UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
(Amendment No. 3)
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
MOLECULAR ROBOTICS, INCORPORATED
(Name of Small Business Issuer in its charter)
Delaware 91-1844453
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1015 Gayley Ave., No. 387 Los Angeles, CA. 90024
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (818) 817-7662
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
Preferred Stock
PART I
ITEM 1. DESCRIPTION OF BUSINESS
On March 23, 2000, the Board of Directors of NTECH Corporation and the
required number of shareholders duly authorized and amended the Certificate
of Incorporation changing the name of the Corporation to Molecular Robotics,
Incorporated. Molecular Robotics, Inc. (hereinafter referred to as "MR" or the
"Company"), is a development stage company that was incorporated in Delaware on
July 29, 1997. The Company was initially funded through a Regulation 504D
offering, and was listed on the Over-The-Counter Bulletin Board on Dec. 24,
1997 under the symbol NTEH (The Company currently trades under the symbol
MRBI). Its principal business is the development of enabling technology
products and applications to transition from micro to nano scale for both
miniaturized electrical products and molecularly and atomically assembled
substances. The Company's primary targeted industry is Nanotechnology or
"micro-miniaturization." Nanotechnology involves the disciplines of chemistry,
physics, biology, electrical engineering, computer science, and material
science.
Microtechnology, which is the prevalent existing scale, is in the order of
magnitude of one-millionth or 10 -6, whereas nanotechnology is one-billionth
or 10 -9. Within this measurement or "order of magnitude" exists individual
molecules/atoms. The technology to completely manipulate molecules/atoms
has not yet been perfected. Enabling technology being developed by the
Company should facilitate realization of the efficient processes to assemble
and replicate atoms, hence molecules, which potentially will revolutionize
existing technologies and markets.
Products
The Company has enabling technology products at different stages of
development.
1. Single-Chip DNA Sequencer via AFM (Atomic Force Microscope)
This project consists of two related projects: building a single-chip AFM and
combining the single-chip AFM with a mechanism to wind DNA onto a spool while
"reading" the sequence with the AFM tip.
The first part of the project will extend and commercialize the work of the
Baltes Lab in Zurich, building an entire AFM on one chip, including on-chip
computer circuitry to process the data. The device will be made robust and
self-contained enough to put down on any surface for imaging, although it
will primarily be useful in the controlled setting of the laboratory. The
device will be inexpensive enough to be disposable when the tip breaks or wears
out, eliminating the time-consuming process of replacing the tip. This
disposable property becomes even more of an advantage when the device
incorporates an array of tips for parallel (hence high-speed) imaging.
In the second project, a MEMS (Microelectromechanical Systems) device will
incorporate a flat "pan-cake" electric motor that winds up the DNA around the
outside of a flat spool. Unlike the macroscopic process, the spool does not
provide the substrate for AFM imaging, rather the DNA is dragged past a block
of silicon and imaged as it is being drawn onto the spool. Tension on the
winding DNA strand is provided by an electric charge that pulls the "clump" of
DNA in the opposite direction to the direction of winding.
2. Drug Delivery Systems
This project is directed at the Diabetic/Insulin delivery market,
specifically in glucose monitoring and the use of insulin pumps. There are two
initial approaches to be studied. The first approach will produce a small MEMS
device to be implanted under the skin to monitor glucose levels. When the
level passes a certain threshold, a needed amount of insulin is automatically
released from a small reservoir. The glucose sensor, drug delivery reservoir,
valve and pump will be connected to each other via an analog computer similar
to the circuitry now used in automobile airbag sensors.
The second approach will be related to the first except that the device would
not be implanted. There are several companies and research efforts targeted
at making MEMS arrays of micro-needles to deliver drugs painlessly, as the
needles would be too small to penetrate to the neurons.
3. Power Generation
Fuel cells convert hydrogen and oxygen to water and electricity without high-
temperature burning. Recent research results show that bi-directional
membranes can be constructed that catalyze oxygenation of hydrogen (producing
electricity) as well as the opposite hydrolysis reaction-splitting water into
hydrogen and oxygen (using electricity). Such a system can be closed, acting
as a rechargeable battery, and potentially storing far more power than a
conventional chemical battery. MR will design and build a MEMS version of this
closed, rechargeable fuel cell, using micro-fluidic pumps and valves.
A second power generation project will capitalize on the huge amount of
asphalt and concrete road surface, including sidewalks, parking lots, airport
tarmacs, even tops of buildings, that could be used for solar power
generation. MR will engineer a process that could make large numbers of small,
inexpensive MEMS photocells and place them on a wire net, lay the mesh down on
the surface of a road, and then coat the net with clear plastic. The
electricity is drained off at the sides of the road. Cars will damage some
fraction of the photocells, but many more will survive. Airport tarmacs have
large areas that won't be damaged by planes or trucks.
4. 3-D Computer Chip
Currently computer chips all use only one layer of electronic components
(transistors), although each transistor is made of multiple layers of
material. Chips can be made with many layers of transistors, but such a chip
would build up too much heat in the interior and would eventually be damaged.
Various efforts have been made to integrate cooling systems on the top or
bottom of the chip, but these efforts have all been abandoned.
MR will make a "3-D" computer chip, i.e., one that has many layers of
components and includes vertical cooling channels, through which a liquid such
as water is pumped to keep the chip cool. Such a chip could have the
equivalent of hundreds of today's processors stacked on top of one another. In
the initial version the processors would not communicate directly with each
other (from one layer up to the next) but will connect to the outside world
along the edges, similar to single-layer chips. New packaging will be
developed to allow connection of the edges of each layer to the socket below.
Later, more sophisticated versions will incorporate inter-layer connections
that obviate the need for external connections to each layer.
5. Taggants
Currently, taggants are made from silicon using MEMS processes. Existing
taggants have a tendency to break which increases the effective density of
taggants needed for embedding into a surface. MR will design a process for
making stronger taggants from nickel that reduces breakage. MR will also
explore the feasibility of making hex-shaped taggants which will distribute
stress more evenly over the surface of the taggant, reducing breakage.
Another project will create an alternative method for producing and reading
taggants with two main advantages over the current design. One advantage is
that it will require less light and hence draw less power, decreasing the
needed battery size in a portable reader from ~2.5 pounds to perhaps just an AA
battery.
6. Shipping Sensors
A range of simple, low-cost sensors will be developed which change state upon
reaching a threshold temperature, shock, or humidity. These are "blown-fuse"
type sensors, in the respect that they do not keep a continuous record of
changes, but only register above a given threshold. The change is likely
permanent, just as a fuse melts above a certain amperage. The sensors will be
designed so that no power supply is necessary. The sensors will be attached to
shipping crates for instance. The change in the sensor would ideally be
visible to the eye, and would be most useful as a shipping and transportation
application.
7. Micro-Aperture Display
This project will produce a MEMS device for digital projection of images, as
an alternative to existing MEMS devices that produce images via an array of
micro-mirrors. This device could be used for large digital video projectors,
head-mounted displays and desktop displays.
The MEMS device incorporates an array of micro-apertures and aperture covers
that are opened and closed via PZT actuators. The device is built on a
transparent substrate containing an array of molded lenses on the back, which
focus the light from a large LED on each aperture. The lenses do not have to
be precise, and therefore could be made from concentric rings etched into the
substrate. Color is produced by rapidly alternating between three different
light sources.
8. Impulse Engine
Recent discoveries and experiments have verified an effect that seemingly
violates conservation of momentum, but in fact "borrows" momentum from the
interaction of an object with the rest of the mass in the universe. This
effect is derived from and predicted by Mach's Principle. The effect can be
harnessed to produce a reactionless thrust, converting electricity into
acceleration without ejection of reaction mass. Although slight, the effect is
nonetheless strong enough to use for station-keeping of satellites and space
stations and potentially for inexpensive space travel.
