MANHATTAN SCIENTIFICS INC - Quarter Report: 2007 June (Form 10-Q)

	TABLE OF CONTENTS
		Page
	PART I
Item 1.	Financial Statements
	Consolidated Balance Sheets as of June 30, 2007 (unaudited) and December 31, 2006	1
	Unaudited Consolidated Statements of Operations for the three and six months ended June 30, 2007 and June 30, 2006 and for the period from July 31, 1992 (Inception) through June 30, 2007	2
	Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and June 30, 2006 for the period from July 31, 1992 (Inception) through June 30, 2007	3
	Notes to Unaudited Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	11
Item 3.	Controls and Procedures	15
	PART II
Item 1.	Legal Proceedings	15
Item 1A.	Risk Factors	15
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3.	Defaults Upon Senior Securities	15
Item 4.	Submission of Matters to a Vote of Security Holders	15
Item 5.	Other Information	15
Item 6.	Exhibits	15

SIGNATURES		16

Table of Contents

PART I

ITEM 1. FINANCIAL STATEMENTS

MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

(a development stage enterprise)

CONSOLIDATED BALANCE SHEETS

ASSETS	June 30, 2007 (unaudited)			December 31, 2006
Current assets:
Cash and cash equivalents	$	885,000		$	149,000
Prepaid expenses and other assets		58,000			9,000

Total current assets		943,000			158,000

Property and equipment, net		29,000			30,000
Investments		2,000			2,000
Patents, net of accumulated amortization of $1,782,000 and $1,678,000		298,000			402,000
Other asset		2,000			2,000

Total assets	$	1,274,000		$	594,000

LIABILITIES
Current liabilities
Accounts payable and accrued expenses	$	1,762,000		$	1,522,000
Accrued interest and expenses - related parties		236,000			324,000
Convertible promissory notes, net of discount of $269,000		719,000
Note payable to officers		1,029,000			1,100,000
Note payable - other		33,000			32,000

Total current liabilities		3,779,000			2,978,000

Commitments and Contingencies:

CAPITAL DEFICIT
Capital stock $.001 par value
Preferred, authorized 1,000,000 shares
Series A convertible, redeemable, 10 percent cumulative, authorized 182,525, shares; issued and outstanding - none		-			-
Series B convertible, authorized 250,000 shares; 49,999 shares issued and outstanding		-			-
Series C convertible, redeemable, authorized 14,000 shares; issued and outstanding - none		-			-
Common, authorized 250,000,000 shares, 250,000,000 and 200,449,577 shares issued, and outstanding		250,000			201,000
Additional paid-in-capital		45,741,000			44,902,000
Deficit accumulated during the development stage		(48,496,000	)		(47,487,000	)

Total capital deficit		(2,505,000	)		(2,384,000	)

	$	1,274,000		$	594,000

See notes to unaudited consolidated financial statements

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MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

(a development stage enterprise)

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

													PERIOD FROM
													JULY 31, 1992
	THREE MONTHS ENDED						SIX MONTHS ENDED						(INCEPTION)
	JUNE 30,						JUNE 30,						THROUGH
	2007			2006			2007			2006			JUNE 30, 2007

Revenue	$	-		$	-		$	-		$	-		$	856,000

Operating costs and expenses:
General and administrative		1,054,000			989,000			1,322,000			1,326,000			40,824,000
Research and development		52,000			53,000			105,000			108,000			8,717,000
Impairment charge of certain patents		-			-			-			-			189,000

Total operating costs and expenses		1,106,000			1,042,000			1,427,000			1,434,000			49,730,000

Loss from operations before other income and expenses		(1,106,000	)		(1,042,000	)		(1,427,000	)		(1,434,000	)		(48,874,000	)

Other income and expenses:
Gain from sale of equity interest		-			-			-			-			885,000
Gain on settlement of NMXS.com option		-			-			-			50,000			50,000
Gain on legal settlement		-			-			-			-			393,000
Gain from sale of Novint Technologies Inc. common stock		369,000			-			446,000			-			1,910,000
Gain on issuance of investor common stock		-			-			-			-			531,000
Contract revenue		-			-			-			-			3,741,000
Interest and other expenses		(15,000	)		(18,000	)		(30,000	)		(41,000	)		(1,051,000	)
Interest income		1,000			2,000			2,000			4,000			180,000
Equity in losses of investees		-			-			-			-			(1,243,000	)
Gain / (Loss) on disposal of equipment		-			-			-			-			(13,000	)

NET LOSS	$	(751,000	)	$	(1,058,000	)	$	(1,009,000	)	$	(1,421,000	)	$	(43,491,000	)

