,628,273 shares of Common Stock, options to purchase 26,500,000 shares.
(6) Includes 105,761 shares of Series D Preferred Stock on an as converted basis. The Series D Preferred Stock has a conversion price of $0.055 and a stated value of $10.00 per share. Each share of Series D Preferred Stock is convertible into such number of shares of common stock of the Company as determined by dividing stated value by the conversion price.

 

 
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 

None.

 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

INDEPENDENT AUDITOR FEES

 

The following is a summary of the fees billed to us by our independent auditors for the fiscal years ended December 31, 2017 and December 31, 2016:

 

Fee Category

 

Fiscal 2017

 

 

Fiscal 2016

 

 

 

 

 

 

 

 

Audit and audit related fees

 

$ 45,000

 

 

$ 60,000

 

Tax fees

 

 

-

 

 

 

-

 

Other fees

 

 

-

 

 

 

-

 

Total fees

 

$ 45,000

 

 

$ 60,000

 

 

Audit Fees. Consists of aggregate fees billed for professional services rendered for the audit of our consolidated financial statements and review of the interim consolidated financial statements included in quarterly reports and services that are normally provided by our auditors in connection with statutory and regulatory filings or engagements.

 

Tax Fees. Consists of aggregate fees billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal and state tax compliance. There were no tax services provided in fiscal years ended December 31, 2017 and 2016.

 

Other Fees. Consists of fees for products and services other than the services reported above. There were no management consulting services provided in fiscal years ended December 31, 2017 and 2016.

 

We do not currently have an Audit Committee. Our full Board of Directors considers whether the provision of these services is compatible with maintaining the auditor’s independence, and has determined such services

 

BOARD OF DIRECTORS POLICY ON PRE-APPROVAL OF SERVICES OF INDEPENDENT AUDITORS

 

The Board of Directors’ policy is to pre-approve all audit and permissible non-audit services provided by the independent auditors on a case-by-case basis. These services may include audit services, audit-related services, tax services and other services.

 
 
25
 
Table of Contents

 

ITEM 15. EXHIBITS

 

(a) EXHIBITS

 

Exhibit Number

Description of Exhibit

  

2.1

Agreement and Plan of Reorganization (1)

2.2

Agreement and Plan of Merger (1)

3.1

Certificate of Incorporation dated August 1, 1995 (12)

3.2

Certificate of Amendment to Certificate of Incorporation dated January 8, 1998 (12)

3.3

Bylaws (1)

3.4

Certificate of Amendment of Certificate of Incorporation dated January 16, 2001 (12)

3.5

Certificate of Amendment of Certificate of Incorporation dated August 8, 2007 (12)

4.1

Certificate of Designation, Preferences and Rights of Series B Preferred Stock (12)

4.2

Amended Certificate of Designation, Preferences and Rights of Series B Preferred Stock (12)

4.3

Certificate of Designation, Preferences and Rights of Series C Preferred Stock (12)

4.4

Amended Certificate of Designation, Preferences and Rights of Series C Preferred Stock (2)

4.5

Certificate of Designation for the Series D Preferred Stock (14)

10.1

Manhattan Scientifics, Inc. 1998 Stock Option Plan (1)

10.2

Manhattan Scientifics, Inc. 2000 Equity Incentive Plan (5)

10.3

2004 Consultant Stock Plan (6)

10.4

Manhattan Scientifics 2005 Equity Incentive Plan (8)

10.5

Technology Transfer Agreement by and between Carpenter Technology Corporation and Manhattan Scientifics, Inc, effective as of the 12th day of September 2009 (7)

10.6

Acquisition Option Agreement by and among Senior Scientific LLC, Edward R. Flynn, Ph.D., Scientific Nanomedicine, Inc. and Manhattan Scientifics, Inc. (10)

10.7

Stock Purchase Agreement, dated as of June 12, 2008, among Manhattan Scientifics, Inc., Metallicum, Inc., and the shareholders of Metallicum (9)

10.8

Settlement and Memorandum of Agreement among Marvin Maslow, Jack B. Harrod and Manhattan Scientifics, Inc. (9)

10.9

Patent License Agreement Between Los Alamos National Security, LLC and Manhattan Scientifics, Inc. (10)

10.10

Agreement and Plan of Reorganization by and among the Company, Scientific Nanomedicine, Inc., Edward, R. Flynn and Edward R. Flynn and Maureen A. Flynn, as Co-Trustees of the Edward R. Flynn and Maureen A. Flynn Revocable Trust u/t/a dated 10/25/2006. (11)

10.11

Purchase Agreement by and among the Company, Senior Scientific LLC and Edward R. Flynn. (11)

10.12

Consulting Agreement dated June 1, 2011 between Manhattan Scientifics Inc. and V. Gerald Grafe (12)

10.13

Employment Agreement dated March 28, 2013 between Manhattan Scientifics Inc. and Emmanuel Tsoupanarias (12)

10.14

Consulting Agreement between Normandie New Mexico Corp. and Manhattan Scientifics Inc. dated October 1, 2009 (12)

10.15

Amendment to the Consulting Agreement between Normandie New Mexico Corp. and Manhattan Scientifics Inc. dated October 1, 2009 (12)

10.16

Settlement Agreement and Mutual General Releases by and between Manhattan Scientifics, Inc. and Carpenter Technology Corporation dated February 11, 2015 (22)

14.1

Code of Ethics (9)

16.1

Letter from L.L. Bradford & Company, LLC (21)

21.1

List of Subsidiaries (12)

31.1

Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) and 15d- 14(a)

32.1

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 
26
 
Table of Contents

 

EX-101.INS**

XBRL INSTANCE DOCUMENT

EX-101.SCH**

XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT

EX-101.CAL**

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EX-101.DEF**

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____________

(1) Incorporated by reference to the registrant’s Form 10-SB filed with the Commission on December 8, 1999.

