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, 2019
| ¨ | 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.) |
244 Fifth Avenue, Suite 2341, New York, New York 10001
(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 ☒
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 ☒
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 |
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| Emerging growth company | ☐ |
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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 ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the issuer as of June 30, 2019 was $8,119,517 based upon a closing price of $0.012 on June 30, 2019. 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 13, 2020 there were 557,781,064 shares of common stock issued and outstanding.
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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 12%, 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. In January 2009, Metallicum was granted an exclusive license by The Los Alamos National Laboratory on patents related to nanostructured metals.
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, 2019, the Company owns 61,516,508 shares of Imagion (2,000,000 restricted shares), resulting in a noncontrolling interest of approximately 12% of Imagion’s issued and outstanding common stock. Based upon Imagion’s latest trading price of $0.0175 per share, the fair value of the Imagion shares is $1,045,000.
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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.
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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.
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.
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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:
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| · | capitalization; |
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| · | cost of product; |
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| · | first to market with product in market segment; |
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| · | strong intellectual portfolio; |
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| · | product reliability; |
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| · | strong customer base; and |
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| · | strong manufacturing and supplier relationships. |
CUSTOMERS AND SUPPLIERS
For the years ended December 31, 2019 and 2018, two and zero customers generated all of our revenue. We did not have any significant suppliers.
EMPLOYEES
As of December 31, 2019, we had no full-time employees. 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.
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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.
WE HAVE SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.
Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We are dependent upon our ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. If we are unable to continue as a going concern, our stockholders will lose their investment. We will be required to seek additional capital to fund future growth and expansion. No assurance can be given that such financing will be available or, if available, that it will be on commercially favorable terms. Moreover, favorable financing may be dilutive to our stockholders.
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.
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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 25% 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.
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:
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| · | changes in earnings estimates of operational results by analysts; |
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| · | inability of market makers to combat short positions on the stock; |
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| · | an overall downturn in the financial markets and stock markets; |
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| · | the use of stock to pay employees and consultants if sufficient working capital is not available; |
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| · | inability of the market to absorb large blocks of stock sold into the market; and |
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| · | 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.
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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.
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.
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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 244 Fifth Avenue, Suite 2341, New York, New York, 10001. We lease approximately 300 square feet of office space on a month-to-month basis. The aggregate annual rent for this office space was $1,400 in 2019.
Since October 2016, we lease an approximately 3,000 square foot office at 331 Corporate Circle, Golden, CO 80401. In June 2019, we entered into an assignment and assumption of lease with the landlord and another entity for two years and is set to expire in April 2021. The average aggregate annual rent for this space is $30,360.
We believe our facilities are adequate for our current and planned business operations.
We are subject from time to time to litigation, claims and suits arising in the ordinary course of business. As of December 31, 2018, 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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We are currently trading on the OTCQB operated by www.otcmarkets.com.
As of March 25, 2020, there were 557,781,064 shares of common stock of the issuer issued and outstanding and 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:
2019 and 2018
During the year ended December 31, 2019, the Company issued 24,000,000 shares of common stock to its board of directors for services valued at $360,000. The shares were valued based on the market price of the Company’s common shares of $0.015 on the grant date.
During the year ended December 31, 2019, the Company issued 500,000 options to acquire 500,000 shares of common stock to its consultants for services valued at $7,000. The shares were valued based on the Black Scholes calculation on the grant date.
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During the year ended December 31, 2018, we did not sell any unregistered securities.
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, 2019 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, 2019 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, 2019 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, 2019 was 4,000,000.
| 12 |
|
|
| Table of Contents |
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, 2017 |
|
| 21,855,000 |
|
|
|
|
|
|
|
|
| 21,855,000 |
| ||
| Granted |
|
| - |
|
| $ | - |
|
| $ | - |
|
|
| - |
|
| Exercised |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| Expired |
|
| (250,000 | ) |
|
| 0.07 |
|
|
| 0.07 |
|
|
| (250,000 | ) |
| Outstanding as of December 31, 2018 |
|
| 21,605,000 |
|
|
|
|
|
|
|
|
|
|
| 21,605,000 |
|
| Granted |
|
| 500,000 |
|
|
| 0.015 |
|
|
| 0.015 |
|
|
| 500,000 |
|
| Exercised |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| Expired |
|
| (30,000 | ) |
|
| 0.26 |
|
|
| 0.26 |
|
|
| (30,000 | ) |
| Outstanding as of December 31, 2019 |
|
| 22,075,000 |
|
|
|
|
|
|
|
|
|
|
| 22,075,000 |
|
| 13 |
|
|
| Table of Contents |
Exercise prices and weighted-average contractual lives of 22,075,000 stock options outstanding as of December 31, 2019 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 |
| |||||||||||
| $ | 0.02 |
| 500,000 |
| 4.50 |
| $ | 0.02 |
| 500,000 |
| $ | 0.02 |
| ||||||||
| $ | 0.05 |
| 3,000,000 |
| 5.49 |
| $ | 0.05 |
| 3,000,000 |
| $ | 0.05 |
| ||||||||
| $ | 0.06 |
| 6,000,000 |
| 4.87 |
| $ | 0.06 |
| 6,000,000 |
| $ | 0.06 |
| ||||||||
| $ | 0.07 |
| 9,000,000 |
| 1.38 |
| $ | 0.07 |
| 9,000,000 |
| $ | 0.07 |
| ||||||||
| $ | 0.08 |
| 575,000 |
| 5.64 |
| $ | 0.08 |
| 575,000 |
| $ | 0.08 |
| ||||||||
| $ | 0.14 |
| 3,000,000 |
| 3.74 |
| $ | 0.14 |
| 3,000,000 |
| $ | 0.14 | |||||||||
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, 2019.