BASIC AND DILUTED LOSS PER COMMON SHARE:
Weighted average number of common shares outstanding		229,077,710			193,423,214			214,684,058			189,044,930

Basic and diluted loss per common share	$	(0.00	)	$	(0.01	)	$	(0.00	)	$	(0.01	)

See notes to unaudited consolidated financial statements

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MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

(a development stage enterprise)

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

							PERIOD FROM
							JULY 31, 1992
	SIX MONTHS ENDED						(INCEPTION)
	JUNE 30,						THROUGH
	2007			2006			JUNE 30, 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,009,000	)	$	(1,421,000	)	$	(43,491,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on sale of investments		(446,000	)		-			(2,299,000	)
Gain on settlement of NMXS.com option		-			(50,000	)		(50,000	)
Gain from sale of equity interest in Horizon		-			-			(885,000	)
Gain on issuance of investee common stock								(531,000	)
Common stock issued for services		707,000			815,000			7,820,000
Preferred stock issued for services		-			-			598,000
Stock options issued for services		110,000			-			9,951,000
Cashless stock option exercise								126,000
Warrants issued for services								2,556,000
Convertible note issued for services		1,000			5,000			108,000
Financing costs payable with common stock		-			-			191,000
Amortization of financing costs related to beneficial conversion feature of convertible notes		100,000			-			100,000
Loss of equity investee								1,207,000
Amortization of technology license		-			-			537,000
Amortization of patents		104,000			104,000			1,782,000
Loss on disposal of equipment		-			-			28,000
Impairment charge of certain patents		-			-			189,000
Impairment charge on property and equipment		-			-			8,000
Depreciation		1,000			2,000			1,126,000
Changes in:
Prepaid expenses and other assets		(26,000	)		91,000			167,000
Accounts payable and accrued expenses		294,000			217,000			3,369,000
Accrued interest and expenses - related parties		(88,000	)		24,000			236,000

Net cash provided by operating activities;		(252,000	)		(213,000	)		(17,157,000	)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of equipment								(432,000	)
Purchase of investment		-			-			(100,000	)
Proceeds from sale of equipment		-			-			18,000
Proceeds from sale of equity interest								885,000
Proceeds from settlement of NMXS.com		-			50,000			50,000
Proceeds received from sale of investment		-			-			1,690,000

Net cash provided by (used in) investing activities		-			50,000			2,111,000

See notes to unaudited consolidated financial statements

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MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES

(a development stage enterprise)

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

						PERIOD FROM
						JULY 31, 1992
	SIX MONTHS ENDED					(INCEPTION)
	JUNE 30,					THROUGH
	2007		2006			JUNE 30, 2007
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock for retirement		-		-			(100,000	)
Note payable to stockholders							2,374,000
Proceeds from convertible promissory notes		988,000		-			988,000
Proceeds from note payable - other		-		-			634,000
Repayment of note payable - other		-		-			(435,000	)
Repayment of note payable to officers		-					(525,000	)
Net proceeds from issuance of preferred stock		-		-			3,569,000
Net proceeds from issuance of common stock		-		-			9,571,000
Loan repayment to preferred stockholder		-		-			(148,000	)
Capital lease payments		-		-			(13,000	)
Return of security deposit							16,000

Net cash provided by (used in) financing activities		988,000		-			15,931,000

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		736,000		(163,000	)		885,000
Cash and cash equivalents, beginning of period		149,000		364,000			-

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	885,000	$	201,000		$	885,000

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid		-		60,000			111,000

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Fixed assets contributed to the company in exchange for
Series A preferred stock							45,000
Issuance of 14,391,627 common shares to acquire intangible assets							15,000
Special distribution of 14,391,627 shares of common stock to
stockholder in settlement of stockholder advances							376,000
Issuance of 7,200,000 common shares to acquire intangible assets							1,440,000
Issuance of Series A preferred stock and warrants in settlement
of note payable and accrued interest							1,830,000
Issuance of 1,000,000 common shares to acquire intangible assets							1,000,000
Issuance of 100,000 common shares to acquire furniture and fixtures							49,000
Issuance of 78,000 common shares in satisfaction of accrued expenses							15,000
Issuance of 10,500 shares to acquire furniture and fixtures							40,000
Issuance of 1,400,00 of common shares to acquire Teneo Computing							785,000
Issuance of 1,000,000 of common shares to purchase 42% of Novint Technologies							561,000
Issuance of 3,180,552 common shares in satisfaction of accrued expenses							159,000
Issuance of 1,277,685 common shares in satisfaction of accrued expenses							83,000
Issuance of 795,324 of common shares in settlement of note payable				45,000			45,000
Issuance of 1,184,220 common shares in satisfaction of accrued expenses							59,000

See notes to unaudited consolidated financial statements

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MANHATTAN SCIENTIFICS, INC.