(2) Incorporated by reference to the registrant’s Form 10-QSB filed with the Commission on August 14, 2000 for the period ended June 30, 2000.

(3) Incorporated by reference as Amendment No. 2 to the registrant’s Form 10-SB filed with Commission on February 9, 2000.

(4) Reserved.

(5) Incorporated by reference to the registrant’s proxy statement filed on Schedule 14C filed with the Commission on December 26, 2000.

(6) Incorporated by reference to the registrant’s registration statement filed on Form S-8 filed with the Commission on November 26, 2004.

(7) Incorporated by reference to Amendment No. 2 to the registrant’s Form 10-Q/A for the period ended September 30, 2009 filed with the Commission on October 4, 2010.

(8) Incorporated by reference to the registrant’s registration statement in Form S-8 filed with the Commission on June 8, 2005.

(9) Incorporated by reference to the registrant’s Form 10-K filed with the Commission on April 9, 2010.

(10) Incorporated by reference to the registrant’s Form 10-K/A filed with the Commission on March 25, 2011.

(11) Incorporated by reference to the registrant’s Form 8-K filed with the Commission on June 6, 2011.

(12) Incorporated by reference to the registrant’s Form 10-K filed with the Commission on April 1, 2013.

(13) Incorporated by reference to the registrant’s Form 8-K filed with the Commission on April 9, 2013

(14) Incorporated by reference to the registrant’s Form 8-K filed with the Commission on November 8, 2013

(15) Incorporated by reference to the registrant’s Form 8-K filed with the Commission on January 31, 2014

(16) Incorporated by reference to the registrant’s Form 8-K filed with the Commission on February 12, 2014

(17) Incorporated by reference to the registrant’s Form 8-K filed with the Commission on November 18, 2014

(18) Incorporated by reference to the registrant’s Form 8-K filed with the Commission on December 11, 2014

(19) Incorporated by reference to the registrant’s Form 8-K filed with the Commission on January 5, 2015

(20) Incorporated by reference to the registrant’s Form 8-K filed with the Commission on January 20, 2015

(21) Incorporated by reference to the registrant’s Form 8-K filed with the Commission on February 9, 2015

(22) Incorporated by reference to the registrant’s Form 8-K filed with the Commission on February 19, 2015

(23) Incorporated by reference to the registrant’s Form 8-K filed with the Commission on March 19, 2015

(24) Incorporated by reference to the registrant’s Form 8-K filed with the Commission on April 20, 2015

(25) Incorporated by reference to the registrant’s Form 8-K filed with the Commission on May 7, 2015

(26) Incorporated by reference to the registrant’s Form 8-K filed with the Commission on August 28, 2015

 
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

 
27
 
Table of Contents

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 16th day of April 2018.

 

 

MANHATTAN SCIENTIFICS, INC.

 

By:

/s/ Emmanuel Tsoupanarias

 

Emmanuel Tsoupanarias

 

Chief Executive Officer

 

In accordance with the Exchange Act, this report has been signed below by the following persons on April 16, 2018 on behalf of the registrant and in the capacities indicated.

 

Signature

 

Title

 

/s/ Emmanuel Tsoupanarias

 

Chief Executive Officer, President, Chairman of the Board

 

Emmanuel Tsoupanarias

 

(Principal Executive, Financial and Accounting Officer)

  

 

 

 

/s/ Frank Georgiou

 

Director

 

Frank Georgiou

 

/s/ Marvin Maslow

 

Director

 

Marvin Maslow

 

  

28

 

EX-31.1 2 mhtx_ex311.htm CERTIFICATION mhtx_ex311.htm

EXHIBIT 31.1

 

Certifications

  

I, Emmanuel Tsoupanarias, certify that:

  

1.

I have reviewed this annual report on Form 10-K of Manhattan Scientifics, Inc.;

 

2.

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

 

3.

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

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: April 16, 2018

By:

/s/ Emmanuel Tsoupanarias

 

Emmanuel Tsoupanarias

 

Chief Executive Officer

 

(Principal Executive, Financial and Accounting Officer)

 

EX-32.1 3 mhtx_ex321.htm CERTIFICATION mhtx_ex321.htm

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Annual Report of Manhattan Scientifics, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Emmanuel Tsoupanarias, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

 

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

 

 

 

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: April 16, 2018

By:

/s/ Emmanuel Tsoupanarias

 

Emmanuel Tsoupanarias

 

Chief Executive Officer (Principal Executive and, Financial and

Accounting Officer)

 

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Manhattan Scientifics, Inc. and will be retained by Manhattan Scientifics, Inc. and furnished to the Securities and Exchange Commission or its staff upon request .

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