|
|
| Warrants |
|
| Weighted average Exercise Price |
| ||
| Outstanding as of December 31, 2017 |
|
| 28,943,182 |
|
| $ | 0.07 |
|
| Issued/Vested |
|
| - |
|
| $ | - |
|
| Cancelled/Expired |
|
| - |
|
|
| - |
|
| Outstanding as of December 31, 2018 |
|
| 28,943,182 |
|
| $ | 0.07 |
|
| Issued/Vested |
|
| - |
|
|
| - |
|
| Exercised |
|
| - |
|
|
| - |
|
| Cancelled/Expired |
|
| (19,243,182 | ) |
|
| 0.07 |
|
| Outstanding as of December 31, 2019 |
|
| 9,700,000 |
|
| $ | 0.07 |
|
| Date |
| Number of Warrants |
|
| Exercise Price |
|
| Contractual Life Remaining |
| Number of Shares Exercisable |
| |||
| April 2012 |
|
| 6,000,000 |
|
| $ | 0.05 |
|
| 0.8 years |
|
| 6,000,000 |
|
| March 2015 |
|
| 2,500,000 |
|
| $ | 0.12 |
|
| 0.2 years |
|
| 2,500,000 |
|
| July 2015 |
|
| 300,000 |
|
| $ | 0.05 |
|
| 0.5 years |
|
| 300,000 |
|
| August 2015 |
|
| 300,000 |
|
| $ | 0.05 |
|
| 0.6 years |
|
| 300,000 |
|
| September 2015 |
|
| 300,000 |
|
| $ | 0.05 |
|
| 0.7 years |
|
| 300,000 |
|
| October 2015 |
|
| 300,000 |
|
| $ | 0.05 |
|
| 0.8 years |
|
| 300,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 9,700,000 |
|
|
|
|
|
|
|
|
| 9,700,000 |
|
| 14 |
|
|
| Table of Contents |
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 12%, 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, 2019 the Company owns 61,516,508 shares (including 2,000,000 restricted shares related to issued promissory notes interests) of Imagion, resulting in a noncontrolling interest of approximately 12% of Imagion’s issued and outstanding common stock. Based upon Imagion’s latest trading price of $0.0175 per share, the fair value of the Imagion shares is US$1,045,000.
| 15 |
|
|
| Table of Contents |
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 2019 COMPARED TO YEAR ENDED DECEMBER 31, 2018
GROSS PROFIT. In the year ended December 31, 2019, we recorded $97,000 in revenue compared to $0 of revenue recognized for the year ended December 31, 2018. The increase is attributable to royalty payment and services performed and completed.
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 $1,114,000 for the year ended December 31, 2019 compared with $1,389,000 for the year ended December 31, 2018. This decrease in general and administrative expenses is mostly attributable to reduction in business operations in its subsidiary and a decline in the use of consultants.
RESEARCH AND DEVELOPMENT. Research and development expenses consist of consultants and contractors. Research and development expenses were $8,000 for the year ended December 31, 2019 compared with $52,000 for the year ended December 31, 2018. Research and development expenses decreased in research and development over the year was the result reduction in business operations in its subsidiary.
OTHER INCOME AND (EXPENSES). Total other expenses for the year ended December 31, 2019 totaled $197,000. This is primarily attributable to the impairment of assets based on the Company’s impairment analysis. 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). Interest expense for the promissory notes. During the years ended December 31, 2019 and 2018, unrealized losses on fair value adjustments of its noncontrolling interest in Imagion was $(190,000) and $(4,150,000).
NET LOSS. We incurred a net loss of $(1,222,000) for the year ended December 31, 2019, compared to a net loss of $(8,334,000) for the year ended December 31, 2017.
LIQUIDITY AND PLAN OF OPERATIONS
Stockholders’ deficit totaled $(1,005,000) on December 31, 2019 and the working capital deficit was $(1,520,000) on such date.
We had an increase of $174,000 in cash and cash equivalents for the year ended December 31, 2019, primarily as a result of cash proceeds from sales of assets and investment, and cash proceeds from promissory notes. For the year ended December 31, 2019, cash used in operating activities was $(316,000). Cash provided by investing activities for the year ended December 31, 2019 totaled $340,000 related to sale of assets and investments.
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, 2019, we had $261,000 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.
| 16 |
|
|
| Table of Contents |
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 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.
Revenue Recognition
The Company recognizes revenue in accordance with generally accepted accounting principles as outlined in the Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue From Contracts with Customers, which consists of five steps to evaluating contracts with customers for revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation.
| 17 |
|
|
| Table of Contents |
Revenue recognition occurs at the time we satisfy a performance obligation to our customers, when control transfers to customers, provided there are no material remaining performance obligations required of the Company or any matters of customer acceptance. We only record revenue when collectability is probable.
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.
| 18 |
|
|
| Table of Contents |
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
| F-1 |
|
|
| Table of Contents |
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 sheet of Manhattan Scientifics, Inc. (the “Company”) as of December 31, 2019 and the related statements of operations, stockholders’ (deficit), and cash flows for the year ended December 31, 2019, 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, 2019, and the result of its operations and its cash flow for the year ended December 31, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Matter
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 had cumulative losses and has accumulated deficit as of December 31, 2019, 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.
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 audit. 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 audit 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 audit, 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 audit 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 audit 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 audit provides a reasonable basis for our opinion.