The experimental device consists of a stack of piezoelectric crystals, topped
by a capacitor, and driven by a voltage oscillator. The latest design
dispenses with the capacitor entirely, being constructed entirely of PZT's. MR
will make a MEMS version of this, including an on-chip oscillator, for testing
via a carefully constructed torque balance. Theory predicts that the MEMS
device should have a stronger acceleration per unit mass than the macroscopic
device. Arrays of these MEMS devices mounted on printed circuit boards will
increase the overall thrust.
9. Earthquake Active Compensation
This project will create a process for real-time active compensation for
buildings in earthquakes. A net of MEMS accelerometers will be attached to
the walls of the building to provide to a computer a dynamic, millisecond-by-
millisecond picture of the pattern of shockwaves throughout the building,
enabling an effective response by actuators distributed throughout the
building to nullify the effect of the earthquake. The building will thus
appear to "surf" on the earthquake, remaining immobile while the ground shakes.
10. Biological Carbon Nanotube Synthesis
Existing methods of producing carbon nanotubes are inexact and yield
irregularities of many kinds in the nanotubes. MR's project will provide a
reliable source of perfectly regular, standardized nanotubes for use in many
applications, including AFM tips, fuel cell hydrogen storage, flat panel
displays and molecular electronics.
11. Quantum Logic Devices
Quantum computers hold great promise for efficiently solving problems that
involve searching for a single answer among an exponentially large number of
possible answers. Much theoretical work has been done on algorithms for
hypothetical quantum computers, schemes for quantum error correction, and
potential designs for quantum hardware, but to date no one has demonstrated a
working quantum computer with more than a dozen or so logic elements.
One of the most promising concepts for a quantum computer involves using the
quantum spin of nuclear particles or electrons to represent one "qubit"
(quantum bit). Representing and transferring information using quantum spin
has come to be known as "spintronics" and has garnered much attention from both
the computer industry and DARPA for its potential to break through the imminent
barriers to further miniaturization of computer chips.
MR'S project will address one aspect of "spintronics," namely techniques to
read and write information encoded as the spin of nuclear particles or
electrons. MR will explore various strategies for reading and writing spins of
small numbers of particles or even single particles. These strategies will
include various types of SPMs (scanning probe microscopes) with tips capable of
sensing or modifying the magnetic fields of individual molecules or atoms.
This project will likely make use of the single-chip SPM technology developed
in project 1, Single-Chip DNA Sequencer via AFM.
12. Molecular Computer
A computer made from electronic components on the scale of carbon nanotubes
holds the potential of dramatic increases in speed over current computers,
due to the shorter path lengths between components and the enormous parallelism
inherent in a molecular design.
Single-walled carbon nanotubes can be either semiconductors or metals,
depending on their conformation (helicity and diameter). Crossed nanotubes of
the appropriate conformation can act as field effect transistors. Ideally a
computer built of such transistors would be made by self-assembly, rather
than individual placement of the components.
Proteins self-assemble into sometimes elaborate structures such as viruses.
If proteins could be made that "grab" one end of a nanotube and simultaneously
"grab" one or more other proteins, then a three dimensional graph could self-
assemble, where the nodes of the graph are junctions between proteins and the
edges are the nanotubes.
This project will depend critically on a supply of precisely regular carbon
nanotubes with specified characteristics of helicity, diameter and length.
Project 10, Biological Carbon Nanotube Synthesis, will endeavor to produce
such nanotubes.
As an early stage, technology development company, Molecular Robotics has not
identified manufacturers, distributors or sales agents and hence does not rely
on any outside companies for these types of services.
Market Analysis
Existing and prospective growth markets for the Company's products and
process applications are large dollar volume and, mostly, growing at reasonable
to rapid rates. According to Systems Planning Corporation, the MEMS market, for
example, is forecast to grow from $2.1B in 1996 to $11.5B in 2003. Molecular
Robotics holds a competitive advantage on initiating novel uses of MEMS devices
by having the MEMS design team working directly with the applications
engineering staff, all in-house.
Research and Development
For the last two fiscal years, the Company has spent approximately $16,735
on research and development activities.
Molecular Robotics has established the Institute of Applied Physics ("IAP,"
formerly The Institute of New Physics), a California corporation, to receive
grant funding in the fields of nano-physics, artificial intelligence
application development, chemistry, nanoelectromechanical systems ("NEMS"),
MEMS, material sciences and other collective, scientific developments of
enabling technologies to Nanotechnology.
IAP will also conduct portions of the Company's long term research and
development programs, which will facilitate the commercialization of advanced
products in the field.
The Institute of Applied Physics was incorporated in California on February
18, 1997 by Susan Alt (as Susan M. Brana). As a non-profit corporation,
Molecular Robotics is a member, not a shareholder. The Officers and Directors
are Susan Alt, Diane Marciel and Mark Kaeller.
Competition
The level and size of competition the Company faces varies by targeted market
segments. Many of the Company's competitors are more established, benefit
from market recognition and have greater financial, production and/or
marketing resources than Molecular Robotics.
The target markets for each technology developed by Molecular Robotics will
vary widely. Identification of markets for MEMS applications are currently
being pursued by AT&T, Lucent Technologies & Siemens. Molecular Robotics
will focus initially on the market for sensors and taggants in the shipping/
tracking industry. Other applications for the Company's MEMS devices
include DNA spooling devices, single chip AFM, fuel cells, photo cells and 3-D
computer chips.
The Company's limited operating history and lack of revenues have resulted in
a substantial net operating loss. The sole reason for the positive equity
balance is the continuing effort of the company personnel to sell common
stock. There is no certainty they will be able to continue to do so. The
Company's ability to become an on-going concern is discussed in the Independent
Auditors Report and the going concern discussion in Note 1 of the attached
audited financial statements.
ITEM 2. PLAN OF OPERATION
RESULTS OF OPERATIONS
The Company incurred a loss of ($86,088) for its first year of development
activity ended June 30, 1998 and ($171,930) for the year ended June 30, 1999.
Through April 30, 2000, the Company had incurred an accumulated loss of
($349,155). Cash reserves will carry the company for up to six months and the
company is actively seeking additional financing. For the next twelve months,
the Company plans to raise additional capital to sustain its operations and
research and development by continuing to issue restricted shares of Common
Stock for cash, including but not limited to the issuance of shares in a
Private Placement Memorandum. The Company will use the additional capital
raised to further the development of its optical reader and other products in
development. At this time, the Company anticipates the hiring of approximately
15 additional employees in the next six months, comprised of both
technical/scientific and administrative positions.
The Company can continue operations funded by the management and investors
known to management who bring significant resources to the group. The
Company is currently completing a Private Offering with qualified investors.
These funds and the intended appointment of an underwriter will sufficiently
generate the capital required for the Company's operations until the Company is
revenue positive.
The Institute of Applied Physics, until recently, has not been active. The
Institute has neither applied for nor received any grant funding. As a non-
profit California Corporation, all technology developed through the Institute
will become public domain and the Company has not yet identified a project
suitable for this arrangement.
The Company has not entered into any outside funding commitments to date.
The funding for the company to date has come primarily come from the management
and private investors and has been allocated to the taggant/reader development,
as well as general business set up and operating expenses.
There was a significant increase in the operating expenses and operating
losses for the period ended 6/30/99 compared to 6/30/98 and for the 10 months
ended April 30, 2000. Theses increases are due to the costs associated with
the on-going development of the Company's optical reader. There was also a
significant increase in the Company's liabilities (note payable) for the
period 12/31/99 compared to the period 12/31/98. This increase in liability
was due to the Company's borrowing of money from another company in which it
had a licensing agreement with to develop alternative metals and plastics, as
well as to develop security paper using its taggant.
