UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
(Amendment No. 5)
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: (310) 550-1019
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.0001
(Title of class)
Preferred Stock, par value $0.0001
(Title of class)
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 (hereinafter referred to as "MR" or the "Company"). The Company
changed its name from NTECH to Molecular Robotics because the new name better
reflects the nature of the Company's business and technology development. The
Company is in no way affiliated with the University of Southern California or
with its Laboratory of Molecular Robotics. Molecular Robotics, Inc. is an
early stage technology development 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. 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
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. Molecular Robotics has
one prototype stage project (prototype being built; commercialization
process has begun), three development stage projects (prototype being designed;
technology has been proven) and eight research stage projects (no prototype
exists, technology not yet proven). All research stage projects are in a very
early stage of development with no products developed and funding sources and
market feasibility not yet established. Funding for all of the Company's
products has not yet been procured. It is not known at this time if any of the
Company's products will have funding in the future. The Company has the
following enabling technology products at different stages of development.
Prototype Stage Products
1. Taggant / Optical Reading Device
Molecular Robotics has developed a prototype taggant and a prototype optical
reading device. Currently, the taggants are made from silicon using MEMS
processes. MR is currently working on a design for making taggants from nickel.
MR is also exploring the feasibility of making hex-shaped taggants which will
distribute stress more evenly over the surface of the taggant.
These encoded microparticles could potentially be used for security
identification. This microparticle has market potential for use as a security
feature in identification documents (passports, drivers licenses), stock
certificates, bonds, currency, and negotiable instruments (checks, travelers
checks).
In a concurrent project, the Company is working on an updated optical reader
for reading the taggants. The advantage of this new optical reader is that it
will require less light and hence draw less power, decreasing the needed
battery size in this portable reader from approximately 2.5 pounds to perhaps
just an AA battery.
This is a prototype stage product with the final prototype anticipated by
January 1, 2001. The investment through June 30, 2000 was $16,748 for the
development of the taggant and $190,398 for the reading device. This
investment has come from management and private investors. There are no
economic, competitive, legal or technical problems to be overcome at this time
that would prevent this product from becoming commercially viable. A full
market study and technological analysis has been done by the Company. The
taggant and optical reader are expected to be ready for market in approximately
six to nine months. The Company has estimated the cost at $4 million to bring
the taggant and optical reader to market, and is currently negotiating this
capital requirement with private and venture capital sources. The Company is
currently formulating patent claims for both the taggant and the optical
reading device. There has been no patent application filed for either the
taggant or the reader at this time.
Development Stage Products
2. 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 has designed and is planning to build a MEMS
version of this closed, rechargeable fuel cell, using micro-fluidic pumps and
valves. This MEMS designed fuel cell has potential applications in the
portable power markets, such as laptops, mobile telephones and PDA devices.
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 is
working on engineering 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. This technology has
potential applications as an alternative to conventional power sources.
These are development stage projects, with the fuel cell project being done in
collaboration with the University of Southampton, United Kingdom. This
collaboration agreement is being negotiated and has not been finalized as of
the date of this filing. The fuel cell and photocell are expected to be ready
for market in approximately two years. The Company has estimated the cost at
$4 million to bring the fuel cell and photocell to market, and is currently
negotiating this capital requirement with private and venture capital sources.
The Company is currently formulating patent claims. There has been no patent
application filed at this time.
3. 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 has designed and is planning to build 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. The Company is also
working on developing new packaging that will allow connection of the edges of
each layer to the socket below. Later, more sophisticated versions will be
developed that incorporate inter-layer connections that obviate the need for
external connections to each layer. This stacked chip has potential
applications in servers, workstations and supercomputers.
This is a development stage project in collaboration with the University of
Southampton, United Kingdom. This collaboration agreement is being negotiated
and has not been finalized as of the date of this filing. The 3-D Computer
Chip is expected to be ready for market in approximately 18 months. The
Company has estimated the cost at $4 million to bring the 3-D Computer Chip to
market, and is currently negotiating this capital requirement with private and
venture capital sources. The Company is currently formulating patent claims.
There has been no patent application filed at this time.
4. Shipping Sensors
The Company is currently working on developing a range of simple, low-cost
sensors 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 are being 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 in shipping
and transportation applications.
This is a development stage project with the market feasibility study for
sensors in transportation firmly established. The shipping sensors are
expected to be ready for market in approximately 12-18 months. The Company has
estimated the cost at $2 million to bring the shipping sensors to market, and
is currently negotiating this capital requirement with private and venture
capital sources. The Company is currently formulating patent claims. There
has been no patent application filed at this time.
Research Stage Products
5. 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.
This is a research project in collaboration with ETH, a technology institute
in Zurich, Switzerland. This collaboration agreement is being negotiated and
has not been finalized as of the date of this filing. A feasibility study is
currently being conducted to determine the best and most profitable applications
of this product. However, the market for high-end microscopy is well
established. The Company is currently formulating patent claims. There has
been no patent application filed at this time.
