UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

                                   (Mark One)

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

                   For the fiscal year ended December 31, 2005

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

               For the transition period from _______ to _______.
                        Commission File Number 000-28411

                           MANHATTAN SCIENTIFICS, INC.
                           ---------------------------
                 (Name of small business issuer in its charter)

                Delaware                                  850460639
                --------                                  ---------
   (State or other jurisdiction of            I.R.S. Employer Identification No.
    incorporation or organization)

405 Lexington Avenue, 32nd Floor, New York, New York        10174
 ---------------------------------------------------       --------
(Address of principal executive offices)                  (Zip Code)

                    Issuer's telephone number: (212) 551-0577
                    -----------------------------------------
         Securities registered under Section 12(g) of the Exchange Act:
                          Common Stock, $.001 par value
                          -----------------------------
                                (Title of Class)

Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act [ ]

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure is contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year: $0

State the number of shares outstanding of each of the issuer's classes of common
equity, as of March 23, 2006: 185,280,357 shares of common stock.

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days: As of March 29, 2006: $6,286,225

Transitional Small Business Disclosure Format (check one)    Yes [ ]  No [X]

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                                TABLE OF CONTENTS

PART I                                                                      Page

Item 1.   Description of Business                                             3

Item 2.   Description of Properties                                          16

Item 3.   Legal Proceedings                                                  16

Item 4.   Submission of Matters to a Vote of Security Holders                16

PART II

Item 5.   Market for Common Equity and Related Stockholder Matters           17

Item 6.   Management's Discussion and Analysis or Plan of Operations         23

Item 7.   Financial Statements                                               F-1

Item 8.   Changes In and Disagreements with Accountants on Accounting and
             Financial Disclosure                                            28

Item 8A.  Controls and Procedures                                            28

Item 8B   Other Information                                                  29

PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons;
             Compliance with Section 16(a) of the Exchange Act               29

Item 10.  Executive Compensation                                             31

Item 11.  Security Ownership of Certain Beneficial Owners and Management
              And Related Stockholder Matters                                33

Item 12.  Certain Relationships and Related Transactions                     34

Item 13.  Exhibits                                                           35

Item 14.  Principal Accountant Fees and Services                             36
<PAGE>

                           Forward Looking Statements

     This Form 10-KSB contains "forward-looking" statements including statements
regarding our expectations of our future operations. For this purpose, any
statements contained in this Form 10-KSB 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 Internet 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.

                                        2
<PAGE>
                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

     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:

     o    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. We believe this technology has
          the potential to significantly increase product use life over current
          state-of-the-art battery technologies.

     o    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.

     o    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 become disruptive and may positively impact the way
          computers are used everywhere by introducing the ability to "touch."
          (Please see Haptics "Touch and Feel" Internet Applications ((Novint
          Technologies, Inc.))

     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 for cash and a warrant to purchase
238,998 shares of the buyer's junior preferred stock. We exercised this warrant
during 2004.

                                        3
<PAGE>
     In addition, at December 31, 2005, we owned warrants to purchase 1,500,000
shares exercisable at $0.50 per share, of common stock of NMXS.Com, Inc.(f/k/a
New Mexico Software, Inc.), a public company that owns, develops and markets
what it believes to be fast and efficient Internet technologies for the
management of digital images. The warrants were the subject of a litigation we
brought against the issuer that has since been resolved (see note at "Legal
Proceedings").

     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-KSB.

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.

     Presently, our business model is concentrated in the area of
commercialization of our technologies in the alternative energy field, with
emphasis on potential opportunities in Asia, and we have essentially become a
single purpose company in this regard.

     In addition to technology commercialization, we have sought to develop
appropriate corporate opportunities from time to time for the benefit of the
Company and its stockholders.

     Since our technologies are still in their development phase, we have
generated only limited revenues. As such, the need for operating and acquisition
capital is a continuous concern requiring the ongoing efforts of our management.
The Company is not a large capital-user and has raised approximately $9.7
million capital since 1998. During 2005, we sold 1,077,200 shares of Novint
common stock for cash and services raising approximately $615,780. Nevertheless
there is need to continue to raise capital on an as needed basis through private
placements, registered public offerings, debt, and/or other financing vehicles.
Raising capital was more difficult in 2005 than in the past due to the general
economic downturn of 2001-2003 and the residual effects of the September 11
terrorist attacks on the World Trade Center buildings in New York and the
Pentagon in Washington D.C. and the subsequent military actions. The economic
downturn made it difficult for small technology concept companies, without
significant revenues or earnings to raise capital. Our management intends to
work diligently to continue to raise capital for the Company.