(A Development Stage Enterprise)

NOTES TO FINANCIAL STATEMENTS

(unaudited)

JUNE 30, 2007

NOTE A – BASIS OF PRESENTATION

The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-QSB and Regulation S-B as promulgated by the Securities and Exchange Commission ("SEC"). Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles in the United States of America for complete financial statements. These unaudited interim financial statements should be read in conjunction with the audited financial statements and the notes thereto included on Form 10-KSB for the period ended December 31, 2006. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.

The preparation of financial statements in accordance with generally accepted accounting principles in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumption are inherent in the preparation of the Company's financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions that could have a material effect on the reported amounts of the Company's financial position and results of operations.

Operating results for the three and six month period ended June 30, 2007 are not necessarily indicative of the results that may be expected for the year ending December 31, 2007.

NOTE B - GOING CONCERN UNCERTAINTY

These financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred recurring losses and at June 30, 2007, had an accumulated deficit of $48,496,000. For the three months and six months ended June 30, 2007, the Company sustained a net loss of $751,000 and 1,009,000, respectively. These factors, among others, indicate that the Company may be unable to continue as a going concern for a reasonable period of time. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern. The Company's continuation as a going concern is contingent upon its ability to obtain additional financing, and to generate revenue and cash flow to meet its obligations on a timely basis. Accordingly, the Company’s management will seek to raise capital financing either through debt or equity financing. During April 2007 through June 2007, the Company issued a number of convertible promissory notes totaling $988,000 through a private placement. Subsequent to June 30, 2007, the Company issued an additional $72,000 of convertible debts. In October 2007, $1,060,000 of convertible debt was converted in for 106,000,000 shares of the Company’s common stock.

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MANHATTAN SCIENTIFICS, INC.

(A Development Stage Enterprise)

NOTES TO FINANCIAL STATEMENTS

(unaudited)

JUNE 30, 2007

NOTE C - SUMMARY OF SIGNIFICANT ACCOUTING POLICIES AND RELATED MATTERS

[1] PRINCIPLES OF CONSOLIDATION:

The consolidated financial statements include the accounts of the Company and its two wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated.

[2] INTANGIBLE ASSETS:

Patents are recorded at cost of $2,080,000. Amortization is charged against results of operations using the straight-line method over the estimated economic useful life. Patents related to the mid-range fuel cell and the micro fuel cell technologies are estimated to have an economic useful life of 10 years. Amortization expense was $52,000 and $104,000 for the three and six months ended June 30, 2007, respectively, and $1,782,000 for the period from July 31, 1992 (inception) through June 30, 2007. Amortization expense was $52,000 and $104,000 for the three and six months ended June 30, 2006.

[3] USE OF ESTIMATES:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amount of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. A significant estimate includes the carrying value of the Company's patents, fair value of the Company’s common stock, assumptions used in calculating the value of stock options, depreciation and amortization.

[4] BASIC AND DILUTED LOSS PER SHARE:

Basic and diluted net loss per common share is presented in accordance with SFAS 128, "Earnings Per Share". Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the applicable reporting periods. The Company’s computation of dilutive net loss per share for the quarters ended June 30, 2007 and 2006 does not assume any exercise of options or warrants or shares issuable upon conversion of the series B preferred stock and common shares, respectively, as their effect is antidulutive.

[5] INVESTMENTS:

The Company records its investment in Novint Technologies, Inc. (“Novint”) at cost and uses the equity method of accounting to record its proportionate share of Novint's net income or loss. During 2003, the Company recorded an impairment of the investment to $0 due to Novint’s inactivity. Subsequently, during 2004, Novint issued common stock pursuant to a private placement. As a result, the Company has recorded a gain on issuance of investee common stock of $531,000. In addition for the year ended December 31, 2004, the Company has recorded an equity in loss of investee of $492,000, representing the Company’s share of Novint’s current losses. The loss exceeded the Company’s basis in Novint during the year ended December 31, 2004 and the investment balance is carried at $0. As a result of this, the Company did not record its proportionate share of equity in loss of investee for the three and six months ended June 30, 2007 and 2006. The Company’s share of loss not recorded amounted to approximately $59,612 and $134,211, respectively for the three and six months ended June 30, 2007 and $104,645 and $180,213, respectively for the three and six months ended June 30, 2006. The Company will continue to account for its investment under the equity method of accounting; however, it will record its proportionate share of net income only after it has recovered all losses in excess of its basis. For the three months ended March 31, 2007, the Company sold certain shares in Novint and has recorded a gain on sale of those shares of $77,000. In addition, during the three months ended June 30, 2007, the Company issued 493,750 shares as additional consideration in connection with the convertible debt financing and recorded a gain on sale of those shares of $369,000. As of June 30, 2007, the Company owned 1,165,109 shares of Novint common stock or approximately 4% of Novint’s common stock. The Company continued to account for its investment in Novint using the equity method since the Company exercises significant influence over Novint.