/s/ Prager Metis CPAs, LLC
We have served as the Company’s auditor since 2019
Las Vegas, NV
April 14, 2020
| F-2 |
|
|
| Table of Contents |
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 sheet of Manhattan Scientifics, Inc. (the “Company”) as of December 31, 2018 and the related statements of operations, stockholders’ (deficit), and cash flows for the year ended December 31, 2018, 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, 2018, and the results of its operations and its cash flows for the year ended December 31, 2018 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 no revenues, has negative working capital at December 31, 2018, 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 2017
Las Vegas, Nevada
March 26, 2019
| F-3 |
|
|
| Table of Contents |
| CONSOLIDATED BALANCE SHEETS |
|
|
| December 31, |
|
| December 31, |
| ||
|
|
| 2019 |
|
| 2018 |
| ||
|
|
|
|
|
|
|
| ||
| ASSETS |
|
|
|
|
|
| ||
| Current assets: |
|
|
|
|
|
| ||
| Cash |
| $ | 261,000 |
|
| $ | 87,000 |
|
| Prepaid expenses |
|
| 13,000 |
|
|
| 11,000 |
|
| Due from the sale of assets - current portion |
|
| 300,000 |
|
|
| - |
|
| Total current assets |
|
| 574,000 |
|
|
| 98,000 |
|
|
|
|
|
|
|
|
|
|
|
| Investment in equity securities |
|
| 1,045,000 |
|
|
| 1,354,000 |
|
| Property and equipment, net |
|
| 4,000 |
|
|
| 6,000 |
|
| Assets held for sale |
|
| - |
|
|
| 1,200,000 |
|
| Due from the sale of assets |
|
| 600,000 |
|
|
| - |
|
| Other assets |
|
| 2,000 |
|
|
| 2,000 |
|
| Total assets |
| $ | 2,225,000 |
|
| $ | 2,660,000 |
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES |
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
| Accounts payable and accrued expenses |
| $ | 234,000 |
|
| $ | 221,000 |
|
| Accrued expenses — related parties |
|
| 1,860,000 |
|
|
| 1,531,000 |
|
| Total current liabilities |
|
| 2,094,000 |
|
|
| 1,752,000 |
|
|
|
|
|
|
|
|
|
|
|
| Long-term liabilities: |
|
|
|
|
|
|
|
|
| Notes payable, net of discounts |
|
| 78,000 |
|
|
| - |
|
| Total long-term liabilities |
|
| 78,000 |
|
|
| - |
|
| Total liabilities |
|
| 2,172,000 |
|
|
| 1,752,000 |
|
|
|
|
|
|
|
|
|
|
|
| Commitments and Contingencies - Note 6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Series D convertible preferred mandatory redeemable, authorized 105,761 shares, 105,761 and 105,761 shares issued and outstanding as of December 31, 2019 and 2018,, respectively |
|
| 1,058,000 |
|
|
| 1,058,000 |
|
|
|
|
|
|
|
|
|
|
|
| STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
| Capital stock $.001 par value |
|
|
|
|
|
|
|
|
| Preferred, authorized 447,804 shares, 0 and 0 shares issued, and outstanding, as of December 31, 2019 and 2018, respectively |
|
| - |
|
|
| - |
|
| Class A Convertible Preferred, authorized 182,525, 0 and 0 shares issued and outstanding as of December 31, 2019 and 2018, respectively |
|
| - |
|
|
| - |
|
| Class B Convertible Preferred, authorized 250,000, 49,999 and 49,999 shares issued and outstanding as of December 31, 2019 and 2018, respectively |
|
| - |
|
|
| - |
|
| Class C Redeemable Convertible Preferred, authorized 14,000, 0 and 0 shares issued and outstanding as of December 31, 2019 and 2018, respectively |
|
| - |
|
|
| - |
|
| Common, authorized 950,000,000 shares, 557,781,064 and 533,781,064 shares issued, and outstanding as of December 31, 2019 and 2018, respectively |
|
| 558,000 |
|
|
| 534,000 |
|
| Additional paid-in-capital |
|
| 67,632,000 |
|
|
| 67,289,000 |
|
| Accumulated deficit |
|
| (69,195,000 | ) |
|
| (67,973,000 | ) |
| Total stockholders' deficit |
|
| (1,005,000 | ) |
|
| (150,000 | ) |
| TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT |
| $ | 2,225,000 |
|
| $ | 2,660,000 |
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these consolidated financial statements. | ||||||||
| F-4 |
|
|
| Table of Contents |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
|
|
| FOR THE YEARS ENDED |
| |||||
|
|
| DECEMBER 31, |
| |||||
|
|
| 2019 |
|
| 2018 |
| ||
|
|
|
|
|
|
|
| ||
| Revenue |
| $ | 97,000 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
| Operating costs: |
|
|
|
|
|
|
|
|
| Direct cost of revenue |
|
| - |
|
|
| 7,000 |
|
| General and administrative expenses |
|
| 1,114,000 |
|
|
| 1,389,000 |
|
| Research and development |
|
| 8,000 |
|
|
| 52,000 |
|
|
|
|
|
|
|
|
|
|
|
| Total operating costs and expenses |
|
| 1,122,000 |
|
|
| 1,448,000 |
|
|
|
|
|
|
|
|
|
|
|
| Loss from operations before other income and expenses |
|
| (1,025,000 | ) |
|
| (1,448,000 | ) |
|
|
|
|
|
|
|
|
|
|
| Other expenses: |
|
|
|
|
|
|
|
|
| Impairment of asset |
|
| - |
|
|
| (2,736,000 | ) |
| Loss on fair value adjustment of investments |
|
| (192,000 | ) |
|
| (4,150,000 | ) |
| Interest expense |
|
| (5,000 | ) |
|
| - |
|
| Total other expenses |
|
| (197,000 | ) |
|
| (6,886,000 | ) |
|
|
|
|
|
|
|
|
|
|
| Net loss before provision for income taxes |
|
| (1,222,000 | ) |
|
| (8,334,000 | ) |
|
|
|
|
|
|
|
|
|
|
| Provision for income taxes |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| NET LOSS |
| $ | (1,222,000 | ) |
| $ | (8,334,000 | ) |
|
|
|
|
|
|
|
|
|
|
| BASIC AND DILUTED LOSS PER COMMON SHARE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average number of common shares outstanding (Basic) |
|
| 549,364,626 |
|
|
| 533,781,064 |
|
|
|
|
|
|
|
|
|
|
|
| Basic loss per common share |
| $ | (0.00 | ) |
| $ | (0.02 | ) |
|
|
|
|
|
|
|
|
|
|
| Weighted average number of common shares outstanding (Diluted) |
|