                                        4
<PAGE>

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

OUR TECHNOLOGIES

1. FUEL CELL TECHNOLOGIES

     We have conducted research to develop both micro and mid-range fuel cell
technologies. A micro fuel cell is a high-energy miniature power source that
converts alcohol or hydrogen into electricity. A mid-range fuel cell is a high
power density medium sized power source that converts hydrogen into electricity.
Fuel cells create electricity not by burning fuel, but by the process of
electrochemically arranging the fuel's atoms to produce an electric current.
Water or water vapor and in some cases carbon dioxide are the only emissions. In
addition to producing harmless emissions, certain fuel cells have the potential
to be an alternative to traditional energy sources because they use methanol and
other sources of hydrogen as fuels. Methanol can be produced inexpensively from
a variety of plant sources and is considered a renewable resource. Generally,
methanol is regarded to be stable and safe although it is considered to be toxic
in certain countries.

     We have acquired technologies in the fields of both micro fuel cell and
mid-range fuel cells.

MICRO FUEL CELL TECHNOLOGY

     We believe that micro fuel cell-based power sources have the potential to
replace and/or supplement conventional batteries as a charger to provide
portable power sources. If perfected, we believe micro fuel cell technology
could supply energy to consumer electronic products such as cellular phones,
pagers, and other microelectronic devices more efficiently than conventional
batteries. We believe micro fuel cells would be re-fuelable with insignificant
amounts of methanol and water or other fuels and would significantly increase
available energy over current state-of-the-art battery technology which has a
fixed fuel supply. Until recently, fuel cell technology had not been practical
for consumer electronics because of the size of the devices necessary to produce
electrical energy. We believe that new materials and miniaturization technology
have the potential to make micro fuel cell technology commercially feasible.


                                        5

<PAGE>
     In 1998, we demonstrated a pre-prototype of our micro fuel cell technology
by completing a fuel-cell driven cellular telephone call. In 1999, we
demonstrated that an eight cell array, which is approximately the size of a
credit card, running on methanol and water, was able to run a pager. We were
also selected by Industry Week Magazine that year to receive a Technology of the
Year Award in recognition of our work on the micro fuel cell. During 2000, we
developed a test micro fuel cell that achieved a specific energy output three
times greater than standard lithium ion batteries then in use for cellular
telephones. We also introduced a working prototype of a portable cell phone
charging system at an international fuel cell symposium. We have pursued the
development of safe and convenient fueling ampoules (patents pending) with fuels
such as methanol and hydrogen. Hydrogen supplied from a packaged chemical
hydride device has been demonstrated as a way of obtaining higher power
performances from miniature portable fuel cells. We have demonstrated a working
16-cell array of fuel cells, the size of a business card, built on a single
plastic substrate with vacuum and spray depositions, as a prototype of
mass-produced fuel cells. During 2001, we had six new patents issued in various
countries, including the U.S., continued and expanded our scope of research and
development of this technology, and demonstrated various fuel cells arrays,
including a hydrogen-powered portable cell-phone charger holster. During 2002
and 2003, notwithstanding scarcity of funding as a result of general economic
conditions, we made incremental improvements in power density using both
methanol and hydrogen as fuel sources, and were able to operate fuel cells at
higher temperatures. We also were issued two new U.S. patents, six international
patents, and we attended various fuel cell conferences. During 2003, we
determined one of solar patents we had acquired from the inventor of the micro
fuel cell was impaired and we expensed approximately $189,000 because of such
impairment. This impairment was a result the patent only having approximately
nine years of protection remaining which diminishes the present value to the
Company. Additionally, we have not kept pace with the steady growth of the solar
photovoltaic industry during the past six years as we have chosen to focus our
limited resources on the fuel cell inventions and patents which we are pursuing.
In 2003, we updated our contractual arrangement with the inventor of the micro
fuel cell. The new arrangement replaces previous agreements and provides for the
cross-licensing of new micro fuel cell technology with the inventor, the
non-exclusive licensing of existing micro fuel cell technology to the inventor,
rights of first refusal by the inventor to repurchase its technologies in the
event we decide to sell those technologies, provision of ongoing services to us
by the inventor, and clearance of amounts owed, among other things. We
anticipate that we will attempt to secure licensing, sale, and/or manufacturing
and distribution arrangements with third parties in the future. Since the
beginning of our development of the micro fuel cell technology, significant,
well-capitalized competitors in Japan, Europe, Canada and the United States have
entered this field. As a result of the shortage of available capital, no
additional investment or further resulting progress was made in the micro fuel
cell technology during 2005.