ITEM 3. DESCRIPTION OF PROPERTY
The Company has an office in Los Angeles, California. As of April 30, 2000
the Company did not own any real property.
The Company uses the address 1015 Gayley Ave., #387, Los Angeles, California
90024, as a mailing address only. This address is shared with GAIN
Integrated Systems, the holding company of one of the directors of the
company. The company is currently in negotiation of a lease of over 25,000
square feet of office and laboratory space in the Los Angeles area.
ITEM 4. SECURITY OWNERSHIP INTEREST OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth the Common Stock ownership of each person
known by the company to be the beneficial owner of five percent or more of
the Company's Common Stock, each director individually, and all officers and
directors of the Company as a group, as of April 30, 2000. Each person has
sole voting and investment power with respect to the shares of Common Stock
shown, and all ownership is of record and beneficial.
<TABLE>
<S> <C> <C> <C>
Title Name and address Amount and nature Percent
of class of beneficial owner of beneficial ownership of class(1)
Common Evan Gamble 2,000,100 (2) 37.76%
Stock 11733 Montana, No. 108
Los Angeles, CA. 90049
Common TAMA Japan, Ltd. 750,000 14.16%
Stock Kinwick Centre
32 Hollywood Road
Central Hong Kong
Common ERoyalty.net, Inc. 750,000 14.16%
Stock Three Mill Road
Suite 206
Wilmington, DE. 19806
Common Gain Integrated 652,196 12.31%
Stock Systems, Inc.(3)
1015 Gayley Ave.
No. 387
Los Angeles, CA. 90024
Common Tony Bromovsky 354,999 (2) 6.70%
Stock 41 St. James Place
London SW1A 1NS
England
Common Thomas McCarthy 140,000 2.64%
Stock 163 N. Marengo Ave.
No. 217
Pasadena, CA. 91101
Common Mark Kaeller 60,000 1.13%
Stock P.O. Box 572285
Tarzana, CA. 91357
All Officers
and Directors
as a group 3,207,295 60.55%
(1) Based upon 5,297,149 total shares Common Stock outstanding and committed,
as of April 30, 2000.
(2) Total shares based upon total shares outstanding as well as shares
committed.
(3) Susan Alt is the beneficial owner
</TABLE>
<TABLE>
The following table sets forth the Preferred Stock ownership of each person
known by the company to be the beneficial owner of five percent or more of
the Company's Preferred Stock. All ownership is of record and beneficial.
<S> <C> <C> <C>
Title Name and address Amount and nature Percent
Of Class of beneficial owner of beneficial ownership Of Class
Preferred BR Holdings, Ltd. 4,956,850 99.14%
Stock 2533 N. Carson St.
Carson City, NV. 89706
</TABLE>
CASH CONTRIBUTIONS
Upon organization of the Company, there was an initial $450 paid in capital.
In exchange for these funds, the Company issued 450,000 shares to the
founders which were disbursed as follows:
<TABLE>
<S> <C>
Name Shares (post-split)
Gain Integrated Systems, Inc.(1) 243,000 shares
Thomas McCarthy 45,000 shares
Ezekiel Kruglick 162,000 shares(2)
(1) Susan Alt is the owner of record.
(2) Shares have been rescinded.
</TABLE>
The following is a list of cash contributions made by officers, directors,
promoters and affiliated persons made subsequent to the organization of the
Company, and made for the purpose of acquiring common equity in the Company:
<TABLE>
<S> <C> <C>
Shareholder Cash Contribution No. of Shares Issued
(post-split)
Gain Integrated
Systems, Inc. (1) $161,500 363,500
(1) Susan Alt is the owner of record.
</TABLE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
<TABLE>
<CAPTION>
Directors
</CAPTION>
<S> <C> <C>
Name Dates Served Age
Susan Alt 07/97-Present 47
Henry Yard 05/00-Present 42
Thomas McCarthy 07/97-Present 33
</TABLE>
Susan Alt; 47 years old; Chairman of the Board since July 1997
Susan Alt is an entrepreneur with over 20 years of commercial and investment
banking experience. She was Vice President of Mitsui Bank and Wells Fargo
Bank heading up escrow, trust and commercial lending activities. In 1993, Ms.
Alt formed her own Broker/Dealer in Los Angeles, Alt Capital. She has also
served as Chairman of the Board of GAIN Integrated Systems, Inc. Ms. Alt
brings not only financial and organizational skills to the company but also
acts as a creative problem solver and visionary.
Henry Yard; 42 years old; Director since 5/00
Henry Yard is a successful, results-oriented executive with over 18 years of
diverse experience within the technology, nutrition, personal care and
industrial markets. He has had management responsibilities that include
sales, marketing, production, QA/QC, engineering, distribution, environmental
compliance, cost accounting and purchasing with profit/loss responsibility.
He has particular expertise in budget development and control, sales &
marketing, environmental and legal affairs, mergers and acquisitions, business
and information systems, quality systems (TQM, ISO-9000), logistics management,
strategic and tactical planning, engineering and capital management. He has
a B.A. (Business Administration) Rutgers University and a B.S., Electrical /
Biomedical Engineering, Rutgers University.
Thomas McCarthy; 33 years old; Director since July 1997
Thomas McCarthy was a founder and President of minus9, Inc. a micromachine
company. He has also served as International Relations Coordinator for the
Government of Nagano Prefecture in Japan and is fluent in Japanese. In 1993,
he founded the Los Angeles Nanotechnology Study Group, the second longest-
running group in the US. He has a M.A. Degree, Monterey Institute of
International Studies.
<TABLE>
<CAPTION>
Executive Officers
</CAPTION>
<S> <C> <C> <C>
Name Position Dates served Age
Henry Yard Chief Executive Officer and President 3/00-Present 42
Susan Alt Chief Financial Officer 7/97-Present 47
Evan Gamble Chief Technology Officer 5/00-Present 38
Thomas McCarthy Chief Information Officer 7/97-Present 33
Mark Kaeller Corporate Development Officer 7/97-Present 33
Tony Bromovsky Managing Director, European Operations 4/00-Present 49
Diane Marciel Executive Administrative Officer 3/00-Present 39
</TABLE>
Henry Yard, Chief Executive Officer (CEO) and President
Henry Yard is a successful, results-oriented executive with over 18 years of
diverse experience within the technology, nutrition, personal care and
industrial markets. He has had management responsibilities that include
sales, marketing, production, QA/QC, engineering, distribution, environmental
compliance, cost accounting and purchasing with profit/loss responsibility.
He has particular expertise in budget development and control, sales &
marketing, environmental and legal affairs, mergers and acquisitions, business
and information systems, quality systems (TQM, ISO-9000), logistics management,
strategic and tactical planning, engineering and capital management. He has
a B.A. (Business Administration) Rutgers University and a B.S., Electrical /
Biomedical Engineering, Rutgers University.
Susan Alt, Chief Financial Officer (CFO)
Susan Alt is an entrepreneur with over 20 years of commercial and investment
banking experience. She was Vice President of Mitsui Bank and Wells Fargo
Bank heading up escrow, trust and commercial lending activities. In 1993, Ms.
Alt formed her own Broker/Dealer in Los Angeles, Alt Capital. She has also
served as Chairman of the Board of GAIN Integrated Systems, Inc. Ms. Alt
brings not only financial and organizational skills to the company but also
acts as a creative problem solver and visionary.
Evan Gamble, Chief Technology Officer (CTO)
Evan Gamble is the Chief Technology Officer for Molecular Robotics. Mr.
Gamble is also the Company's chief inventor with a diverse background in
mathematics, computer science, molecular biology and quantum mechanics. He
oversees all technology development. From 1987 to 1990, Mr. Gamble worked at
the Artificial Intelligence Research Branch of NASA Ames Research Center, where
he provided research assistance and programming support. From 1983 to 1987, he
served as Senior Software Systems Engineer for Intellicorp of Mountain View,
California, where he designed and implemented extensions to Knowledge
Engineering Environment (KEE), an expert system development tool. Mr. Gamble
has also worked with Informix, Sprint and the IBM Watson Research Center. He
holds a Master's degree in Mathematics.