| 549,364,626 |
|
|
| 533,781,064 |
|
|
|
|
|
|
|
|
|
|
|
| Diluted loss per common share |
| $ | (0.00 | ) |
| $ | (0.02 | ) |
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these consolidated financial statements. | ||||||||
| F-5 |
|
|
| Table of Contents |
| CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||||||||||||||||||||||
| For the Years Ended December 31, 2019 and 2018 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
|
|
| Preferred Stock $0.001 Par Value |
|
| Common Stock |
|
| Additional |
|
|
|
|
| |||||||||||||||
|
|
| Series B |
|
| $0.001 Par Value |
|
| Paid-In |
|
| Accumulated |
|
|
| ||||||||||||||
|
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Total |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
| Balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
| December 31, 2017 |
|
| 49,999 |
|
|
| - |
|
|
| 533,781,064 |
|
|
| 534,000 |
|
|
| 67,289,000 |
|
|
| (59,639,000 | ) |
|
| 8,161,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (8,334,000 | ) |
|
| (8,334,000 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2018 |
|
| 49,999 |
|
|
| - |
|
|
| 533,781,064 |
|
|
| 534,000 |
|
|
| 67,289,000 |
|
|
| (67,973,000 | ) |
|
| (173,000 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common stock issued for services |
|
| - |
|
|
| - |
|
|
| 24,000,000 |
|
|
| 24,000 |
|
|
| 336,000 |
|
|
| - |
|
|
| 360,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stock options issued for services |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 7,000 |
|
|
| - |
|
|
| 7,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1,222,000 | ) |
|
| (1,222,000 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
| 49,999 |
|
|
| - |
|
|
| 557,781,064 |
|
|
| 558,000 |
|
|
| 67,632,000 |
|
|
| (69,195,000 | ) |
|
| (1,028,000 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these consolidated financial statements | ||||||||||||||||||||||||||||
| F-6 |
|
|
| Table of Contents |
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
|
|
|
|
|
|
|
| ||
|
|
| FOR THE YEARS ENDED |
| |||||
|
|
| DECEMBER 31, |
| |||||
|
|
| 2019 |
|
| 2018 |
| ||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
| ||
| Net loss |
| $ | (1,222,000 | ) |
| $ | (8,334,000 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
| Common stock issued for services |
|
| 360,000 |
|
|
| - |
|
| Stock options issued for services |
|
| 7,000 |
|
|
| - |
|
| Depreciation and amortization |
|
| 2,000 |
|
|
| 622,000 |
|
| Asset impairment |
|
| - |
|
|
| 2,736,000 |
|
| Loss on fair value adjustment of investments |
|
| 192,000 |
|
|
| 4,150,000 |
|
| Amortization of debt discount |
|
| 5,000 |
|
|
| - |
|
| Changes in: |
|
|
|
|
|
|
|
|
| Prepaid expenses |
|
| (2,000 | ) |
|
| (2,000 | ) |
| Accounts payable and accrued expenses |
|
| 342,000 |
|
|
| 33,000 |
|
| Accrued interest and expenses, related parties |
|
| - |
|
|
| 113,000 |
|
|
|
|
|
|
|
|
|
|
|
| Net cash used in operating activities |
|
| (316,000 | ) |
|
| (682,000 | ) |
|
|
|
|
|
|
|
|
|
|
| CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
| Proceeds from sale of assets held for sale |
|
| 300,000 |
|
|
| 500,000 |
|
| Proceeds from sale of investments |
|
| 40,000 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| Net cash used in investing activities |
|
| 340,000 |
|
|
| 500,000 |
|
|
|
|
|
|
|
|
|
|
|
| CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
| Proceeds from notes payable |
|
| 150,000 |
|
|
| - |
|
| Net cash provided by financing activities |
|
| 150,000 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| NET DECREASE IN CASH |
|
| 174,000 |
|
|
| (182,000 | ) |
| CASH, BEGINNING OF PERIOD |
|
| 87,000 |
|
|
| 269,000 |
|
|
|
|
|
|
|
|
|
|
|
| CASH, END OF PERIOD |
| $ | 261,000 |
|
| $ | 87,000 |
|
|
|
|
|
|
|
|
|
|
|
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
| Interest paid |
| $ | - |
|
| $ | - |
|
| Income taxes paid |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
| NON-CASH FINANCING ACTIVIES |
|
|
|
|
|
|
|
|
| Original Issue Discount in the form of IBX shares |
| $ | 77,100 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these consolidated financial statements. | ||||||||
| F-7 |
|
|
| Table of Contents |
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
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”). 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.
Metallicum is a nanotechnology 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. The licenses have been fully amortized.
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. The license has been fully amortized.
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 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, 2019 , the Company owns 61,516,508 shares (2,000,000 restricted shares related to issued promissory notes interest) of Imagion, resulting in a noncontrolling interest of approximately 12% 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.
| F-8 |
|
|
| Table of Contents |
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
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, 2019, the Company has cumulative losses totaling $69,195,000 and negative working capital of $1,520,000. The Company had a net loss of $1,222,000 for the year ended December 31, 2019. These factors raise substantial doubt about the Company’s ability to continue within one year from the date of filing. 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. 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.