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MANHATTAN SCIENTIFICS, INC.

(A Development Stage Enterprise)

NOTES TO FINANCIAL STATEMENTS

(unaudited)

JUNE 30, 2007

[6] RECENT ACCOUNTING PRONOUNCEMENTS:

The Company has adopted all accounting pronouncements issued before June 30, 2007, which are applicable to the Company.

In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (FIN 48), which clarifies the accounting for uncertainty in tax positions. This Interpretation requires that we recognize in our financial statements the benefit of a tax position if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 become effective as of the beginning of the 2007 fiscal year, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The adoption of the provisions of FIN 48 did not have an impact on its financial condition or results of operations.

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (SAB 108), which addresses how to quantify the effect of financial statement errors. The provisions of SAB 108 become effective as of the end of its 2007 fiscal year. The adoption of the provisions of SAB 108 did not have an impact on its financial condition or results of operations.

In February 2006, the Financial Accounting standard Board (“FASB”) issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments – an amendment of FASB Statements No. 133 and 140” (“SFAS No. 155”). SFAS No. 155 allows financial instruments that contain an embedded derivative and that otherwise would require bifurcation to be accounted for as a whole on a fair value basis, at the holders’ election. SFAS NO. 155 also clarifies and amends certain other financial instruments acquired or issued in fiscal years beginning after September 15, 2006. The Company does not believe the adoption of SFAS NO. 155 will have any impact on the Company’s financial position or results of operations.

In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets – an amendment of FASB Statement No. 140” (“SFAS No. 156”). SFAS No. 156 provides guidance on the accounting for servicing assets and liabilities when an entity undertakes an obligation to service a financial asset by entering into a servicing contract. This statement is effective for the first fiscal year beginning after September 15, 2006. The Company does not believe the adoption of SFAS No. 156 will have any impact on the Company’s financial position or results of operations.

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MANHATTAN SCIENTIFICS, INC.

(A Development Stage Enterprise)

NOTES TO FINANCIAL STATEMENTS

(unaudited)

JUNE 30, 2007

In September 2006, FASB issued SFAS 157 ‘Fair Value Measurements’. This Statement defined fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practice. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is currently evaluating the effect of this pronouncement on financial statements.

In September 2006, FASB issued SFAS 158 ‘Employers’ Accounting for defined benefit Pension and Other Postretirement Plans-an amendment of FASB Statements No. 87, 88, 106, and 132(R).This Statement improves financial reporting by requiring an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This Statement also improves financial reporting by requiring an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. An employer without publicly traded equity securities is required to recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after June 15, 2007. However, an employer without publicly traded equity securities is required to disclose the following information in the notes to financial statements for a fiscal year ending after December 15, 2006, but before June 16, 2007, unless it has applied the recognition provisions of this Statement in preparing those financial statements. The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position is effective for fiscal years ending after December 15, 2008. The Company is currently evaluating the effect of this pronouncement on financial statements.

NOTE D - CONVERTIBLE PROMISSORY NOTES

During April 2007 through June 2007, the Company issued a number of convertible promissory notes totaling $988,000 through a private placement. The notes have a maturity date of December 2007, are noninterest bearing and convertible into shares of the Company’s common stock at a conversion price of $0.01 per share. The convertible debt was also entitled to half a share of stock the Company held in Novint Technologies, Inc. for every $1 of principal debt held for a total of 493,750 shares. The Company has determined the convertible debenture contains a beneficial conversion feature and qualifies for treatment under Emerging Issues Task Force No. 00-27 and 00-19. The estimated fair value of the 493,750 shares of common stock in Novint Technologies, Inc. of $591,000 has been determined based on the closing stock price of such stock on the date of each respective note. The face amount of the convertible debenture of $988,000 was proportionately allocated to the debenture and the shares of common stock in Novint Technologies, Inc. in the amount of $619,000 and $369,000, respectively. The proportionate value of the Novint common stock of $369,000 as of June 30, 2007, has been accounted for as a debt discount and is being expensed over the maturity period of these promissory notes. For the three and six months ended June 30, 2007, the Company expensed approximately $100,000 and $100,000, respectively, of the debt discount. The convertible notes are not convertible until a future event. This event has not occurred as of June 30, 2007 and therefore no beneficial conversion feature has been recorded.