MID RANGE FUEL CELL TECHNOLOGY

     In addition to micro fuel cells, we have made significant progress in our
continuing efforts to develop and commercialize mid-range fuel cell
technologies. Mid-range fuel cell technologies are directed toward higher power
applications, including consumer electronics (such as laptop computers),
personal transportation devices (such as bicycles and scooters), power tools and
appliances (such as vacuum cleaners and lawnmowers), and portable military
electronics (such as military field radios). In contrast, micro fuel cell
technologies address lower power applications such as cellular phones, pagers
and other microelectronics devices.

     In 2005, we shifted our focus from licensing our mid range fuel cell
Technology to trying to find a joint venture partner to build product in China.
As of December 31, 2005, these efforts have not resulted in our obtaining a
joint venture partner for this technology although we will continue to utilize
this strategy.

     In 2004, we concluded a non-exclusive world wide license agreement with a
Singapore company with operations in Shanghai, China to manufacture and sell the
mid range fuel cell technology. The license included an up front license fee,
royalty on product sold, gross revenue sharing on non fuel cell products and an
equity interest in the company. The equity interest was sold back to the
Singapore company for $885,000 during 2005. We also successfully delivered to
the U.S. Department of Defense Army 700 watt fuel cells during 2004. The
Department of Defense installed its unit in a "Segway" personal transportation
vehicle for demonstration and the Army is currently evaluating its unit as a
portable battery charger.

     In 2003, we granted a non-exclusive worldwide license of the mid range fuel
cell technology to Ballard Power Systems where we received an initial payment of
$300,000 upon execution of the license agreement and the right to receive an
additional $200,000 upon commercial launch by Ballard Power Systems of a product
using the technology. We were also awarded two competitive contracts for the
manufacture and delivery of prototype military evaluation fuel cells: one to the
U.S. Department of Defense, and the other to the U.S. Army.

                                        6

<PAGE>
     In 2002, notwithstanding scarcity of funding as a result of general
economic conditions, we built a 3 KW evaluation prototype fuel cell in
cooperation with the Aprilia company to demonstrate a fuel cell powered scooter,
which was shown at the Paris International Fair and the Bologna Motor Show in
Bologna, Italy, as well as to European Union officials. We also scaled down
operations in Germany as a cost-saving measure, and entered into a new
consulting arrangement with the inventor of the mid-range fuel cell.

     In 2001, we announced the testing of a small, ultra light, and
significantly more powerful (3KW capability) prototype of the mid-range fuel
cell. We also announced the testing of a scooter powered by the more powerful
fuel cell. Late in 2001, a prototype bicycle powered by our mid range fuel cell
received an Invention of the Year 2001 citation from Time Magazine.

     During 2000, we were hired by the U.S. Army to develop a mid-range fuel
cell evaluation prototype suitable for powering military field radios. The
Army's evaluation tests were completed in December, 2000 and were generally
favorable. Further action will depend upon funding of Army projects and our
state of manufacturing readiness.

     During 2000, we also completed delivery of the concept prototype fuel cell
powered bicycle described above, in collaboration with the Aprilia company, an
Italian motorcycle, scooter, and bicycle manufacturer. The bicycle was exhibited
to the public at the Bologna Motor Show in December, 2000.

     We also contracted with the Electrolux Corporation to develop a fuel cell
evaluation prototype suitable to power a portable vacuum cleaner. Evaluation
tests were successfully completed and further action will depend upon our state
of manufacturing readiness.

     In addition to the foregoing specific contracts, we intend to explore other
potential applications for the mid-range fuel cell technology, as well as
potential strategic relationships with third parties relating to investment,
mass manufacturing, and mass marketing of the technology.