The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
The ability to continue as a going concern is dependent on our generating cash from the sale of our common stock and/or obtaining debt financing and attaining future profitable operations. Management’s plans include selling our equity securities and/or obtaining debt financing to fund our capital requirement and ongoing operations; however, there can be no assurance the Company will be successful in these efforts.
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 of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. A significant estimate includes the carrying value of the Company’s patents, fair value of the Company’s common stock, assumptions used in calculating the value of stock options, depreciation and amortization.
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.
CASH CONCENTRATION:
The Company’s cash accounts are fully insured up to $250,000. As of December 31, 2019 and 2018, none of the Company’s cash accounts exceeded the insured amounts.
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.
| F-9 |
|
|
| Table of Contents |
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
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.
During the year ended December 31, 2019, the Company has not recorded impairment.
INTANGIBLE ASSETS:
License Agreements
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. At December 31, 2019 and 2018, the license agreements were fully amortized. Beginning in 2010, the Company was required to pay an annual license fee of $10,000 and may be required to pay royalties, as defined, to the licensors.
ASSETS HELD FOR SALE:
Non-current assets are classified as held for sale if it is highly probably that they will be recovered primarily through sale rather than through continuing use.
Immediately before classification as held for sale, the assets are remeasured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on initial classification as held for sale and subsequent gains and losses on re-measurement are recognized in profit or loss. Gains are not recognized in excess of any cumulative impairment loss.
The Company sold the assets held for sale that were presented on the balance sheet as of December 31, 2018. During the year ended December 31, 2018, the Company recorded impairment and adjusted the asset valuation to $1.2 million. The Company sold the assets for a total of $1.2 million of which $300,000 was received during May 2019. The remaining $900,000 will be collected during the next three years in equal increments on the anniversary date of the agreement, May 1.
| F-10 |
|
|
| Table of Contents |
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
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, 2019 and 2018, 22,075,000, 9,700,000, 13,549,177 and 21,605,000, 28,943,182 and 13,549,177 stock options, warrants, and preferred stock, respectively, 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 $8,000 and $52,000 for the years ended December 31, 2019 and 2018.
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.
The Company recognizes revenue in accordance with generally accepted accounting principles as outlined in ASC 606, Revenue From Contracts with Customers, which consists of five steps to evaluating contracts with customers for revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation.
Revenue recognition occurs at the time we satisfy a performance obligation to our customers, when control transfers to customers, provided there are no material remaining performance obligations required of the Company or any matters of customer acceptance. We only record revenue when collectability is probable.
| F-11 |
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| Table of Contents |
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
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.
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, 2019 and 2018 because of the relative short term nature of these instruments.
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, 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.
As of the year ended December 31, 2019, the Company holds approximately 12% of the total issued and outstanding shares of Imagion and is reported under fair value method under ASC 320. Any change in the value is reported on the income statement as an unrealized gain or loss
| F-12 |
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MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
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.
Leases: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) and subsequent amendments to the initial guidance: ASU 2017-13, ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2019-01 (collectively, Topic 842). Topic 842 requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. The Company early adopted Topic ASC 842 using the effective date of January 1, 2019 as the date of our initial application of the standard. The Company used the new transition election to not restate comparative periods and elected the package of practical expedients upon adoption, which permits the Company to not reassess under the new standard the Company’s prior conclusions about lease identification, lease classification and initial direct costs. Consequently, financial information for the comparative periods will not be updated. Upon adoption, there was no material impact to the financial statements.
Stock Based Compensation: In June 2018, FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718),Improvements to Nonemployee Share Based Payment Accounting. The amendments in this Update expand the scope of stock compensation to include share-based payment transactions for acquiring goods and services from nonemployees. The guidance in this Update does not apply to transactions involving equity instruments granted to a lender or investor that provides financing to the issuer. The guidance is effective for fiscal years beginning after December 31, 2018 including interim periods within the fiscal year. The Company adopted with an effective date of January 1, 2019. Upon adoption, there was no material impact to the financial statements.
There are no other recent accounting pronouncements that are expected to have a material impact on the condensed consolidated financial statements.
NOTE 3 – INVESTMENT IN IMAGION BIOSYSTEMS
As of December 31, 2019, the Company holds 61,516,508 shares of Imagion Biosystems (2,000,000 restricted shares for prepaid notes interests – see Note 8) that is 12% of Imagion’s total issued and outstanding common stock. Based upon Imagion’s trading price on December 31, 2019, $0.0175 per share, the fair value of the Imagion shares was $1,045,000. During the year ended December 31, 2019, the Company recorded unrealized losses in its investments of $190,000.
As of December 31, 2018, the Company owned 64,099,476 shares of Imagion Biosystems (“Imagion”), resulting in a noncontrolling interest of 19% of Imagion’s issued and outstanding common stock. Based upon Imagion’s trading price on December 31, 2018, $0.021097 per share, the fair value of the Imagion shares was $1,352,000. During the year ended December 31, 2018, the Company recorded unrealized losses in its investment of $4,150,000.
NOTE 4 – 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, 2019 and 2018, 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. Class B preferred shares are convertible at a rate of 1 Series B preferred share to 10 common shares. Class B, Preferred Stock is not entitled to receive dividends unless dividends are paid on common stock. Upon liquidation Class B, Preferred Stock shall be treated as if it were converted to common stock prior to liquidation. As of December 31, 2019 and 2018, 49,999 and 49,999 shares of Preferred Stock were issued and outstanding, respectively.
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, 2019 and 2018, no shares of Preferred Stock were issued and outstanding.
| F-13 |
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| Table of Contents |
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
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. As of December 31, 2019 and 2018, 105,761 shares of Series D Preferred Shares were issued and outstanding.