Thomas McCarthy, Chief Information Officer (CIO)
Thomas McCarthy was a founder and President of minus9, Inc. a micromachine
company. He has also served as International Relations Coordinator for the
Government of Nagano Prefecture in Japan and is fluent in Japanese. In 1993,
he founded the Los Angeles Nanotechnology Study Group, the second longest-
running group in the US. He has a M.A. Degree, Monterey Institute of
International Studies.
Mark Kaeller, Corporate Development Officer (CDO)
Mark Kaeller joins Molecular Robotics from Consolidated Growers and
Processors, Inc., a leading, multinational agriculture company, where he was
Executive Vice President of Investor Relations. Mr. Kaeller handled all SEC
filings and shareholder inquiries for this publicly trading company, as well as
assisted the Board of Directors in the raising of capital. Mr. Kaeller spent
ten years in commercial, retail and mortgage banking with Sanwa Bank, Wells
Fargo Bank and Household International. He has a M.S. Degree, Psychobiology,
University of California at Los Angeles.
Tony Bromovsky, Managing Director of European Operations
Tony Bromovsky was the co-founder, with companies in the J. Rothschild Group,
of Kilda Investments, Ltd., London England, a corporate finance and investment
vehicle. Mr. Bromovsky has a broad based knowledge of international banking
and commodities. He served as the Director of Woodhouse Drake & Carey as well
as Louis Dreyfus and Drexel Burnham Lambert in the UK. Mr. Bromovsky also
brings many international contacts in the biotechnology and pharmaceutical
development industry and will handle European business matters for Molecular
Robotics.
Anna Marciel, Executive Administrative Officer
Anna Marciel brings fifteen years of entrepreneurial skills and experience to
the Company. For ten years she managed the offices of Heathercliff Financial
in Beverly Hills, California, a financial and building construction consortium.
Ms. Marciel also owned and operated her own interstate logistics company.
Her most recent executive administrative position was with Health Net, Woodland
Hills, California, where she fine tuned her professional, executive office
skills.
SIGNIFICANT EMPLOYEES
Dr. Curt Deckert, Electrical/Optical Engineer
Dr. Curt Deckert is experienced in the design and development of optical-
mechanical and photographic equipment. He has consulted for 93 different
companies since 1976 including Northrop, CalComp, Ford Aerospace and Abbott
Labs. He is also a certified management consultant (CMC) specializing in R&D
with emphasis on the application of optical technology. He has developed
prototypes for a new medical instrument company that utilizes specialized
fiber optics for light delivery and image transmission to detect cervical
cancer using a CCD camera and fluorescence technology. He has a Ph.D. from
California Coast University and an M.B.A. from the University of Southern
California.
Dr. Slavik Dushenkov, Molecular Biologist
Dr. Slavik Dushenkov is a prominent scientist widely recognized for his
contributions to the biological and environmental sciences. For more than 20
years, he has spearheaded numerous cutting edge biotechnology and ecology
research projects. Dr. Dushenkov has incorporated innovative analytical and
information management systems in his laboratory practice to facilitate
results-oriented research including bringing high throughput express analysis
and design databases for performing plant screening. A pioneer in the
application of high-tech approaches for developing plant based environmentally
friendly remediation technologies, discovering, optimizing and manufacturing a
new generation of plant-based pharmaceutical and nutraceutical products, he has
published over 100 papers, several books and a number of widely used laboratory
manuals. Dr. Dushenkov holds seven US and international patents. He has a
Ph.D. in Molecular Biology and Ecology, Moscow Pedagogical State University,
Moscow, Russia.
Jeanne Leonard, Patent Researcher
Jeanne Leonard brings fifteen years of legal, paralegal and research experience
to the Company's library/categorization department. Ms. Leonard worked as a
legal analyst for EMI Music, Santa Monica, California, as well as several
large, well-established law firms throughout Los Angeles, California.
ITEM 6. EXECUTIVE COMPENSATION
Following is the amount of cash and stock compensation for executives of the
Company since inception through April 30, 2000.
Thomas McCarthy - 140,000 shares Common Stock (post-split)
Mark Kaeller - 60,000 shares Common Stock (post-split)
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
</CAPTION>
<S> <C> <C> <C>
Name and Restricted
Principle Position Years Salary Stock Awards
Thomas McCarthy 1997-00 $0 140,000 shares
Chief Information Officer Common Stock
Mark Kaeller 1997-00 $0 60,000 shares
Corporate Development Officer Common Stock
</TABLE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Molecular Robotics (formerly as NTECH) entered into an agreement with
Consolidated Growers & Processors, Inc. (CGP) for the development of certain
alternative plastic and metal type materials technology, as well as the
development of security paper. Susan Alt and Mark Kaeller were associated
with CGP as directors and/or officers at one time or another. Due to
government regulation on the supply of raw material, CGP filed a Chapter 7
Bankruptcy on March 7, 2000.
In the past five years, Susan Alt and Mark Kaeller, as officers and/or
directors, could be considered as promoters of Consolidated Growers &
Processors, Inc.
CONTACTS
Transfer Agent
Interwest Transfer Company, Inc.
Kristi Kunz
P.O. Box 17136
1981 E. 4800 S.
Suite 100
Salt Lake City, UT. 84117-5126
(801) 272-9294 Tel.
(801) 277-3147 Fax
Market Maker
Sierra Brokerage
Merv Roland or Jeff Richardson
2000 Bethel Rd.
Columbus, OH. 43220
(614) 442-9400 Tel.
(614) 442-9486 Fax
Certified Public Accountant
(Retained 5/04/2000; Review of 04/30/2000 interim financial statements)
Marc I. Abrams, CPA
Singer, Lewak, Greenbaum & Goldstein LLP
10960 Wilshire Blvd., Suite 1100
Los Angeles, CA. 90024
(310) 477-3924 Tel.
(310) 477-9684 Fax
(Through 06/30/99 audited financial statements)
Kevin G. Breard, CPA, An Accountancy Corporation
9010 Corbin Ave.
Suite 7
Northridge, CA. 91324
(818) 886-0940 Tel.
(818) 886-1924 Fax
ITEM 8. DESCRIPTION OF SECURITIES
Common Stock
Warrants - At present in the Company, there are 208,000 outstanding warrants
to purchase equity at $5.00 per warrant.
Options - At present, there are no options outstanding that can be exercised
to purchase equity in the Company.
Convertible Stock - At present, there is no convertible stock.
Selling Security Holders - There are no securities to be registered for the
account of any security holders.
Except as otherwise provided by the Company's Certificate of Incorporation or
By-Laws, at every meeting of the stockholders each stockholder shall be
entitled to one vote for each share of voting stock standing in his name on
the books of the corporation on the record date for the meeting.
IMPORTANT INFORMATION ON PENNY STOCKS
Molecular Robotics, Inc.'s stock is considered a penny stock. Generally, a
Penny Stock is a security that:
Is priced under five dollars;
Is NOT traded on a national stock exchange or on NASDAQ (the NASD's automated
quotation system for actively traded stocks);
May be listed in the "pink sheets" or the NASD OTC Bulletin Board;
Is issued by a company that has less than $5 million in net tangible assets and
has been in business less than three years, by a company that has under $2
million in net tangible assets and has been in business for at least three
years, or by a company that has revenues of $6 million for 3 years.