In the first part of the project, the Company plans to extend and commercialize
the work of the Baltes Lab at ETH in Zurich, building an entire AFM on one chip,
including on-chip computer circuitry to process the data. The device is being
designed to be 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, when commercialized, should 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. The Single-Chip AFM is expected to be ready for market in
approximately two years.
In the second project, the Company plans to incorporate a MEMS
(Microelectromechanical Systems) device, a flat "pancake" 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. This single-chip AFM has potential applications in the current AFM
market as well as the gene sequencing market. The Single-Chip AFM with DNA
sequencing capability is expected to be ready for market in approximately four
years. The Company has estimated the cost at $5 million to bring the
Single-Chip AFM with DNA sequencing capability to market, and is currently
negotiating this capital requirement with private and venture capital sources.
6. Drug Delivery Systems
This project, which will be subject to FDA approval, 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. In the
first approach, the Company plans to develop 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. This product has potential applications
in the drug delivery markets.
The second approach will be related to the first except that the device would
not be implanted.
This is a research project with the market feasibility confirmed by the 15.7
million Americans who suffer from diabetes (Source: American Diabetes
Association). The drug delivery devices are expected to be ready for market in
approximately ten years. The Company has estimated the cost at $1 million to
bring the drug delivery devices to market, and is currently negotiating this
capital requirement with private and venture capital sources. The Company is
currently formulating patent claims. There has been no patent application
filed at this time. The Company has not yet filed any applications with the
FDA for this product.
7. Micro-Aperture Display
The Company plans to develop 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 MEMS device would incorporate an array of micro-apertures
and aperture covers that are opened and closed via PZT actuators. The device
would be 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 would 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. This device has potential
applications for use in large digital video projectors, head-mounted displays
and desktop displays.
This is a research stage project with the market feasibility study in progress.
The Micro-Aperture Display Devices are expected to be ready for market in
approximately two years. The Company has estimated the cost at $1 million to
bring the Micro-Aperture Display Devices to market, and is currently
negotiating this capital requirement with private and venture capital sources.
The Company is currently formulating patent claims. There has been no patent
application filed at this time.
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 have potential applications for station-keeping of
satellites and space stations and potentially for inexpensive space travel.
Experimental devices consist 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 plans to
develop 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 should
increase the overall thrust.
This is a research stage project with the market feasibility study in progress.
The Impulse Engine is expected to be ready for market in approximately eight
years. The Company has estimated the cost at $1 million to bring the Impulse
Engine to market, and is currently negotiating this capital requirement with
private and venture capital sources. The Company is currently formulating
patent claims. There has been no patent application filed at this time.
9. Earthquake Active Compensation
The Company plans to develop 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.
This product has potential applications in the construction of buildings in
areas that have a history of earthquake activity.
This is a research stage project with the market feasibility study in progress.
The Earthquake Active Compensation product is expected to be ready for market
in approximately five years. The Company has estimated the cost at $500,000 to
bring the Earthquake Active Compensation product to market, and is currently
negotiating this capital requirement with private and venture capital sources.
The Company is currently formulating patent claims. There has been no patent
application filed at this time.
10. Biological Carbon Nanotube Synthesis
Existing methods of producing carbon nanotubes are inexact and yield
irregularities of many kinds in the nanotubes. The Company's research of
Carbon Nanotubes is aimed at developing a reliable source of perfectly regular,
standardized nanotubes that have potential applications for use in AFM tips,
fuel cell hydrogen storage, flat panel displays and molecular electronics.
This is a research stage project in collaboration with the University of Texas
at Austin. This collaboration agreement is being negotiated and has not been
finalized as of the date of this filing. The Carbon Nanotubes are expected to
be ready for market in approximately four years. The Company has estimated the
cost at $600,000 to bring the Carbon Nanotubes to market, and is currently
negotiating this capital requirement with private and venture capital sources.
The Company is currently formulating patent claims. There has been no patent
application filed at this time.
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 plans to address one aspect of "spintronics," namely techniques to read and
write information encoded as the spin of nuclear particles or electrons. MR
plans to 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 the
Single-Chip DNA Sequencer via AFM project.
This is a research stage project in collaboration with the California Institute
of Technology, Pasadena. This collaboration agreement is being negotiated and
has not been finalized as of the date of this filing. The Quantum Logic
Devices are expected to be ready for market in approximately eight years. The
Company has estimated the cost at $250,000 to bring the Quantum Logic Devices
to market, and is currently negotiating this capital requirement with private
and venture capital sources. The Company is currently formulating patent
claims. There has been no patent application filed at this time.
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.
This is a research stage project in collaboration with the University of
Nottingham, United Kingdom. This collaboration agreement is being negotiated
and has not been finalized as of the date of this filing. The Molecular
Computer is expected to be ready for market in approximately six years. The
Company has estimated the cost at $900,000 to bring the Molecular Computer to
market, and is currently negotiating this capital requirement with private and
venture capital sources. The Company is currently formulating patent claims.