NOTE E – CAPITAL TRANSACTIONS

In March 2007, the Company granted options for 10,000,000 shares of common stock at an exercise price of $0.014 to the Company’s former CEO and chairman for services previously provided. The value of these options totaled $109,982 which was valued using the Black-Scholes option pricing model.

The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Discount Rate - Bond Equivalent Yield	4.5 %
Dividend yield	0.0 %
Volatility factor	107.0 %
Weighted average expected life	5 years

In May 2007, the Company issued 35,350,317 shares of common stock to various individuals for services with values totaling $707,006 based upon the fair value of the shares issued.

In May 2007, the Company issued 14,200,106 shares of common stock to its former Chief Executive Officer for settlement of debts totaling $71,000.

NOTE F – NOTES PAYABLE – OFFICER

As of June 30, 2007, the Company has loans payable of $500,000 and $529,000 payable to its former Chief Operating Officer and Chief Executive Officer, respectively. The loans bear interest at 5.5% per annum and were initially due December 31, 2002 and have been mutually extended and settled. In May 2007, the Company issued 14,200,106 shares of common stock to its former Chief Executive Officer for settlement of debts totaling $71,000.

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MANHATTAN SCIENTIFICS, INC.

(A Development Stage Enterprise)

NOTES TO FINANCIAL STATEMENTS

(unaudited)

JUNE 30, 2007

NOTE G – AUTHORIZED COMMON STOCK

As of June 30, 2007, the Company did not have any shares authorized to issue to option holders, warrant holders or the convertible promissory note holders upon the conversion of these instruments into shares of the Company’s common stock.

In July 2007, the Company amended its Certificate of Incorporation to increase the authorized common stock from 250,000,000 shares to 500,000,000 shares (the “Authorized Shares Amendment”). A majority of the stockholders entitled to vote on the Authorized Shares Amendment voted in favor of the Amendment.

NOTE H – SUBSEQUENT EVENTS

From July through October 2007, the Company issued an additional $72,000 in convertible notes with a conversion price of $.01 into shares of common stock bringing the total convertible notes issued during 2007 to $1,060,000, see Note D. As discussed in Note D, the Company has determined the convertible notes contain a beneficial conversion feature however, it was contingent upon the conversion of the notes subject to board approval which occurred on October 31, 2007, at which point all outstanding debt was automatically converted. As of October 31, 2007, the remaining discounted convertible debentures’ value of $975,221 was then further allocated between the debenture and the beneficial conversion feature, and the entire remaining discounted value of $967,851 was allocated to the beneficial conversion feature. The combined total value of the Novint stock and beneficial conversion feature of $1,361,313 has been accounted for as a debt discount that is being amortized and treated as interest expense over the term of the convertible debenture under the effective interest method.

In October 2007, the Company issued 4,200,000 shares of common stock for services to a board member with a value of $60,900 based upon the fair value of the shares issued.

In October 2007, the Company granted warrants for 3,200,000 shares of common stock to members of its board of directors for past services. The value of these options totaled $36,444 which was valued using the Black-Scholes option pricing model.

In October 2007, the Company issued 106,000,000 shares of common stock related to the conversion of convertible debt previously issued throughout 2007. The convertible debt converted totaled $1,060,000 at which time the remaining debt discount was expensed.

In November 2007, Marvin Maslow, Chief Executive Officer, resigned and Emmanuel Tsoupanarias was appointed as the new Chief Executive Officer.

In November 2007, the Company issued 1,000,000 shares of common stock to an individual for services to be provided with a value of $31,000 based upon the fair value of the shares issued.

In November 2007, the Company issued 1,000,000 shares of common stock to an individual for services with a value of $31,000 based upon the fair value of the shares issued.

In December 2007, the Company granted an officer options for 800,000 shares of common stock for services provided as a member of the Company’s board of directors. The value of this option totaled $49,768 which was valued using the Black Scholes option pricing model using the following assumptions: exercise price of $0.015, discount rate of 4.5%; volatility rate of 142%; term of 5 years; and stock price grant date of $0.065.

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MANHATTAN SCIENTIFICS, INC.

(A Development Stage Enterprise)

NOTES TO FINANCIAL STATEMENTS

(unaudited)

JUNE 30, 2007

NOTE H – SUBSEQUENT EVENTS (CONTINUED)

In December 2007, the Company purchased and retired 43,655,000 shares of its common stock and warrants for 10,000,000 shares of Company common stock for a total of $215,000.

During 2007, debts held by two shareholders/former officers and directors totaling $1,416,500 were forgiven and accounted for as contributed capital. The new balances will bear interest at 5% and will be paid under a variety of circumstances, i.e. if the company raises sufficient capital for operations and for repayment of this debt; and/or upon the sale of corporate assets including upon the sale of Novint stock pursuant to a formula described in the agreement.