2. HAPTICS "TOUCH AND FEEL" INTERNET APPLICATIONS (NOVINT TECHNOLOGIES, INC.)

     During 2000, we acquired exclusive licenses and sublicenses to certain
haptics Internet applications from Novint Technologies, Inc. Haptics is an
emerging technology that allows computer users to have the physical sensation of
manipulating and touching objects on a computer screen as if they were
three-dimensional, using a special mouse. Detailed texture and viscosity can be
sensed, among many other aspects of touch. We also acquired 36,606 shares of
Novint Technologies, Inc. common stock, and contracted with the developer of the
licensed technology to perform research and development of the licensed
applications for contract payments of $1,500,000. In May 2001, we acquired Teneo
Computing, Inc., a private corporation with rights to certain haptics
applications for dental simulation and oil and gas exploration. We licensed
these rights exclusively to Novint in exchange for various enhanced and amended
license rights with Novint in the areas of Internet applications and interactive
applications. We also acquired an additional 4,066 shares of Novint common
stock, increasing our ownership in Novint to 40,672 shares, subsequently split
into 4,067,200 shares. For accounting purposes, we have treated the acquisition
of the Novint common stock as one transaction. During 2001, Novint worked to
develop and begin commercialization of the dental simulation and oil and gas
exploration applications, among other things. During 2004, we sold 928,590
shares of Novint common stock for cash and services raising approximately
$565,000. In 2005, we sold 1,077,200 shares of Novint common stock for cash and
services raising approximately $615,780. As of December 31, 2005, we own
2,061,410 shares of Novint common Stock, of which 500,000 were pledged as
security for a $200,000 loan from Oro Valley Associates, LLC (see Notes
Payable).


In 2002 and 2003, Novint continued to grow its professional applications, and
supported itself on its own revenues through several research contracts which
Novint is working to expand. Novint also launched a product called BabyLight
Gems. The BabyLight Gems are glass blocks with the image of an unborn baby
etched into it, created from Novint's 3D ultrasound technology.


In 2004, Novint continued to develop products and applications in the haptics
field, including a consumer 3D touch hardware device called the Novint Falcon.
Novint expanded its team to 15 people, and was awarded several new contracts.
Novint also filed a registration statement on Form SB-2 with the Securities and
Exchange Commission (the "SEC").


In 2005, Novint received significant national and international media coverage
when it exhibited at a technology trade show known as the Demo Conference in
Scottsdale Arizona. Novint finalized the design of the Novint Falcon to a point
where it can be utilized by a Chinese manufacturer to create a consumer priced
product. Novint also began work on the first game title that will be packaged
with the Novint Falcon, called Newton's Monkey Business. Newton's Monkey
Business is a collection of small games that truly show the power of 3D touch
interactions in video games.


We believe that haptics technology has the potential to significantly change the
way computers are utilized, and that there are many promising applications.
These include 3-dimensional, touch-enabled online shopping and computer gaming.
We believe that our ownership of Novint stock will benefit our shareholders as
Novint develops these and other promising haptics applications. We intend to
work with Novint in the future to explore available opportunities to develop and
exploit this technology. Many other large companies, including Microsoft, are
developing haptic technology.


                                        7
<PAGE>
     On May 17, 2004, Novint filed a registration statement on Form SB-2 with
the SEC. The registration statement was declared effective on February 3, 2006.
Novint common stock is not yet listed or quoted on any national or regional
stock market Quotation system. We believe, based on information obtained from
Novint, that the Novint Common stock will be quoted and approved for listing on
the Over-the-Counter Bulletin Board in the second quarter of 2006. However, no
assurances can be made that such listing will be approved or if approved that it
will be maintained.

3. HOLOGRAPHIC DATA STORAGE TECHNOLOGY

     Our wholly owned subsidiary, Tamarack Storage Devices, Inc. (a/k/a Holostor
(TM)), previously conducted research and development activities relating to
holographic data storage technology since approximately 1992. Holographic data
storage technology relates to the storage and retrieval of data in the form of
light patterns. In 2002, we sold our portfolio of patents relating to this
technology to a third party, based on our assessment that it was unlikely that
this technology would be commercializable in the near future.

4. DIGITAL IMAGE MANAGEMENT TECHNOLOGY (INVESTMENT IN NMXS.COM, INC.)

     At December 31, 2005, we owned warrants to acquire 1,500,000 shares at an
exercise price of $0.50 per share, of the common stock of NMXS.Com, Inc., a
public company located in Albuquerque, New Mexico. The options were acquired in
2001. NMXS.Com markets Internet technology-based software for the high-speed
transmission of high-resolution graphic images, video clips and audio
recordings, among other things. NMXS.Com's proprietary software provides image
archiving, asset packaging, data mining and secure commerce over the Internet
transaction capabilities.