There has been no patent application filed at this time.
Market Analysis
Many of the Company's products are being developed using MEMS
(microelectromechanical systems) processes. According to Systems Planning
Corporation, the MEMS market 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 period ended June 30, 2000 the Company had spent approximately $16,735
on research and development of the taggant only. For the period ended June
30, 2000, the Company had spent $190,398 to develop its optical reader; this
amount has been capitalized under equipment.
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 security market for taggants and the shipping
industry for sensors.
Sales and Marketing
Although the Company's technologies presently are in the prototype, development
and research stages, the Company is engaged in an early marketing program
intended to facilitate the transition of its products from their current stages
to manufacturing and sales. This program consists of preliminary dialogue with
potential strategic partners, investors and manufacturers concerning the
funding and implementation of manufacturing and distribution activities.
Employees
As of June 30, 2000, the Company had ten employees, seven of which are
full-time. A significant portion of the Company's research and development is
performed by independent contractors and by others from the Company's strategic
relationships with commercial entities and universities.
Operations
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 2 of the attached audited
financial statements.
ITEM 2. PLAN OF OPERATION
The following results and plan of operations should be read in conjunction with
the financial statements and accompanying notes appearing elsewhere in this
Form 10-SB.
RESULTS AND PLAN OF OPERATIONS
The Company incurred a loss of ($727,088) for the year ended June 30, 1999 and
($13,564,011) for the year ended June 30, 2000. Through June 30, 2000, the
Company had incurred an accumulated loss of ($23,866,669). There was a
significant increase in the operating expenses and operating losses for the
period ended 6/30/00 compared to 6/30/99. These increases are due to an
increase in general and administrative costs associated with the Company's
daily operations, as well as costs associated with acquiring various
technologies.
During the year ended June 30, 2000, the Company issued 4,956,850 shares of
preferred stock in exchange for certain intellectual property valued at
$7,435,275. During the year ended June 30, 2000, the Company issued 3,900,000
shares of common stock in exchange for intellectual property valued at
$5,850,000.
For the year ended June 30, 2000, the Company completed a contract to build an
optical reader that reads the code of the Company's taggant. The total cost of
the contract was $190,398.
As a development stage company, Molecular Robotics needs to continue to raise
capital to continue its operations. The Company is actively seeking financing
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. 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
Company will use the additional capital raised to further the development of
its taggant and optical reader and other products in development, as well as
general operating expenses. The Company has not entered into any outside
funding commitments to date.
The funding for the company to date has come primarily from management and
private investors and has been allocated to the taggant/reader development, as
well as general business set up and operating expenses. For the next twelve
months, the Company's cash flow will continue to be supplemented by management
and/or outside private investors. For the year ending 6/30/2000, the Company
was still in the development stage. Currently, prototypes of two products are
being developed for commercial sales, the taggants and the optical reader.
No revenue was realized for these or any other products for the year ended
6/30/2000.
At this time, the Company anticipates the hiring of approximately 15 additional
employees in the next twelve months, comprised of both technical/scientific and
administrative positions.
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.
ITEM 3. DESCRIPTION OF PROPERTY
The Company has an office in Los Angeles, California. As of June 30, 2000 the
Company did not own any real property.
The Company has an office address of 16161 Ventura Blvd., No. 671, Encino, CA.,
91436. The Company also has an office address in the UK at 26 Kingly Street,
London, UK, W1R 5LB. The Company also uses the address of Susan Alt, a
director of Molecular Robotics and the beneficial owner of GAIN Integrated
Systems, Inc., 1015 Gayley Ave., #387, Los Angeles, California 90024, as a
mailing address only. The Company has no lease obligations at this time. The
Company is currently in negotiation of a lease of approximately 30,000 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 June 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>
Title Name and address Amount and nature Percent
of class of beneficial owner of beneficial ownership of class(1)
<S> <C> <C> <C>
Common Evan Gamble 2,000,100 37.76%
Stock 11733 Montana, No. 108
Los Angeles, CA. 90049
Common TAMA Japan, Ltd. (2) 750,000 14.16%
Stock Kinwick Centre
32 Hollywood Road
Central Hong Kong
Common ERoyalty.net, Inc. (3) 750,000 14.16%
Stock Three Mill Road
Suite 206
Wilmington, DE. 19806
Common Gain Integrated 652,197 12.31%
Stock Systems, Inc.(4)
1015 Gayley Ave.
No. 387
Los Angeles, CA. 90024
Common Tony Bromovsky 354,999 6.70%
Stock 41 St. James Place
London SW1A 1NS
England
Common Ezekiel Kruglick 334,000 6.31%
Stock 2411 McKinley Ave.