In January 2008, the Company issued 200,000 shares of common stock for past services to consultants for a total value of $12,000 or $0.06 per share.

In January 2008, the Company issued 925,926 shares of common stock, $50,000 in cash, and 53,191 shares of Novint Technologies, Inc. common stock in satisfaction of past legal fees totaling $100,000.

In January 2008, the Company cancelled previously granted options for 16,000,000 shares of common stock with an exercise price of $0.05 per share and replaced them with new options for 18,000,000 shares of common stock with an exercise price of $0.013 per share. The value of these options totaled $921,246 which was valued using the Black Scholes option pricing model using the following assumptions: discount rate of 4.5%; volatility rate of 144%; term of 5 years; and stock price of $0.06.

In April 2008, the Company issued 700,000 shares of common stock to various consultants for services for a total value of $35,000 or $0.05 per share.

In July 2008, the Company issued 300,000 shares of common stock to a consultant for services for a total value of $21,000 or $0.07 per share.

In August 2008, the Company issued 250,000 shares of common stock for legal services for a total value of $15,000 or $0.06 per share.

In September 2008, the Company issued 750,000 shares of common stock for legal services for a total value of $30,000 or $0.04 per share.

In October 2008, the Company issued 400,000 shares of common stock to a consultant for services for a total value of $14,000 or $0.035 per share.

In June 2008, the Company entered into stock purchase agreement with Metallicum, Inc. to acquire all of the outstanding capital in exchange for 15,000,000 shares of the Company’s common stock. An additional 15,000,000 shares of the Company’s common stock will be payable to Metallicum in the event of meeting certain milestones. The stock purchase agreement with Metallicum, Inc. will be accounted for as a purchase under SFAS No. 141 Business Combinations. The 15,000,000 shares of the Company’s common stock valued at $562,500 will be allocated between the purchase price and goodwill. The additional 15,000,000 shares payable to Metallicum will be accounted for as a performance based incentive which will be revalued at the end of each reporting period.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward Looking Statements

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

OVERVIEW

Manhattan Scientifics, Inc., a Delaware corporation, was formed through a reverse merger involving a public company in January 1998. The public company was incorporated in Delaware on August 1, 1995 under the name Grand Enterprises, Inc. ("Grand"). Grand was initially organized to market an unrelated patented product, but subsequently determined that its business plan was not feasible. In January 1998, Grand effected the reverse merger in a transaction involving Projectavision, Inc., another public company that was founded by Marvin Maslow, our former Chief Executive Officer. Projectavision was the owner of approximately 98% of Tamarack Storage Devices, Inc., a privately-held Texas corporation formed in 1992 to develop and market products based on the holographic data storage technology. We are no longer engaged in development and commercialization of Holographic data storage technologies (technologies for the storage and retrieval of data in the form of holographically stored light patterns, rather than magnetic). The Company sold its portfolio of approximately 21 patents surrounding these inventions during 2002. In January 1998, Grand formed a wholly-owned subsidiary named Grand Subsidiary, Inc. Grand Subsidiary and Tamarack merged, Tamarack being the surviving corporation, and via the merger, Tamarack became a subsidiary of Grand. As consideration for merging Tamarack with Grand Subsidiary, Grand gave Projectavision and the other stockholders of Tamarack 44,000,000 shares of our common stock. In addition, in exchange for a note payable of $1.5 million plus accrued interest of $330,000 due to Projectavision from Tamarack, Grand gave Projectavision 182,525 shares of its Series A Preferred Stock and a warrant to purchase 750,000 shares of our common stock at an exercise price of $0.10 per share, which expired on January 7, 2008. Mr. Maslow, our former Chief Executive Officer, purchased the warrant from Projectavision for $25,000. The Series A Preferred Stock was subsequently converted into 9,435,405 shares of our common stock. In connection with this transaction, new personnel assumed the management of Grand, former management resigned, and Grand changed its name to Manhattan Scientifics, Inc.

Manhattan Scientifics, Inc., a development stage company, previously operated as a technology incubator that sought to acquire, develop and commercialize life-enhancing technologies in various fields, with emphasis in the areas of alternative energy, and consumer and commercial electronics. In that capacity, we have previously identified emerging technologies through strategic alliances with scientific laboratories, educational institutions, and scientists and leaders in industry and government.

We have worked to develop and commercialize three technologies:

Micro fuel cell technology, which is designed to become an ultra efficient miniature electricity generator that converts hydrogen into electricity by chemical means, for portable electronic devices, including cellular telephones, as a substitute for lithium ion and other batteries in common use today.

Mid-range fuel cell technology, which is an ultra efficient medium-size electricity generating device that converts hydrogen into electricity, with potential applications including personal transportation, cordless appliances, power tools, wheelchairs, bicycles, boats, emergency home generators, military field communications and laptop computers.