FOR MORE INFORMATION ABOUT PENNY STOCKS, contact the Office of Filings,
Information, and Consumer Services of the U.S. Securities and Exchange
Commission, 450 Fifth Street, NW., Washington, DC 20549, (202) 272-7440. For
detailed information on Penny Stocks, please refer to General Rules and
Regulations promulgated under the Securities Exchange Act of 1934, Rule 15g-1
through 15g-6.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
Market Information
The registrant's securities are traded Over-The-Counter ("OTC") operated by
The National Association of Securities Dealers, Inc. under the symbol MRBI. The
registrant's securities began trading on the OTC on December 24, 1997 under
the symbol NTEH. The quarterly high and low bid prices for the last two years
were unavailable at the time this Form 10-SB was prepared.
Holders
As of April 30, 2000, there were approximately 90 shareholders of Common
Stock in the Company and 3,043,150 shares of Common Stock outstanding. In
addition, there were an additional 2,253,999 shares of Common Stock committed.
As of April 30, 2000, there was one shareholder of Preferred Stock and
4,956,850 shares of Preferred Stock outstanding.
Dividends
There have been no cash dividends declared on any shares of common equity in
the Company since the inception of the Company to present.
Splits
On March 21, 2000, the Board of Directors and the required number of
shareholders of Molecular Robotics duly authorized that the previously issued
Common Stock of the Corporation (the "Old Common Stock") be automatically
converted into Common Stock at the rate of one (1) share of Common Stock for
each ten (10) shares of Old Common Stock (the "Conversion Rate"). This
reverse split of the Corporation's Old Common Stock shall become effective at
11:59 p.m. on April 3, 2000 (the "Conversion Date"). From and after the
Conversion Date, each outstanding certificate that prior to the Conversion Date
represented Old Common Stock shall be deemed for all corporate purposes to
evidence the ownership of the whole number of duly issued and outstanding
shares of Common Stock into which the shares of Old Common Stock which, prior
to the Conversion Date, were represented thereby, have been so converted, and
upon surrender of such certificate to the Corporation the holder shall be
entitled to receive in exchange therefor a certificate or certificates
representing the whole number of shares of Common Stock into which the shares
of Old Common Stock theretofore represented by such certificate shall have
been converted.
ITEM 2. LEGAL PROCEEDINGS
On June 16, 1999, the Company filed suit (Case No. 813370-6) in the Superior
Court for the State of California, County of Alameda, against a former
Officer and Director, Ezekiel Kruglick, for Trade Secret Misappropriation,
Conversion, Fraud, Breach of Contract and Breach of Fiduciary Duty. The suit
involves Molecular Robotics, Inc., a Delaware Corporation (filed originally
under the name NTECH Corporation), Plaintiff, versus Ezekiel Kruglick and DOES
1-10, inclusive, Defendants.
The Company has sought the following relief:
a. A temporary restraining order to be followed by a preliminary injunction
during the pendency of this action and a permanent injunction thereafter,
restraining and enjoining Defendant Kruglick and all those acting in concert
or participation with him from using or disclosing Plaintiff's Confidential
Information.
b. An order requiring Defendant Kruglick to forthwith turn over to Plaintiff
any tangible document or thing in whatever form in Defendant's possession,
custody or control which contains Plaintiff's Confidential Information,
including but not limited to all documents and things relating to his
research and development of StuffDust, CMOS switches, voltage conversion
devices and micro-relay switches.
c. An order requiring Defendant Kruglick to forthwith transfer and return to
the Company all Molecular Robotics stock held by Defendant for services not
provided to Molecular Robotics.
d. An award of damages in an amount to be determined by the trier of fact.
e. An order of punitive damages in an amount to be assessed by the trier of
fact.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
On May 4, 2000, the Company changed its accounting firm from Kevin G. Breard,
CPA, An Accountancy Corporation to Singer, Lewak, Greenbaum & Goldstein LLP.
The audited financial statements ended 06/30/1999 have been prepared by
Kevin G. Breard, and the interim financial statements for the 10 months ended
04/30/2000 (unaudited) has been reviewed by Singer, Lewak, Greenbaum and
Goldstein.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
In April 2000, the Company had issued and committed the following shares at the
rate of $.40 per share as a tax free exchange for technology transferred to the
Company.
<TABLE>
<S> <C> <C>
Name Shares of Shares of
Common Stock Common Stock
Issued Committed
Evan Gamble 110,100 1,890,000
BR Holdings, Ltd. 4,956,850*
ERoyalty.net, Inc. 750,000
TAMA Japan Ltd. 750,000
Tony Bromovsky 100,000 254,999
Curt Deckert 10,000 5,000
Xing Yang 10,000
Herman Boiko 10,000
Daan Pattanayak 10,000
*Preferred Stock
</TABLE>
In addition, since inception through April 30, 2000, pursuant to Reg. 504 of the
Securities Act of 1933, the Company has issued 611,900 shares of Common Stock
for a total cash consideration of $357,924.
In November 1997, the Company had a Private Placement Memorandum (PPM) offering
for 25,000 shares at $10.00 per share. The securities were offered pursuant to
an exemption provided by Regulation 504 of the Securities Exchange Act of 1933.
The Company incurred certain offering costs of $16,004, with the sale of the
stock, such as legal fees. The Company did not use an underwriter, so there
was no discounts or commissions paid. These offering costs, associated with
the sale of common stock to the public, were charged to additional paid-in
capital. Net loss per share represents the basic and diluted earnings per
share. The Company has no potentially dilutive securities.
With respect to the sales of these unregistered securities by Molecular
Robotics, the Company believes that these transactions did not involve any
public offering, in as much as all these shares were issued to the Company's
Officers, Directors and others, who purchased the shares for investment
purposes only and not with a view to further public distribution. Further, no
commissions were paid to any persons in connection with such sales, no
advertising of any nature was made in connection with the sale of said shares,
all Company information was made available to said purchasers, and said
purchasers were required to execute a subscription agreement restating the
aforementioned, among other things. Accordingly, the Company believes that the
aforementioned transactions were exempt from registration pursuant to Section
4(2) of the Securities Act of 1933, as amended.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation states the following:
"No director of the corporation shall have personal liability to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, provided that this provision shall not eliminate or limit
the liability of a director (a) for any breach of the director's duty or
loyalty to the corporation or its stockholders, (b) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (c) under Section 174 of the Delaware Corporation Law, or (d) for any
transaction from which the director derived an improper personal benefit."
The Company's By-Laws, Section IX, .01 states the following:
"The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the Corporation) by reason of the fact that such person is or was a Director,
Trustee, Officer, employee or agent of the Corporation, or is or was serving
At the request of the Corporation as a Director, Trustee, Officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgment, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person acted in good
faith and in such a manner such person reasonably believed to be in or not
opposed to the best interests of the Corporation, and with respect to any
criminal action or proceeding, had no reasonable cause to believe such
person's conduct was unlawful."
PART F/S
The Financial Statements and related notes presented below should be read in
conjunction with "PLAN OF OPERATION." The information below may not be
indicative of the Company's future results of operations.
Financial Information
INTERIM STATEMENTS (UNAUDITED)
In the opinion of the Management, the interim financial statements include
all adjustments necessary to make these financial statements in no way
misleading. The information below may not be indicative of the Company's
future results of operations.
<TABLE>
<CAPTION>
Molecular Robotics, Inc.
(formerly NTECH Corporation)
A Development Stage Company
Balance Sheet
April 30, 2000
(unaudited)
</CAPTION>
<S> <C>
ASSETS
UNAUDITED
Current assets
Cash and cash equivalents $ 128,627
Total current assets 128,627
Patents 3,714,535
Total assets $3,843,162
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 1,500
Total current liabilities 1,500
Stockholders' equity
Preferred stock, $0.0001 par value
5,000,000 shares authorized
4,956,850 shares (unaudited)
issued and outstanding 496
Common stock, $0.0001 par value
45,000,000 shares authorized
3,043,150 shares (unaudited)
issued and outstanding 304
Committed stock 1,120,000
Additional paid-in capital 3,070,017
Deficit accumulated during the
development stage (349,155)
Total stockholders' equity 3,841,662
Total liabilities and
stockholders' equity $ 3,843,162
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Molecular Robotics, Inc.