Berkeley, CA. 94703
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 3,207,296 60.55%
(1) Based upon 5,297,150 total shares common stock outstanding and to be
issued, as of June 30, 2000.
(2) Midland Investments Limited is the beneficial owner. Mavis Smith is the
beneficial owner of Midland Investments Limited.
(3) David Lavitt is the beneficial owner.
(4) Susan Alt is the beneficial owner.
</TABLE>
<TABLE>
Title Name and address Amount and nature Percent
Of Class of beneficial owner of beneficial ownership Of Class
<S> <C> <C> <C>
Preferred BR Holdings, Ltd. (1) 4,956,850 99.14%
Stock 2533 N. Carson St.
Carson City, NV. 89706
(1) James L. Golfos is the beneficial owner.
</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
following officers / directors which were disbursed as follows:
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 beneficial owner.
(2) Shares have been rescinded.
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:
Shareholder Cash Contribution No. of Shares Issued
(post-split)
Gain Integrated
Systems, Inc. (1) $161,500 373,500
(1) Susan Alt is the beneficial owner.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors
Name Dates Served Age
Susan Alt 07/97-Present 47
Henry Yard 05/00-Present 42
Thomas McCarthy 07/97-Present 33
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.
Henry Yard; 42 years old; Director since 5/00
Henry Yard is a successful 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>
Executive Officers
Name Position Dates served Age
<S> <C> <C> <C>
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 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.
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.
Diane Marciel, Executive Administrative Officer
Diane 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 supported senior executive management.
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. Deckert is employed under contract by the Company.
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.
ITEM 6. EXECUTIVE COMPENSATION
Following is the amount of cash and stock compensation for executives of the
Company since inception through June 30, 2000.
Thomas McCarthy - 140,000 shares common stock (post-split)
Mark Kaeller - 60,000 shares common stock (post-split)
THE FOLLOWING SHARES WERE ISSUED TO OFFICERS AT THE FOLLOWING VALUATIONS:
<TABLE>
NAME DATE NO. PRICE* FAIR MARKET FORM OF
SHARES* VALUE CONSIDERATION
<S> <C> <C> <C> <C> <C>
THOMAS MCCARTHY 12/15/97 45,000 10.00 $450,000 CASH/SERVICES**
1/29/98 45,000 10.00 $450,000 SERVICES
11/23/98 50,000 4.00 $200,000 SERVICES
MARK KAELLER 12/31/97 10,000 10.00 $100,000 SERVICES
3/9/99 10,000 4.00 $ 40,000 SERVICES
4/5/99 25,000 1.00 $ 25,000 SERVICES
5/26/99 15,000 4.00 $ 60,000 SERVICES
*Post-Split
**$2,500 of the $450,000 Fair Market Value was cash.
</TABLE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Name and Restricted
Principle Position Years Salary Stock Awards
<S> <C> <C> <C>
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, are considered promoters of Consolidated Growers & Processors, Inc.
Susan Alt is the beneficial owner of GAIN Integrated Systems, Inc. and is also
on the Board of Directors of the Institute of Applied Physics. The Institute
of Applied Physics was incorporated in California on February 18, 1997 by Susan
Alt (formerly known as Susan M. Brana) as a non-profit corporation. The
Officers and Directors are Susan Alt, Diane Marciel and Mark Kaeller. There
are no existing contractual arrangements between Molecular Robotics, the
Institute of Applied Physics or GAIN Integrated Systems, Inc., other than the
independent association of Susan Alt, as an individual. Molecular Robotics is
a member of the Institute, not a shareholder.
Promoters of Molecular Robotics, Inc. over the last five years have included
Susan Alt, Ezekiel Kruglick, Thomas McCarthy, and Mark Kaeller.
James Golfos (BR Holdings), David Lavitt (ERoyalty.net) and Evan Gamble were
consultants to the Company at the time shares were issued for the transfer
of technology/intellectual property.
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
Capital Stock
Preferred Stock - There are no preferential terms given to the Preferred Stock.
Molecular Robotics' preferred stock has the same terms and conditions as the
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 400,000 options outstanding that can be
exercised to purchase common stock in the Company. These options have a term
of ten years and can be exercised at $1.00 per share.
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 began trading under the symbol NTEH on the OTC
Bulletin Board on December 24, 1997 and until the close of business February
24, 2000. Currently, the registrant's securities are not traded on any
exchange. The Company is filing this Form 10-SB for the purposes of enabling
its shares to again trade on the OTC Bulletin Board. Following the date that
the SEC comes to a position of no further comment on this Form 10-SB, the
Company will file to have its shares quoted again on the OTC Bulletin Board.