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Haptics "Touch and Feel" computer applications, which is a technology that allows computer users to be able to touch and feel any objects they see on their computer screen with the aid of special "mouse." Detailed texture, object-weight, stickiness, viscosity and object density can be "felt" or sensed. Management believes this haptics technology may positively impact the way computers are used everywhere by introducing the ability to "touch." (Please see Haptics "Touch and Feel" Internet Applications and Investment in Novint Technologies, Inc.”

In 2008, the Company purchased, in exchange for common stock of the Company, Metallicum, Inc. and its licensed patented technology. Through Metallicum, the Company hopes to take advantage of a unique processing methodology for producing nanostructures in a wide range of ductile metals and alloys and is now attempting to commercialize this new and revolutionary technology. Nanostructured metals and alloys possess significantly enhanced mechanical properties that include, for example, increased strength without concurrent losses in ductility, and significantly increased resistance to fatigue fracture. Nanostructured commercially pure grades of titanium have proven to also possess excellent machinability as well as high toughness and strength.

We are also seeking to develop corporate opportunities to benefit our shareholders; however, other than as set forth in this document, we have not executed agreements or finalized arrangements for any other technologies or opportunities as of the date of this Form 10-QSB.

OUR DEVELOPMENT MODEL

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

NANO-STRUCTURED METALS (METALLICUM, INC.)

In June 2008, the Company acquired Metallicum, Inc. and its licensed patented technology. The Company entered into a stock purchase agreement with Metallicum, Inc. to acquire all of the outstanding capital in exchange for 15,000,000 shares of the Company’s common stock. An additional 15,000,000 shares of the Company’s common stock will be payable to Metallicum in the event of meeting certain milestones.

The transaction includes all of Metallicum's licensed intellectual property related to the design and high-volume nano-fabrication of nano-structuring metals for medical components as well as for transportation applications. The Company intends to establish manufacturing partner relationships with major Fortune 500 metals companies. The Company’s business plan includes strategic partnering with significant customers in the medical device & prosthetics industries as well as in auto, truck, and aircraft manufacturing industries

The Metallicum division will produce and license the super strong metals using nano-technology developed by scientists at Los Alamos National Laboratory in conjunction with their colleagues in Russia. The technology is expected to trim thousands of pounds from airplanes and hundreds of pounds from cars without sacrificing structural strength or adding significant cost.

The nanostructured metals have wide implications for use in the medical device and prosthetics industries including dental implants, replacements for hips, shoulders, knees and cardio vascular stents. Clinical studies have already shown that bone integrates with these new metals up to 20 times faster.

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RESULTS OF OPERATIONS

THREE AND SIX MONTHS ENDED JUNE 30, 2007 COMPARED TO THREE AND SIX MONTHS ENDED JUNE 30, 2006.

REVENUES. We had no revenues for the three and six months ended June 30, 2007 and 2006.

GENERAL AND ADMINISTRATIVE. General and administrative expenses were $1,054,000 and $1,322,000 for the three and six months ended June 30, 2007, which consisted of consultants, contractors, accounting, legal, travel, rent, telephone and other day to day operating expenses, versus general and administrative expenses of $989,000 and $1,326,000 for the three and six months ended June 30, 2006, an overall increase of $65,000 or 6.6%, and a decrease of $4,000 or less than 1%, respectively. Included in the overall nominal change in general and administrative expenses for both the three and six months ended June 30, 2007 was the financing cost associated with the convertible debt equal to $100,000,which was all incurred in the three months ended June 30, 2007.

RESEARCH AND DEVELOPMENT. Research and development expenses of $52,000 and $105,000 for three and six months ended June 30, 2007 remained constant compared to $53,000 and $108,000 for the three and six months ended June 30, 2006.

NET LOSS. We reported a net loss of $751,000 and $1,009,000 for the three and six months ended June 30, 2007, respectively, versus a net loss of $1,058,000 and $1,421,000 for the three and six months ended June 30, 2006, respectively. The decrease of $307,000 and $412,000 or 29% and 29%, for the three and six months ended June 30, 2007 compared to the same periods in 2006, principally resulted from a gain on distribution of common stock held in Novint Technologies, Inc. totaling $369,000 during the three months ended June 30, 2007.

LIQUIDITY AND PLAN OF OPERATIONS

We are a development stage company and are in the technology acquisition and development phase of our operations. Accordingly, we have relied primarily upon private placements and subscription sales of stock to fund our continuing activities and acquisitions. To a limited extent, we have also relied upon borrowing from the Company's officers. Until we generate revenue from sales and licensing of technology, or receive a large infusion of cash from a potential strategic partner or through the efforts of an investment banker, we intend to continue to rely upon this methods and the limited sales of our shares or other assets, which has become increasingly difficult with our low share price, to fund operations during the next year.