The Company has 447,804 and 447,804 undesignated blank check preferred stock, $0.001 par value, authorized as of December 31, 2019 and 2018. 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, 2019 and 2018, 557,781,064 and 533,781,064 shares of common stock were issued and outstanding, respectively.
Stock activity during 2019 and 2018
During the year ended December 31, 2019, the Company issued 24,000,000 shares of common stock to its board of directors for services valued at $360,000. The shares were valued based on the market price of the Company’s common shares of $0.015 on the grant date.
The Company did not issue any shares of common stock during the years ended December 31, 2018.
| F-14 |
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| Table of Contents |
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
Options
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, 2019 and 2018 was 4,000,000.
As of the year ended December 31, 2019, the Company issued 500,000 options to its advisors for services valued at approximately $7,000. The options are exercisable at $0.015 and have a life of 5 years. The Company used the Black Scholes Merton model and the assumptions used were the stock price of $0.015, 180% volatility and discount rate of 2.25%.
| F-15 |
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| Table of Contents |
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
Set forth in the table below is information regarding awards made through compensation plans or arrangements through December 31, 2019, the most recently completed fiscal year.
At December 31, 2019, the 22,075,000 outstanding options had an aggregate intrinsic value of $1,579,770.
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, 2017 |
|
| 21,855,000 |
|
|
|
|
|
|
|
|
| 21,855,000 |
| ||
| Granted |
|
| - |
|
| $ | - |
|
| $ | - |
|
|
| - |
|
| Exercised |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| Expired |
|
| (250,000 | ) |
|
| 0.07 |
|
|
| 0.07 |
|
|
| (250,000 | ) |
| Outstanding as of December 31, 2018 |
|
| 21,605,000 |
|
|
|
|
|
|
|
|
|
|
| 21,605,000 |
|
| Granted |
|
| 500,000 |
|
|
| - |
|
|
| - |
|
|
| 500,000 |
|
| Exercised |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| Expired |
|
| (30,000 | ) |
|
| 0.26 |
|
|
| 0.26 |
|
|
| (30,000 | ) |
| Outstanding as of December 31, 2019 |
|
| 22,075,000 |
|
|
|
|
|
|
|
|
|
|
| 22,075,000 |
|
| F-16 |
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| Table of Contents |
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
Exercise prices and weighted-average contractual lives of 22,075,000 stock options outstanding as of December 31, 2019 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 |
| 5.49 |
| $ | 0.05 |
| 3,000,000 |
| $ | 0.05 |
| ||||||||
| $ | 0.06 |
| 6,000,000 |
| 4.87 |
| $ | 0.06 |
| 6,000,000 |
| $ | 0.06 |
| ||||||||
| $ | 0.07 |
| 9,000,000 |
| 1.38 |
| $ | 0.07 |
| 9,000,000 |
| $ | 0.07 |
| ||||||||
| $ | 0.08 |
| 575,000 |
| 5.64 |
| $ | 0.08 |
| 575,000 |
| $ | 0.08 |
| ||||||||
| $ | 0.14 |
| 3,000,000 |
| 3.74 |
| $ | 0.14 |
| 3,000,000 |
| $ | 0.14 |
| ||||||||
| $ | 0.02 |
| 500,000 |
| 4.50 |
| $ | 0.02 |
| 500,000 |
| $ | 0.02 | |||||||||
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, 2019.
|
|
| Warrants |
|
| Weighted average Exercise Price |
| ||
| Outstanding as of December 31, 2017 |
|
| 28,943,182 |
|
| $ | 0.07 |
|
| Issued/Vested |
|
| - |
|
|
| - |
|
| Cancelled/Expired |
|
| - |
|
|
| - |
|
| Outstanding as of December 31, 2018 |
|
| 28,943,182 |
|
| $ | 0.07 |
|
| Issued/Vested |
|
| - |
|
|
| - |
|
| Exercised |
|
| - |
|
|
| - |
|
| Cancelled/Expired |
|
| (19,243,182 | ) |
|
| 0.07 |
|
| Outstanding as of December 31, 2019 |
|
| 9,700,000 |
|
| $ | 0.07 |
|
| Date |
| Number of Warrants |
|
| Exercise Price |
|
| Contractual Life Remaining |
| Number of Shares Exercisable |
| |||
| April 2012 |
|
| 6,000,000 |
|
| $ | 0.05 |
|
| 0.8 years |
|
| 6,000,000 |
|
| March 2015 |
|
| 2,500,000 |
|
| $ | 0.12 |
|
| 0.2 years |
|
| 2,500,000 |
|
| July 2015 |
|
| 300,000 |
|
| $ | 0.05 |
|
| 0.5 years |
|
| 300,000 |
|
| August 2015 |
|
| 300,000 |
|
| $ | 0.05 |
|
| 0.6 years |
|
| 300,000 |
|
| September 2015 |
|
| 300,000 |
|
| $ | 0.05 |
|
| 0.7 years |
|
| 300,000 |
|
| October 2015 |
|
| 300,000 |
|
| $ | 0.05 |
|
| 0.8 years |
|
| 300,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 9,700,000 |
|
|
|
|
|
|
|
|
| 9,700,000 |
|
The fair value for warrants granted were determined using the Black-Scholes option-pricing model.
| F-17 |
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| Table of Contents |
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
NOTE 5 – INCOME TAXES
Deferred tax assets are comprised of the following at December 31:
|
|
| 2019 |
|
| 2018 |
| ||
| Net operating loss carryforward |
| $ | 13,536,000 |
|
| $ | 13,280,000 |
|
| Temporary differences |
|
| 6,988,000 |
|
|
| 6,988,000 |
|
| Less valuation allowance |
|
| (20,542,000 | ) |
|
| (20,268,000 | ) |
| 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, 2019 and 2018, 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, 2019 and 2018, net operating loss carryforwards were approximately $51,357,000 and $50,135,000, respectively, for federal tax purposes that expire at various dates through 2031 and for state tax purposes expire through 2025. For the years ended December 31, 2019 and 2018, the change in valuation is $20,542,000 and $20,268,000, respectively, and we have open tax years for 2017 through 2019.