The quarterly high and low bid prices (post-split) for the last two
years (as submitted by the Company's management) were as follows:
<TABLE>
Quarter Ending* High Bid Low Bid
<S> <C> <C>
December 31, 1999 .35 .10
September 30, 1999 .35 .10
June 30, 1999 .35 .10
March 31, 1999 .35 .10
December 31, 1998 .35 .10
September 30, 1998 .35 .10
June 30, 1998 .35 .10
*Note: The quarter ending March 31, 2000 and June 30, 2000 have not been
included as the Company's securities ceased trading on the OTC Bulletin Board
as of the close of business on February 24, 2000.
</TABLE>
Holders
As of June 30, 2000, there were approximately 90 shareholders of common
stock in the Company and 5,193,150 shares of common stock outstanding. In
addition, there were an additional 104,000 shares of common stock to be
issued.
As of June 30, 2000, there was one shareholder of preferred stock in the
Company 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 became 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. In addition:
The Registrant's shareholders elected the accounting firm of
Singer, Lewak, Greenbaum & Goldstein to replace the firm of Kevin G. Beard,
CPA, An Accountancy Corporation as Registrant's accountants.
The former accountant did not resign or decline to stand for
reelection, but were dismissed on May 4, 2000 to allow the appointment of
Singer, Lewak, Greenbaum & Goldstein, the accountants.
Registrant's former principal accountants, Kevin G. Beard, CPA,
An Accountancy Corporation's audited financial reports stated qualification
that Registrant might not continue as a going concern. Such statement was
unrelated to Kevin G. Beard, CPA, An Accountancy Corporation's replacement.
The decision to change accountants was recommended and approved
by the Board of Directors and Registrant's shareholders.
Registrant is not aware of any disagreements with Registrant's
former accountant during the past two most recent fiscal years on any matter of
accounting principals or practices, financial statement disclosure or auditing
scope or procedure.
Registrant has provided the former accountant with a copy of the
disclosures Registrant is making in this FORM 10-SB in response to the
disclosures required by Regulation S-K, Item 304(a). The former accountant has
furnished Registrant with a letter addressed to the Commission stating its
agreement and absence of any disagreement with the statements made by
Registrant in response to this Item. Registrant has filed herewith the former
accountant's letter as an exhibit to this Form 10-SB.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
Recent sales of unregistered securities
In April 2000, the Company had the following shares of stock issued or to be
issued at the rate of $1.50 per share as a tax free exchange for technology
transferred to the Company.
<TABLE>
Name Shares of Shares of
Common Stock Common Stock
<S> <C> <C>
Issued To be issued**
Evan Gamble 110,000 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
*Originally issued as preferred stock. There are no preferential terms given
to the preferred stock. Molecular Robotics' preferred stock has the same terms
and conditions as the common stock. On October 12, 2000, the Company recalled
all outstanding shares of preferred stock as of June 30, 2000 and reissued to
the preferred stockholder an equal amount of common stock. Also, see Note 8 in
the attached Financial Statements.
**Shares have been issued as of June 30, 2000.
</TABLE>
In addition, since inception through June 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. There was an additional $260,000
in cash received through June 30, 2000, with 104,000 shares of common stock to
be issued.
In November 1997, the Company had a Private Placement 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
were 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.
PART F/S
Financial Information - Annual Statements
The Financial Statements and related notes presented below should be read in
conjunction with "PLAN OF OPERATION." In the opinion of the Management, the
annual 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.
Please note that this amended Form 10-SB filing (amendment number five) has
been updated from the registrant's prior 10-SB filing (amendment number four)
with audited financial statements for the period ended June 30, 2000; the
registrant's prior Form 10-SB filing contained unaudited financial statements
as of and for the ten months ended April 30, 2000.
MOLECULAR ROBOTICS, INC.
(formerly NTECH CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
JUNE 30, 2000 AND 1999
<PAGE>
CONTENTS
June 30, 2000
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS
Balance Sheet
Statements of Operations
Statements of Stockholders' Equity
Statements of Cash Flows
Notes to Financial Statements
<PAGE>
------------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Molecular Robotics, Inc.
(formerly NTech Corporation)
We have audited the accompanying balance sheet of Molecular Robotics, Inc.
(formerly NTech Corporation) as of June 30, 2000, and the related statements of
operations, stockholders' equity, and cash flows for the year then ended, and
for the period from July 29, 1997 (inception) to June 30, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Molecular Robotics, Inc.
(formerly NTech Corporation) as of June 30, 2000, and the results of its
operations and its cash flows for the year then ended, and for the period from
July 29, 1997 (inception) to June 30, 2000 in conformity with generally
accepted accounting principles.
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 discussed in Note 2 to the financial
statements, the Company had losses and negative cash flows from operations and
needs to raise additional funds to accomplish its objectives. These matters
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.