(formerly NTECH Corporation)
(A Development Stage Company)
Statements of Operations
For the 10 Months Ended April 30, 2000 and 1999 (unaudited) and
for the Period from July 29, 1997 (Inception) to April 30, 2000 (unaudited)
</CAPTION>
<S> <C> <C>
For the
Period from
July 29, 1997
For the 10 Months (Inception) to
Ended April 30, April 30,
2000 1999 2000
(unaudited) (unaudited) (unaudited)
Costs and expenses
General and
administrative expenses $ 168,988 $ 142,714 $ 410,271
Research and development - 7,415 16,735
Total costs and expenses 168,988 150,129 427,006
Loss before other income (168,988) (150,129) (427,006)
Other income
Forgiveness of debt 77,851 - 77,851
Net loss $ (91,137) $ (150,129) $ (349,155)
Basic and diluted
earnings per share $ (0.06) $ (0.13) $ (0.31)
Weighted-average common shares
outstanding 1,413,678 1,133,439 1,143,074
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Molecular Robotics, Inc.
(formerly NTECH Corporation)
(A Development Stage Company)
Statements of Stockholders' Equity
For the Period from July 29, 1997 (Inception) to April 30, 2000 (unaudited)
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Deficit
Accumulated
Additional During the
Preferred Stock Common Stock Committed Paid-In Development
Shares Amount Shares Amount Stock Capital Stage Total
Balance, July 29, 1997
(Inception) - $ - - $ - $ - $ - $ - $ -
Common stock issued for
Cash 461,340 46 102,354 102,400
Services 522,050 52 31,666 31,718
Committed common stock
issued for cash 4,987 4,987
Issuance costs (15,704) (15,704)
Net loss (86,088) (86,088)
Balance, June 30, 1998 - - 983,390 98 4,987 118,316 (86,088) 37,313
Common stock issued for
Cash 150,560 15 250,522 250,537
Services 193,300 19 25,124 25,143
Committed stock issued for
Cash (4,987) 4,987 -
Returned and canceled
Shares (34,100) (3) (15,001) (15,004)
Net loss (171,930) (171,930)
Balance, June 30, 1999 - - 1,293,150 129 - 383,948 (258,018) 126,059
Common stock issued for
patents (unaudited) 1,750,000 175 699,825 700,000
The accompanying notes are an integral part of these financial statements.
</TABLE
</TABLE>
<TABLE>
<CAPTION>
Molecular Robotics, Inc.
(formerly NTECH Corporation)
(A Development Stage Company)
Statements of Stockholders' Equity
For the Period from July 29, 1997 (Inception) to April 30, 2000 (unaudited)
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Deficit
Accumulated
Additional During the
Preferred Stock Common Stock Committed Paid-In Development
Shares Amount Shares Amount Stock Capital Stage Total
Committed common stock
issued for patents
(unaudited) $ $ 860,000 $ $ $ 860,000
Committed common stock
in connection with
private placement
(unaudited) 260,000 260,000
Preferred stock issued
for patents
(unaudited) 4,956,850 496 1,986,244 1,986,740
Net loss (unaudited) (91,137) (91,137)
Balance, April 30,
2000 (unaudited) 4,956,850 $ 496 3,043,150 $ 304 $1,120,000 $ 3,070,017 $ (349,155) $ 3,841,662
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Molecular Robotics, Inc.
(formerly NTECH Corporation)
(A Development Stage Company)
Statements of Cash Flows
For the 10 Months Ended April 30, 2000 and 1999 (unaudited) and
for the Period from July 29, 1997 (Inception) to April 30, 2000 (unaudited)
</CAPTION>
<S> <C> <C> <C>
For the
Period from
July 29,
1997
For the 10 Months Ended (Inception) to
April 30, April 30, 2000
2000 1999 2000
(unaudited) (unaudited) (unaudited)
Cash flows from
operating activities
Net loss $(91,137) $(150,129) $(349,155)
Adjustments to reconcile
net loss to net cash
used in operating activities
Gain from forgiveness
of debt (77,851) - (77,851)
Issuance of stock
for services - 25,973 50,961
Increase in
Accounts payable and
accrued expenses - - 1,500
Net cash used in
operating activities (168,988) (124,156) (374,545)
Cash flows from investing
activities
Purchase of patents (23,878) (107,525) (171,795)
Net cash used in
investing activities (23,878) (107,525) (171,795)
Cash flows from financing
activities
Proceeds from short-term loan
payable - related party 53,651 10,800 77,851
Proceeds from issuance of
common stock 264,000 211,609 597,116
Net cash provided by
financing activities 317,651 222,409 674,967
Increase (decrease) in cash
and cash equivalents 124,785 (9,272) 128,627
Cash and cash equivalents,
beginning of period 3,842 6,083 -
Cash and cash equivalents
(book overdraft),
end of period $ 128,627 $ (3,189) $ 128,627
The accompanying notes are an integral part of these financial statements.
</TABLE>
Molecular Robotics, Inc.
(formerly NTECH Corporation)
(A Development Stage Company)
Statements of Cash Flows
For the 10 Months Ended April 30, 2000 and 1999 (unaudited) and
for the Period from July 29, 1997 (Inception) to April 30, 2000 (unaudited)
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
During the period from July 29, 1997 (inception) to April 30, 2000, the Company
issued and committed preferred and common stock in exchange for patents for
$3,546,740 (unaudited).
During the period from July 29, 1997 (inception) to April 30, 2000, the Company
issued 715,350 (unaudited) shares of common stock for consulting and employment
services rendered valued at $56,561 (unaudited).
The accompanying notes are an integral part of these financial statements.
NOTE 1 - BUSINESS AND ORGANIZATION
Molecular Robotics, Inc. (formerly NTech Corporation) (the "Company") was
incorporated under its former name in the State of Delaware on July 29, 1997
for the primary purpose of developing, manufacturing, and marketing nano-scale
products ("nano technology"). Effective March 23, 2000, NTech Corporation's
name was changed to Molecular Robotics, Inc. Nano technology is the concept of
miniaturizing products to a point that there becomes a practical commercial
application of the products. The Company's offices are located in Los Angeles,
California, and the Company intends to use independent third parties to
manufacture its products.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Going Concern
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles that contemplate continuation of the
Company as a going concern. As shown in the accompanying financial statements
for the 10 months ended April 30, 2000, the Company had a net loss and negative
cash flows from operations. In addition, the Company's sole reason for the
positive equity balance is the continuing effort of Company personnel to sell
preferred and common stock. There is no certainty they will be able to
continue to do so. Management plans to rely on the sales of securities to
sustain operations.
Development Stage Enterprise
The Company is a development stage company as defined in Statement of Financial
Accounting Standards ("SFAS") No. 7, "Accounting and Reporting by Development
Stage Enterprises." The Company is devoting substantially all of its present
efforts to establish a new business, and its planned principal operations have
not yet commenced. All losses accumulated since inception have been considered
as part of the Company's development stage activities.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements. Such
estimates affect the reported amounts of revenues and expenses during the
reported period. Actual results could materially differ from these estimates.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fair Value of Financial Instruments
The Company measures its financial assets and liabilities in accordance with
generally accepted accounting principles. For certain of the Company's
financial instruments, including cash and cash equivalents and accounts payable
and accrued expenses, the carrying amounts approximate fair value due to their
short maturities.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all highly
liquid investments purchased with original maturities of three months or less
to be cash equivalents.