For December 31, 2019 and 2018, the provision for income taxes differs from the amount computed by applying the U.S. federal statutory tax rate (21% in 2019 and 2018) to income taxes as follows:
|
|
| 2019 |
|
| 2018 |
| ||
| Tax benefit computed at 21% |
| $ | - |
|
| $ | - |
|
| Change in valuation allowance |
|
| 274,000 |
|
|
| 3,334,000 |
|
| Change in carryovers and tax attributes |
|
| (274,000 | ) |
|
| (3,334,000 | ) |
| Income tax provision |
| $ | - |
|
| $ | - |
|
See below for rate reconciliation.
|
|
| 2019 |
|
| 2018 |
| ||
| Federal Tax statutory rate |
|
| 21.00 | % |
|
| 21.00 | % |
| Valuation allowance |
|
| (21.0 | )% |
|
| (21.0 | )% |
| Effective rate |
|
| 0.00 | % |
|
| 0.00 | % |
NOTE 6 – COMMITMENTS AND CONTIGENCIES
Legal matter contingencies
The Company believes, based on current knowledge and after consultation with legal counsel, that it is not currently party to any material proceedings, individually or in the aggregate, the resolution of which would have a material effect on the Company. Provisions for losses are established in accordance with ASC 450, “Contingencies” when warranted. Once established, such provisions are adjusted when there is more information available of when an event occurs requiring a change.
Lease
The Company leases a facility with terms of month to month for its headquarters and had a lease on a facility through April 2021. During the year ended December 31, 2019, the lease was assigned to a third party entity. The lease was able to be cancelled at any time with three months written notice before April 2020 and 2021, the anniversary dates of the lease. The Company adopted ASC 842 on January 1, 2019 and has evaluated that has no impact on the financial statements as under the practical expedient the leases consist of terms less than one year, and therefore is not required to capitalize the lease.
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| Table of Contents |
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
NOTE 7 – LICENSE AGREEMENT
On May 1, 2019, the Company, entered into an agreement with a non-affiliated third party (“Third Party”), providing for an exclusive license by the Company of its ECAP technology to the Third Party for a term of 17 years unless terminated sooner, a sublicense by the Company to the Third Party of its rights under that certain Exclusive Field-of-Use Patent License Agreement dated January 5, 2009 entered with The Los Alamos National Laboratory for a term until the expiration of the last valid claim to expire of the patents pursuant to such agreement and the sale by the Company of ECAP-C machines to the Third party. As part of the above license agreements, the Company will receive royalty payments, including minimum payments, based on a percentage of the Third Party’s sales. Royalties will be 10% on gross sales of licensed dental products and average of 5% on all other sales of licensed products.
During the year ended December 31, 2019, the Company received $50,000 as a minimum royalty payment, which is recognized in revenue for the year ended December 31, 2019.
NOTE 8 – NOTES PAYABLE
On March 11, 2019, the Company received a loan for $50,000 and entered into a promissory note and security agreement with a third party. The loan was secured with ECAP-C machines. The due date of the loan was the earlier of April 30, 2019 or the closing of the transaction with the third party. Interest shall accrue at a rate of 6% per annum from April 11, 2019 until paid in full.
On May 1, 2019, the transaction closed and agreements were executed. The Company repaid the $50,000 upon closing of the transaction.
On October 17, 2019, the Company executed a secured note with a related party for $100,000. The secured note is due on October 17, 2022. The Company agreed that the note bears interest at 10% per annum, to be paid in advance in shares of Imagion Biosystems Limited common stock (IBX), calculated at $0.015 per share with 2 million shares of IBX common stock. The interest expense for the year ended December 31, 2019 was $3,400. The Company recorded a debt discount for debt issue costs consisting of shares of IBX valued at $51,400.
On October 17, 2019, the Company executed a secured note with an individual for $ 50,000. The secured note is due on October 17, 2022. The Company agreed that the note bears interest at 10% per annum, to be paid in advance in shares of Imagion Biosystems Limited common stock (IBX), calculated at $0.015 per share with 1 million shares of IBX common stock. The interest expense for the year ended December 31, 2019 was $1,600. The Company recorded a debt discount for debt issue costs consisting of shares of IBX valued at $25,700.
| Notes payable |
| $ | 150,000 |
|
| Less: Discounts on notes payable |
|
| (72,000 | ) |
| Notes payable, net of discounts |
| $ | 78,000 |
|
During the year ended December 31, 2019, the Company recorded amortization of $5,100. The balance of the debt discount was $72,000 as of December 31, 2019.
NOTE 9 – REVENUE
During the year ended December 31, 2019, the Company recorded revenue of $45,000 for which the services were performed and completed in 2018, but the Company performed an assessment and determined the collectability was not reasonably assured and did not record as revenue in 2018 per ASC 605. The original contract was dated in 2017. In 2019, the Company collected on the invoice and recorded revenue upon receipt of the funds.
NOTE 10 – STOCKHOLDERS’ EQUITY (DEFICIT)
During the year ended December 31, 2019, the Company issued 24,000,000 shares of common stock to its board of directors for services valued at $360,000. The shares were valued based on the market price of the Company’s common shares of $0.015 on the grant date.
NOTE 11 – RELATED PARTY TRANSACTIONS
As of December 31, 2019 and 2018, the Company had accrued expenses to related parties of approximately $1,860,000 and $1,531,000.