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, California
August 29, 2000
<PAGE>
<TABLE>
MOLECULAR ROBOTICS
(formerly NTECH CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
June 30, 2000
ASSETS
<S> <C>
Assets
Equipment $ 195,506
Total assets $ 195,506
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Book overdraft $ 4,833
Accounts payable and accrued expenses 1,500
Total current liabilities 6,333
Commitments
Stockholders' equity
Preferred stock, $0.0001 par value
5,000,000 shares authorized
4,956,850 shares issued and outstanding 496
Common stock, $0.0001 par value
45,000,000 shares authorized
5,193,150 shares issued and outstanding 519
Common stock to be issued 260,000
Additional paid-in capital 23,794,827
Deficit accumulated during the development stage (23,866,669)
Total stockholders' equity 189,173
Total liabilities and stockholders' equity $ 195,506
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
MOLECULAR ROBOTICS, INC.
(formerly NTECH CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the Years Ended June 30, 2000 and 1999 and
for the Period from July 29, 1997 (Inception) to June 30, 2000
<CAPTION>
For the
Period from
July 29,
1997
For the Years Ended (Inception)to
June 30, June 30,
2000 1999 2000
<S> <C> <C> <C>
Costs and expenses
General and
administrative expenses $ 279,847 $ 710,379 $10,566,042
Research and development - 16,735 16,735
Total costs and expenses 279,847 727,114 10,582,777
Loss before other income (expense) (279,847) (727,114) (10,582,777)
Other income (expense)
Loss on impairment of
intellectual property (13,285,275) - (13,285,275)
Interest income - 26 272
Other income 1,111 - 1,111
Total other income (expense) (13,284,164) 26 (13,283,892)
Net Loss $ (13,564,011) $(727,088) $ (23,866,669)
Basic and diluted loss per share $ (4.44) $ (0.65) $ (13.27)
Weighted-average common shares
outstanding 3,054,125 1,119,838 1,798,290
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
MOLECULAR ROBOTICS, INC.
(formerly NTECH CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
For the Period from July 29, 1997 (Inception) to June 30, 2000
<CAPTION> Deficit
Accumulated
Common Additional During the
Preferred Stock Common Stock Stock Paid-In Development
Shares Amount Shares Amount to be Issued Capital Stage Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, July 29, 1997
(Inception) - $ - - $ - $ - $ - $ - $ -
Common stock issued for
Cash 5,340 - 53,400 53,400
Cash 6,000 1 23,999 24,000
Services 493,000 49 4,929,951 4,930,000
Services 29,050 3 116,197 116,200
Cash and services 450,000 45 4,499,955 4,500,000
Common stock to be
issued for cash 4,987 4,987
Issuance costs (15,704) (15,704)
Net loss (9,575,570) (9,575,570)
Balance, June 30, 1998 - - 983,390 98 4,987 9,607,798 (9,575,570) 37,313
Common stock issued for
Cash 113,250 11 133,959 133,970
Cash 17,500 2 34,998 35,000
Cash 19,145 2 76,578 76,580
Cash 665 - 4,987 4,987
Services 126,200 12 502,189 502,201
Services 11,000 1 21,999 22,000
Services 56,100 6 56,094 56,100
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
MOLECULAR ROBOTICS, INC.
(formerly NTECH CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
For the Period from July 29, 1997 (Inception) to June 30, 2000
<CAPTION>
Deficit
Accumulated
Common Additional During the
Preferred Stock Common Stock Stock Paid-In Development
Shares Amount Shares Amount to be Issued Capital Stage Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common stock to be
issued for cash $ $ $ (4,987) $ 4,987 $ $ -
Returned and canceled
shares (34,100) (3) (15,001) (15,004)
Net loss (727,088) (727,088)
Balance, June 30, 1999 - - 1,293,150 129 - 10,428,588 (10,302,658) 126,059
Common stock issued for
intellectual property 3,900,000 390 5,849,610 5,850,000
Common stock to be
issued in connection
with private placement 260,000 260,000
Forgiveness of debt 81,850 81,850
Preferred stock issued for
intellectual property 4,956,850 496 7,434,779 7,435,275
Net loss (13,564,011) (13,564,011)
Balance, June 30, 2000 4,956,850 $ 496 5,193,150 $ 519 $ 260,000 $23,794,827 $(23,866,669) $ 189,173
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
MOLECULAR ROBOTICS, INC.
(formerly NTECH CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Years Ended June 30, 2000 and 1999 and
for the Period from July 29, 1997 (Inception) to June 30, 2000
<CAPTION>
For the
Period from
July 29,
1997
For the Years Ended (Inception) to
June 30, June 30,
2000 1999 2000
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $(13,564,011) $(727,088) $ (23,866,669)
Adjustments to reconcile net loss
to net cash used in operating
activities
Loss on impairment of
intellectual property 13,285,275 - 13,285,275
Issuance of stock for services - 580,301 10,101,501
Increase in Accounts payable
and accrued expenses - 1,500 1,500
Net cash used in operating activities (278,736) (145,287) (478,393)
Cash flows from investing activities
Purchase of equipment (47,589) (116,687) (195,506)
Net cash used in investing activities (47,589) (116,687) (195,506)
Cash flows from financing activities
Increase in book overdraft 4,833 - 4,833
Net proceeds from short-term loan
payable - related party 57,650 24,200 81,850
Proceeds from issuance of preferred
and common stock 260,000 235,533 587,216
Net cash provided by financing activities 322,483 259,733 673,899
Net decrease in cash and cash equivalents (3,842) (2,241) -
Cash and cash equivalents,
beginning of year 3,842 6,083 -
Cash and cash equivalents,
end of year $ - $ 3,842 $ -
The accompanying notes are an integral part of these financial statements.