Loss per Share
The Company calculates loss per share in accordance with SFAS No. 128,
"Earnings per Share." Basic loss per share is computed by dividing loss
available to common stockholders by the weighted-average number of common
shares outstanding. Diluted loss per share is computed similar to basic loss
per share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were
dilutive. Because the Company has incurred net losses, basic and diluted loss
per share are the same.
Stock Split
On April 3, 2000, the Company effected a 10-for-one reverse stock split of its
common stock. All share and per share data have been retroactively restated to
reflect this stock split.
Income Taxes
The Company accounts for income taxes under the asset and liability method of
accounting. Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. A
valuation allowance is required when it is less likely than not that the
Company will be able to realize all or a portion of its deferred tax assets.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Comprehensive Income
The Company utilizes SFAS No. 130, "Reporting Comprehensive Income." This
statement establishes standards for reporting comprehensive income and its
components in a financial statement. Comprehensive income as defined includes
all changes in equity (net assets) during a period from non-owner sources.
Examples of items to be included in comprehensive income, which are excluded
from net income, include foreign currency translation adjustments and
unrealized gains and losses on available-for-sale securities. Comprehensive
income is not presented in the Company's financials statements since the
Company did not have any of the items of comprehensive income in any period
presented.
Recently Issued Accounting Pronouncements
In June 1999, the Financial Accounting Standards Board ("FASB") issued SFAS No.
136, "Transfer of Assets to a Not-for-Profit Organization or Charitable Trust
that Raises or Holds Contributions for Others." This statement is not
applicable to the Company. In June 1999, the FASB issued SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities." The Company
does not expect adoption of SFAS No. 137 to have a material impact, if any, on
its financial position or results of operations.
RECLASSIFICATIONS
Certain amounts included in the 1999 financial statements have been
reclassified to conform with the 2000 presentation.
NOTE 3 - PATENTS
Patents include the cost of patents acquired in exchange for stock.
The Company is in the process of building equipment and developing technology
to be sold to consumers. The patents will be amortized when the technology is
licensed, using the ratio of expected sales over the estimated useful lives.
At April 30, 2000, $3,714,535 (unaudited) had been recorded as patents. As no
revenue has been earned to date, no amortization expense has been recorded.
NOTE 4 - STOCKHOLDERS' DEFICIT
Preferred Stock
The Company's preferred stock has a par value of $0.0001. There are 5,000,000
shares authorized and 4,956,850 shares (unaudited) issued and outstanding. The
holders of the preferred stock have voting rights.
During the 10 months ended April 30, 2000, the Company issued 4,956,850 shares
(unaudited) of preferred stock in exchange for certain patents acquired for
$1,986,740 (unaudited). The cost of the acquisition of these patents was
capitalized (see Note 3).
Common Stock
During the 10 months ended April 30, 2000, the Company issued 1,750,000 shares
(unaudited) of common stock in exchange for patents for $700,000 (unaudited).
The cost of the patents was capitalized (see Note 3), and additional paid-in
capital increased by $699,825 (unaudited), representing the excess cost of the
acquisition of the patents over the par value of the common stock issued. In
addition, the Company committed 2,253,999 shares (unaudited) of common stock in
exchange for patents for $860,000 (unaudited). The shares were issued
subsequent to the 10 months ended April 30, 2000.
Private Placement
In April 2000, the Company entered into another private placement agreement to
offer up to $5,000,000 worth (unaudited) of units to accredited investors. As
of April 30, 2000, $260,000 (unaudited) was received, and the Company had
committed 104,000 shares (unaudited) of common stock, which were issued
subsequent to April 30, 2000. Each unit was comprised of one share of the
Company's common stock and two warrants at an exercise price of $5 per share.
The warrants will be immediately detachable from the common shares for separate
transfer and will be exercisable from the closing date of the offering for a
period of 12 months thereafter.
In connection with the offering, the Company issued 208,000 warrants
(unaudited) subsequent to April 30, 2000.
AUDITED FINANCIAL STATEMENTS
The financial statements below are audited and should be read in conjunction
with "PLAN OF OPERATION" and the Financial Statements and related notes
included elsewhere in this Registration Statement. The information below may
not be indicative of the Company's future results of operations.
September 25, 1999
To the Board of Directors
NTech Corporation
Monterey, California
Independent Auditor's Report
I have audited the accompanying balance sheets of NTech Corporation (A
Development Stage Company) as of June 30, 1999 and 1998 and the related
statements of operations and retained deficit, and changes in cash flows for
the years then ended and for the period from July 29, 1997 (inception), to June
30, 1999. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I have conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatements. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a
reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of NTech Corporation (A
Development Stage Company) as of June 30, 1999 and 1998, and the results of
its operations and its cash flows for the years then ended and from July 29,
1997 (inception), to June 30, 1999, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's minimal operations to date have resulted
in substantial net losses of $171,930 and $86,088 during the years ended June
30, 1999 and 1998 respectively. The Company has an accumulated deficit
during the development stage of $258,018 and $86,088 at June 30, 1999 and
1998 respectively. The sole reason for the positive equity balance is the
continuing effort of company personnel to sell common stock. There is no
certainty they will be able to continue to do so, however management plans to
rely on the sales of securities to sustain operations. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ KEVIN G. BREARD, CPA, A Professional Accountancy Corporation
Kevin G. Breard
9010 Corbin Ave., Suite 7
Northridge, California 91324
<PAGE>
<TABLE>
<CAPTION>
Balance Sheet
Assets
</CAPTION>
<S> <C> <C>
As of As of
June 30, June 30,
1999 1998
Cash and cash equivalents $ 3,842 $ 6,083
Property and equipment 147,770 30,950
Organization costs, net of accumulated
amortization of $203 in 1999 and $70 in 1998 147 280
Total assets $ 151,759 $ 37,313
Liabilities & Stockholders' Equity
Liabilities
Accounts payable and accrued expense $ 1,500 -
Loan payable related party 24,200 -
Commitments and contingencies - -
Total liabilities 25,700 -
Stockholders' equity
Common stock, $0.0001 par value, 45,000,000 shares
authorized, 1,297,250 shares issued and 1,293,150
outstanding for 1999 and 983,390 shares issued and
outstanding for 1998 129 98
Preferred stock, $0.0001 par value, 5,000,000 shares
authorized, -0- shares issued and outstanding for
1999 and 1998 - -
Additional paid-in capital 383,948 118,316
Stock to be issued - 4,987
Accumulated deficit during the development stage (258,018) (86,088)
Treasury stock, at cost, 4,100 shares in 1999,
-0- shares in 1998 - -
Total stockholders' equity 126,059 37,313
Total liabilities & stockholders' equity $ 151,759 $ 37,313
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations
</CAPTION>
<S> <C> <C> <C>
Cumulative
During
Development For the Year Ended
Stage June 30,
1999 1998
Revenue $ - $ - $ -
Total revenue - - -
Costs and expenses
Costs of sales - - -
General and administrative expenses 241,555 155,221 86,334
Research and development 16,735 16,735 -
Total costs and expenses 258,290 171,956 86,334
Net ordinary income (loss) (258,290) (171,956) (86,334)
Other income and expenses
Interest income 272 26 246
Total other income and expenses 272 26 246
Net income (loss) before
income tax provision (258,018) (171,930) (86,088)
Provision for income taxes - - -
Income tax provision - - -
Net income (loss) $ (258,018) $ (171,930) $ (86,088)
Earnings (losses) per share $ (0.26) $ (0.15) $ (0.12)
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Stockholders' Deficit
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Accumulated
Deficit
Additional During the Stock
Common Stock Paid-in Development to be Treasury
Shares Amount Capital Stage Issued Stock Totals
Common stock issued for cash
at $0.056 per share 450,000 $ 45 $ 24,955 $ - $ - $ - $ 25,000