At June 30, 2007, our significant assets include our portfolio of intellectual property relating to the various technologies, our contracts with third parties pertaining to technology development, acquisition, and licensing, and 1,165,109 shares of common stock of Novint Technologies, Inc.; our cash on hand; and our strategic alliances with various scientific laboratories, educational institutions, scientists and leaders in industry and government.

The Company had an increase of $736,000 in cash and cash equivalents for the six months ended June 30, 2007, as a result of proceeds of $988,000 from the issuance of convertible promissory notes, compared to a decrease in cash and cash equivalents for the comparable period in 2006. For the six months ended June 30, 2007, cash used by operating activities was $252,000 compared to $213,000 used by operating activities for the six months ended June 30, 2006. Cash used by operating activities included common stock and options to purchase common stock issued for services valued at $817,000 for the six months ended June 30, 2007 and common stock issued for services valued at $815,000 for the six months ended June 30, 2006.

Stockholders' equity totaled a deficit of $2,505,000 on June 30, 2007 and the working capital was a deficit of $2,836,000 on such date.

We do not expect any significant change in the total number of employees in the near future. We intend to continue to identify and target appropriate technologies for possible acquisition or licensing over the next 12 months, although we have no agreements regarding any such technologies as of the date of this Report.

Based upon current projections, our principal cash requirements for the next 12 months consists of (1) fixed expenses, including rent, payroll, investor relations services, public relations services, bookkeeping services, graphic design services, consultant services, and reimbursed expenses; and (2) variable expenses, including technology research and development, milestone payments, intellectual property protection, utilities and telephone, office supplies, additional consultants, legal and accounting. As of June 30, 2007, we had $885,000 in cash. We intend to satisfy our capital requirements for the next 12 months by continuing to pursue private placements to raise capital, using our common stock as payment for services in lieu of cash where appropriate, borrowing as appropriate, and our cash on hand. However, we do not know if those resources will be adequate to cover our capital requirements.

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RECENTLY ISSUED ACCOUNTING STANDARDS

In September 2006, FASB issued SFAS 157 ‘Fair Value Measurements’. This Statement defined fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practice. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The management is currently evaluating the effect of this pronouncement on financial statements.

In September 2006, FASB issued SFAS 158 ‘Employers’ Accounting for defined benefit Pension and Other Postretirement Plans-an amendment of FASB Statements No. 87, 88, 106, and 132(R).This Statement improves financial reporting by requiring an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This Statement also improves financial reporting by requiring an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. An employer without publicly traded equity securities is required to recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after June 15, 2007. However, an employer without publicly traded equity securities is required to disclose the following information in the notes to financial statements for a fiscal year ending after December 15, 2006, but before June 16, 2007, unless it has applied the recognition provisions of this Statement in preparing those financial statements. The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position is effective for fiscal years ending after December 15, 2008. The management is currently evaluating the effect of this pronouncement on financial statements.

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ITEM 3. CONTROLS AND PROCEDURES

Our principal executive and principal financial officers have evaluated the effectiveness of our disclosure controls and procedures, as of the end of the period covered by this quarterly report. Without third-party specialists, our current disclosure controls and procedures are not effective to provide reasonable assurance that material information required to be included in our periodic SEC reports is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and accumulated and communicated to our senior management, including our CEO, to allow timely decisions regarding required disclosures.

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

During the most recent quarter ended June 30, 2007, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS

We are subject from time to time to litigation, claims and suits arising in the ordinary course of business. As of June 30, 2007, we were not a party to any material litigation, claim or suit whose outcome could have a material effect on our financial statements other than the litigation described above which was subsequently settled.

ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES

In May 2007, the Company issued 35,350,317 shares of common stock to various individuals for services with values totaling $707,006 based upon the fair value of the shares issued.

In May 2007, the Company issued 14,200,106 shares of common stock to its former Chief Executive Officer for settlement of debts totaling $71,000.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

Not Applicable.

ITEM 6. EXHIBITS

Index to Exhibits

31.1	Certification of Chief Executive Officer under Rule 13(a) - 14(a) of the Exchange Act.
31.2	Certification of Chief Financial Officer under Rule 13(a) - 14(a) of the Exchange Act.
32	Certification of CEO and CFO under 18 U.S.C. Section 1350

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 15th day of December, 2008.

	MANHATTAN SCIENTIFIC, INC.

	By:	/s/ Emmanuel Tsoupanarias
		Emmanuel Tsoupanarias
		Chief Executive Officer