</TABLE>
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MOLECULAR ROBOTICS, INC.
(formerly NTECH CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Years Ended June 30, 2000 and 1999 and
for the Period from July 29, 1997 (Inception) to June 30, 2000
Supplemental schedule of non-cash investing and financing activities
During the year ended June 30, 2000 and the period from July 29, 1997
(inception) to June 30, 2000, the Company issued preferred and common stock in
exchange for intellectual property for $13,285,275.
During the period from July 29, 1997 (inception) to June 30, 2000, the Company
issued 1,165,350 shares of common stock to management and others for consulting
and employment services rendered valued at $10,126,501.
The accompanying notes are an integral part of these financial statements.
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MOLECULAR ROBOTICS, INC.
(formerly NTECH CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 1 - BUSINESS AND ORGANIZATION
Molecular Robotics, Inc. (formerly NTech Corporation) (the "Company") was
incorporated under its former name in the State of Delaware on July 29, 1997
for the primary purpose of developing, manufacturing, and marketing nano-scale
products ("nano technology"). Nano technology is the concept of miniaturizing
products to a point that there becomes a practical commercial application of
the products. Effective March 23, 2000, NTech Corporation's name was changed
to Molecular Robotics, Inc. The Company's offices are located in Los Angeles,
California, and the Company intends to use independent third parties to
manufacture its products.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Going Concern
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles that contemplate continuation of the
Company as a going concern. As shown in the accompanying financial statements,
the Company had losses and negative cash flows from operations and needs to
raise additional funds to accomplish its objectives. In addition, the
Company's sole reason for the positive equity balance is the continuing effort
of Company personnel to sell preferred and common stock. There is no certainty
they will be able to continue to do so. Management plans to rely on the sales
of securities to sustain operations. These financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Development Stage Enterprise
The Company is a development stage company as defined in 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.
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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fair Value of Financial Instruments
The Company measures its financial assets and liabilities in accordance with
generally accepted accounting principles. For certain of the Company's
financial instruments, including cash and cash equivalents and accounts payable
and accrued expenses, the carrying amounts approximate fair value due to their
short maturities.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all highly
liquid investments purchased with original maturities of three months or less
to be cash equivalents.
Equipment
Equipment is stated at cost. The Company provides for depreciation and
amortization using the straight-line method over the estimated useful lives of
the assets of three to five years.
Loss per Share
The Company calculates loss per share in accordance with SFAS No. 128,
"Earnings per Share." Basic loss per share is computed by dividing loss
available to common stockholders by the weighted-average number of common
shares outstanding. Diluted loss per share is computed similar to basic loss
per share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were
dilutive. Because the Company has incurred net losses, basic and diluted loss
per share are the same.
The preferred stock issued during the year ended June 30, 2000 has the same
rights as the common stock. The preferred stock has no liquidation
preferences, dividends, or redemption rights. Accordingly, the preferred stock
has been treated as common stock for the purpose of computing basic and diluted
loss per share (see Note 8).
Stock-Based Compensation
The Company accounts for employee stock compensation arrangements in accordance
with provisions of Accounting Principles Board Opinion No. 25 ("APB 25"),
"Accounting for Stock Issued to Employees," and complied with the disclosure
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." Under
APB 25, compensation expense is based on the difference, if any, on the date of
grant between the fair value of the Company's common stock and the exercise
price. Unearned compensation is amortized over the vesting period of the
related options.
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.
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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of Long-Lived Assets
During the year ended June 30, 2000, the Company adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of." Under the provisions of this statement, the Company has
evaluated its long-lived assets for financial impairment and will continue to
evaluate them as events or changes in circumstances indicate that the carrying
amount of such assets may not be fully recoverable.
The Company evaluates the recoverability of long-lived assets not held for sale
by measuring the carrying amount of the assets against the estimated
undiscounted future cash flows associated with them. At the time such
evaluations indicate that the future undiscounted cash flows of certain
long-lived assets are not sufficient to recover the carrying value of such
assets, the assets are adjusted to their fair values. Based on these
evaluations, the Company recorded an impairment loss of $13,825,275 for the
year ended June 30, 2000 on the intellectual property acquired during the year.
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.
Advertising and Promotional Expenses
Advertising and promotional expenses are charged to expense as incurred.
Advertising and promotional expenses for the years ended June 30, 2000 and 1999
were $3,424 and $1,028, respectively.