Common stock issued for cash
at $10.00 per share 5,340 - 53,400 - - - 53,400
Common stock issued for
$16,718 in outside services 492,050 49 16,669 - - - 16,718
Common stock issued for cash
at $4.00 per share 6,000 1 23,999 - - - 24,000
Common stock issued for
$15,000 in outside services 30,000 3 14,997 - - - 15,000
Stock to be issued, 665
shares for $7.50 per share - - - - 4,987 - 4,987
Deferred offering costs charged
to additional paid-in capital - - (15,704) - - - (15,704)
Net income (loss) - - - (86,088) - - (86,088)
Balances as of June 30, 1998 983,390 $ 98 $118,316 $ (86,088) $4,987 $ - $ 37,313
Reclassification of stock to
be issued at June 30, 1998 - - 4,987 - (4,987) - -
Issuance of stock for services 193,300 19 25,124 - - - 25,143
Issuance of stock 150,560 15 225,522 - - - 225,537
Voided shares (30,000) (3) (14,997) - - - (15,000)
Additional paid-in capital - - 25,000 - - - 25,000
4,100 shares of stock returned (4,100) - (4) - - - (4)
Net income (loss) - - - (171,930) - - (171,930)
Balances as of
June 30, 1999 1,293,150 $ 129 $ 383,948 $ (258,018) $ - $ - $ 126,059
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Cash Flows
</CAPTION>
<S> <C> <C> <C>
Cumulative For the
During Year Ended
Development June 30,
Stage 1999 1998
Cash flows from
operating activities
Net income (loss) $ (258,018) $ (171,930) $(86,088)
Adjustments to reconcile net
income (loss) to net cash used
in operating activities:
Amortization 203 133 70
Issuance of stock for services 71 19 52
Issuance of additional
paid-in capital for services 56,790 25,124 31,666
(Decrease) increase in:
Accounts payable and
accrued expenses 1,500 1,500 -
Total adjustments 58,564 26,776 31,778
Net cash used by
operating activities (199,454) (145,154) (54,300)
Cash flow from investing activities
Organization Costs (350) - (350)
Purchase of property and equipment (147,770) (116,820) (30,950)
Net cash used in
investing activities (148,120) (116,820) (31,300)
Net cash flows from financing activities
Proceeds from short term loan
payable from related party 24,200 24,200 -
Proceeds from issuance of common stock 1,096 113 983
Proceeds from stock to be issued 4,987 - 4,987
Proceeds from additional
paid-in capital 321,133 235,420 85,713
Net cash provided by
financing activities 351,416 259,733 91,683
Net increase (decrease) in cash and
cash equivalents 3,842 (2,241) 6,083
Cash and cash equivalents at the
beginning of period 0 6,083 0
Cash and cash equivalents at the
end of the period $ 3,842 $ 3,842 $ 6,083
Supplemental disclosures of cash
flow information
Cash paid during the period for
Interest $ 1 $ - $ 1
Income taxes $ - $ - $ -
Noncash investing and financing
transactions
Issuance of common stock for
$25,143 in outside services
in 1999 and $31,718 in 1998
Common stock $ 71 $ 19 $ 52
Additional paid-in capital $ 56,790 $25,124 $31,666
$ 56,861 $25,143 $31,718
The accompanying notes are an integral part of these financial statements.
</TABLE>
NOTE 1: ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
General
NTech Corporation (the Company) was incorporated in the State of Delaware on
July 29, 1997 for the primary purpose of developing, manufacturing and
marketing nano-scale products ("nanotechnology"). Nanotechnology is the
concept of miniaturizing products to a point that there becomes a practical
commercial application of the products. The Company is in the development
stage, and principal operating activities have not commenced. The Company's
offices are located in Los Angeles, California, and the Company intends to use
independent third parties to manufacture its products.
Going Concern
The Company's minimal operations to date have resulted in a substantial net
operating loss. The sole reason for the positive equity balance is the
continuing effort of the company personnel to sell common stock. There is no
certainty they will be able to continue to do so.
Summary of Significant Accounting Policies
The presentation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Organization costs are amortized on a straight line basis over sixty months.
For the years ended June 30, 1999 and 1998, amortization expense was $133 and
$70 respectively.
Property and equipment are recorded at cost. Depreciation of property and
equipment is recorded on the straight-line method over the respective useful
lives of the assets.
In accordance with Financial Accounting Standards Board (FASB) Statement of
Financial Accounting Standard (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived assets to Be Disposed of," the carrying
value of intangible assets and other long-lived assets is reviewed on a regular
basis for the existence of facts or circumstances, both internal and external,
that may suggest impairment. To date, no such impairment has been indicated.
Should there be an impairment in the future, the Company will measure the
amount of the impairment based on undiscounted expected future cash flows from
the impaired assets. The cash flow estimates that will be used will contain
management's best estimates, using assumptions and projections appropriate and
customary at the time.
Loss per share is computed using the weighted average number of common shares
outstanding during the period. For the year ended June 30, 1999 and 1998,
34,100 and -0- shares, respectively, were returned to the Company and canceled.
In November 1997, the Company had a Private Placement Memorandum (PPM) offering
for 25,000 shares at $10.00 per share. The securities were offered pursuant to
an exemption provided by Regulation 504 of the Securities Exchange Act of 1933.
The Company incurred certain offering costs of $16,004, with the sale of the
stock, such as legal fees. The Company did not use an underwriter, so there
was no discounts or commissions paid. These offering costs, associated with
the sale of common stock to the public, were charged to additional paid-in
capital. Net loss per share represents the basic and diluted earnings per
share. The Company has no potentially dilutive securities.
Research and development costs are expensed as incurred and consist primarily
of product development and application research. Financial accounting
standards require the capitalization of certain software costs after technical
feasibility is established. These costs are not applicable to the Company.
On April 3, 2000, the Board of Directors declared a one (1) for ten (10)
reverse stock split of common stock. All references in the accompanying
financial statements to the number of common stock and per-share amounts for
1999 and 1998 have been retroactively restated to reflect the reverse stock
split.
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivatives and
Hedging Activities, which establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives), and for hedging
activities. Because the Company has never used nor currently intends to use
derivatives, management does not anticipate that the adoption of this new
standard will have a significant effect on earnings or the financial position
of the Company.
NOTE 2: PROPERTY, PLANT AND EQUIPMENT
The Company is in the process of building a piece of equipment. The asset will
be depreciated when the construction is completed. At June 30, 1999 and 1998,
$147,770 and $30,950, respectively, had been charged to property and equipment.
NOTE 3: COMMITMENTS AND CONTINGENCIES
The Company has entered into a contract to build a piece of equipment (see note
2). The Company will be charged as the work progresses. The Company expects
the contract to be completed by the end of the June 30, 2000 fiscal year. The
expenditures associated with this contract will be capitalized to the property
and equipment account and depreciated upon completion of the contract.
NOTE 4: STOCK EXCHANGE FOR SERVICES
For the years ended June 30, 1999 and 1998, the Company issued 193,300 and
522,050 shares respectively of common stock in exchange for outside services
rendered. The cost of the services has been charged to operations, and
additional paid-in capital has been increased by $24,950 and $31,196
respectively, representing the excess of the cost of the services over the par
value of the common stock issued.
The Company issued stock in exchange for services. For the year ended June 30,
1998, the Company valued the securities issued in accordance with FASB 123,
which requires that the value of services be recorded at the fair market value
of the securities issued.
These securities were generally nanotechnology engineering expertise, financial
consulting and legal services.
For the year ended June 30, 1999, 193,300 shares of stock were issued for
financial and engineering consulting. The board of directed voted these shares
be issued at par value.
The outside services for stock exchange were issued between $0.05 and $0.0001
per share.
NOTE 5: SEGMENT INFORMATION
Industry Segment Data
The Company is still in the development stage, and no revenues have been
earned.
Geographic Area Data
No revenues have been earned.