As of December 31, 2019, the amounts are due to the Company’s sole officer for compensation $166,142 and the chairman of the board for compensation of $381,350 and the members of the board of directors of $37,500. The amount due to a former officer of a wholly owned subsidiary of $1,275,000 which at his election can be paid in shares of common stock or options, and he has yet to make a determination.
As of December 31, 2018, the amounts are due to the Company’s sole officer for compensation $80,942 and the chairman of the board for compensation of $147,150 and the members of the board of directors of $22,500. The amount due to a former officer of a wholly owned subsidiary of $1,275,000 which at his election can be paid in shares of common stock or options, and he has yet to make a determination.
NOTE 12 – SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date these financial statements were 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 Annual 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.
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Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2019. 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.
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, 2019, we had no full-time employees 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.
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The names, ages and biographical information of each of our directors and executive officers as of April 13, 2020 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 |
| 67 |
| President and Chief Executive Officer, Director |
| Frank Georgiou |
| 69 |
| Director |
| Marvin Maslow |
| 82 |
| Chairman of the Board |
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, |
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|
|
| · | 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 |
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|
| · | 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 director 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 11-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.
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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, 2018, we believe that our executive officers, directors and ten percent stockholders complied with all reporting requirements applicable to them.
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 244 Fifth Avenue, Suite 2341, New York, New York, 10001.
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.
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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, 2019 and 2018. 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 ($) |
| ||||||||
|
|
|
|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
| Emmanuel Tsoupanarias |
| 2019 |
|
| 186,000 |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| 186,000 |
|
| CEO and Director |
| 2018 |
|
| 186,000 |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| -- |
|
|
| 186,000 |
|
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. Effective January 1, 2015, the Company renewed the agreement for a period of ten years with automatic extensions for one-year periods thereafter. His salary remains at $150,000. 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.
Director Compensation
For the year ended December 31, 2019, for their service as directors, each of the directors received $1,250 per quarter.
Compensation Committee Interlocks and Insider Participation
Our entire board currently acts as our compensation committee. Emmanuel Tsoupanarias is the sole executive officer of our company. No member of the compensation committee is employed by or serving as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving as a member of our board.
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OUTSTANDING EQUITY AWARDS
| Name |
| Grant Date |
| Number of Securities Underlying Unexercised Warrants (#) Exercisable |
|
| Number of Securities Underlying Unexercised Warrants (#) Unexercisable (1) |
|
| Warrant Exercise Price ($) |
|
| Warrant Expiration Date | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Emmanuel Tsoupanarias, Director and CEO |
| 08/05/2011 |
|
| 6,000,000 |
|
|
| - |
|
| $ | 0.070 |
|
| 08/05/2021 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Emmanuel Tsoupanarias, Director 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, Chairman of the Board |
| 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, Chairman of the Board |
| 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, Chairman of the Board |
| 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, 2019.
The following table sets forth, as of March 27, 2019, 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, 244 Avenue, Suite 2341, New York, New York 10001.
| Name and Address of Beneficial Owner |
| Number of |
|
| Percent of |
| ||
|
|
|
|
|
|
|
| ||
| Emmanuel Tsoupanarias (2) |
|
| 29,700,106 |
|
|
| 5.3 | % |
| Leonard C. Friedman (3) |
|
| 11,923,641 |
|
|
| 2.2 | % |
| Frank Georgiou (4) |
|
| 29,937,075 |
|
|
| 5.4 | % |
| Chris Theoharis (4) |
|
| 5,945,334 |
|
|
| 1.1 | % |
|
|
|
|
|
|
|
|
|
|
| Marvin Maslow (5)(6) |
|
| 80,757,545 |
|
|
| 14.5 | % |
| Directors and Executive Officers as a group (5 persons) |
|
| 158,263,701 |
|
|
| 28.4 | % |
|
|
|
|
|
|
|
|
|
|
| Total |
|
| 158,263,701 |
|
|
| 28.4 | % |
____________
| (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 557,781,064 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, 2019 and 2018:
| Fee Category |
| Fiscal 2019 |
|
| Fiscal 2018 |
| ||
|
|
|
|
|
|
|
| ||
| Audit and audit related fees |
| $ | 24,500 |
|
| $ | 39,000 |
|
| Tax fees |
|
| - |
|
|
| - |
|
| Other fees |
|
| - |
|
|
| - |
|
| Total fees |
| $ | 24,500 |
|
| $ | 39,000 |
|
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, 2019 and 2018.
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, 2019 and 2018.
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.
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(a) EXHIBITS
| 27 |
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|
| Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) and 15d- 14(a) | |||
|
| ||||
|
| ||||
|
| ||||
| EX-101.INS** |
| XBRL INSTANCE DOCUMENT | ||
| EX-101.SCH** |
| XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT | ||
| EX-101.CAL** |
| XBRL TAXONOMY EXTENSION CALCULATION LINKBASE | ||
| EX-101.DEF** |
| XBRL TAXONOMY EXTENSION DEFINITION LINKBASE | ||
| EX-101.LAB** |
| XBRL TAXONOMY EXTENSION LABELS LINKBASE | ||
| EX-101.PRE** |
| XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE | ||
(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 March 30, 2012.
(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.
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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 14th day of April 2020.
|
| 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 14, 2020 on behalf of the registrant and in the capacities indicated.
| Signature |
| Title | ||
|
| ||||
| /s/ Emmanuel Tsoupanarias |
| Chief Executive Officer, President, Director |
| |
| Emmanuel Tsoupanarias |
| (Principal Executive, Financial and Accounting Officer) | ||
|
| ||||
| /s/ Frank Georgiou |
| Director |
| |
| Frank Georgiou | ||||
| /s/ Marvin Maslow | Chairman of the Board | |||
| Marvin Maslow | ||||
| 29 |