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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 financial statements since the Company
did not have any of the items of comprehensive income in any period presented.
Recently Issued Accounting Pronouncements
In June 2000, the Financial Accounting Standards Board ("FASB") issued SFAS No.
138, "Accounting for Certain Instruments and Certain Hedging Activities." This
statement is not applicable to the Company.
In June 2000, the FASB issued SFAS No. 139, "Rescission of FASB Statement No.
53 and Amendments to Statements No. 63, 89, and 121." This statement is not
applicable to the Company.
NOTE 3 - EQUIPMENT
Equipment at June 30, 2000 consisted of the following:
Constructed equipment $ 190,398
Computer equipment 5,108
Total $ 195,506
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NOTE 4 - COMMITMENTS
During the year ended June 30, 2000, the Company entered into an employment
agreement, expiring in May 2005, with the following compensation commitments:
Year Ended
June 30,
2001 $ 80,000
2002 $ 80,000
2003 $ 80,000
2004 $ 80,000
2005 $ 70,000
In connection with the acquisition of intellectual property, the Company agreed
to issue an additional 1,000,000 shares of its common stock vesting as follows:
100,000 shares in 2001, 200,000 shares in 2002, 300,000 shares in 2003, and
400,000 shares in 2004. The vesting of the shares is contingent upon
performance of the intellectual property. Accordingly, the cost of the
intellectual property will be measured based on the fair value of the shares at
the vesting dates in accordance with Emerging Issues Task Force 96-18,
"Accounting for Equity Instruments That are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods, or Services."
In May 1998, the Company entered into an agreement to construct a piece of
equipment. The expenditures associated with this contract will be capitalized
to equipment and will be depreciated upon completion of the contract. The
Company is required to pay the consultant upon completion of various phases, at
a pre-determined fee schedule. The total estimated expenditure is $199,000.
As of June 30, 2000, the Company has paid $190,398.
NOTE 5 - STOCKHOLDERS' EQUITY
Preferred Stock
The Company's preferred stock has a par value of $0.0001. There are 5,000,000
shares authorized and 4,956,850 shares issued and outstanding. The holders of
the preferred stock have voting rights.
During the year ended June 30, 2000, the Company issued 4,956,850 shares of
preferred stock in exchange for certain intellectual property acquired for
$7,435,275.
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NOTE 5 - STOCKHOLDERS' EQUITY (Continued)
Common Stock
During the year ended June 30, 2000, the Company issued 3,900,000 shares of
common stock in exchange for intellectual property for $5,850,000.
Private Placement
In June 2000, the Company entered into a private placement agreement to offer up
to $5,000,000 worth of units at $2.50 per unit to accredited investors. As of
June 30, 2000, $260,000 was received, and the Company had committed 104,000
units. Each unit consists of one share of the Company's common stock and two
warrants at an exercise price of $5 per share. The warrants will be immediately
detachable from the common shares for separate transfer and will be exercisable
from the closing date of the offering for a period of 12 months thereafter.
There was no effect on pro forma results of operations as a result of the
issuance of stock purchase warrants as the fair value of the warrants was $0.
The fair value was computed using the Black-Scholes option valuation model with
the following assumptions: dividend yield of 0%, risk-free interest rate of 7%,
expected volatility of 0%, and an expected life of one year.
In connection with the offering, the Company issued 208,000 warrants subsequent
to June 30, 2000.
NOTE 6 - INCOME TAXES
As of June 30, 2000, the Company had approximately $23,866,000 in net operating
loss carryforwards that may be offset against future taxable income. No
provision for income taxes for the year ended June 30, 2000 has been made since
the Company incurred a loss during the period. The deferred income tax benefit
of the loss carryforward is the only significant deferred income tax asset or
liability of the Company. It has been offset by a valuation allowance of the
same amount since management does not believe the recoverability of this
deferred tax asset is more likely than not. Accordingly, no deferred income
tax benefit has been recognized in these financial statements.
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NOTE 7 - RELATED PARTY TRANSACTIONS
During the year ended June 30, 2000, the Company paid consulting fees to
stockholders of the Company. Total fees paid during the year ended June 30,
2000 of $101,933 were for services rendered in relation to the development of a
business plan and the running of daily operations.
NOTE 8 - SUBSEQUENT EVENT
Subsequent to June 30, 2000, the Company entered into a two-year consulting
agreement totaling $36,000 per year. The Company also agreed to issue the
consultant 150,000 shares of common stock upon completion of the two years. As
a result, the Company will record compensation expense of approximately
$187,500 per year over the next two years.
On Oct. 12, 2000, the Company recalled all outstanding shares of preferred
stock as of June 30, 2000 and reissued to the preferred stockholder an equal
amount of common stock.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
Molecular Robotics, Inc.
(Registrant)
Date: October 24, 2000 By:/s/SUSAN M. ALT
Susan M. Alt
Chairman of the Board