     We believe NMXS.Com is positioned to capitalize on the growing trend of
businesses converting their photographs, drawings, artwork and other visual
images into formats that can be stored and retrieved electronically. The company
provides solutions particularly suited to companies seeking to develop a
presence on the Internet or become involved in conducting business over the
Internet.

     In 2004, we commenced an action against NMXS.Com, Inc. and its CEO based on
their failure to honor our exercise of certain warrants. The case caption of
that action is Manhattan Scientifics, Inc. v. NMXS.Com, Inc. and Richard
Govatski, Supreme Court, New York Country, Index No. 601793/04. In January 2006,
we settled the litigation with NMXS.Com, Inc. agreeing to pay us $50,000.


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COMPETITION

     The markets in which we compete are highly competitive and constantly
evolving. We face competition from leading researchers and manufacturers
worldwide. For example, in the last few years there has been a much greater
interest in using fuel cells as an energy source for practical, lower powered
applications such as automobiles and portable electronic devices. In addition,
Ford Motor Company has indicated it will contribute several hundred million
dollars as part of a global alliance with other entities to develop automotive
engines powered by fuel cells.

     By reason of the innovative nature of the technologies we are developing,
and the yet unproven markets for such technologies, the markets in which we
compete may have barriers to entry. These include the perception of fuel cell
technologies in general by the investment community, the costs associated with
creating the infrastructure necessary for delivery of hyrdrogen and other fuels,
and the general condition of the economy. There are others working toward
similar objectives in order to penetrate these markets and we anticipate
additional companies will pursue the same goals. Those whose efforts we are
aware of include, without limitation, Medis El, Inc., MTI, Samsung, Toshiba, and
Smart Fuel Cells in the area of micro fuel cells; and Ballard (now our
licensee), Prononex Technologies, Plug Power, Inc., Palcan, Inc., and MTI, Inc.
in the area of mid-range fuel cells.

     We believe that the principal competitive factors in our technology markets
include without limitation:

     o    capitalization;

     o    cost of product;

     o    type of fuel (hydrogen, methanol);

     o    first to market with product in market segment;

     o    strong intellectual portfolio;

     o    product life/reliability;

     o    strong customer base;

     o    strong manufacturing and supplier relationships; and

     o    benchmark power density and energy efficiency.

     Many of our competitors have longer operating histories and significantly
greater financial, marketing and other resources than we have. Furthermore, our
competitors may introduce new products that address our potential markets.
Competition could have a material adverse effect on our business, financial
condition and results of our operations.

INTELLECTUAL PROPERTY

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

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

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

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

SALES AND MARKETING

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

                                       10

<PAGE>
EMPLOYEES

     As of December 31, 2005, we had two full-time employees, both in general
management. Most of our research and development work has been performed by
employees of our various research and development independent contractors (see
below). We have historically indirectly funded the salaries of these individuals
through our contract research and development payments to their employers.
Although not technically our employees, we have considered these individuals to
be an integral part of our research and development team.

     None of our employees are members of any union or collective bargaining
organization. We consider our relationships with employees to be good.

     As noted above, a significant portion of our research and development has
been performed by independent contractors from whom we acquired or licensed
certain technologies, and their various employees. As of December 31, 2005, Mr.
Thomas Anderson, one of the developers of haptics "touch and feel" Novint
technologies, has performed research and development under contract through his
company, Novint Technologies, Inc. Our independent contractors utilize a number
of their own various employees to satisfy their research and development
obligations to us, and their employees are considered to be part of our research
and development team.

COMPANY HISTORY

     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 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 described above. 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, exercisable at any time prior to January
7, 2008, which warrant as of the date of this Form 10-KSB, remains unexercised
and outstanding. Mr. Maslow, our 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.


                                       11
<PAGE>
RISK FACTORS

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

WE MAY NOT HAVE SUFFICIENT CAPITAL TO RUN OUR OPERATIONS.

We have partially financed ourselves in the past through loans from our officers
and loans guaranteed by our officers which have totaled in principal
approximately $825,000. The loans have been repaid in full. If we are unable to
obtain further financing, it may jeopardize our ability to continue our
operations. To the extent that additional capital is raised through the sale of
equity and/or convertible debt securities, the issuance of such securities could
result in dilution to our shareholders and/or increased debt service
commitments. If adequate funds are not available, we may be unable to
sufficiently develop or maintain our existing operations.

BECAUSE WE HAVE EARNED VERY LITTLE IN REVENUES, THE SUCCESS OF OUR BUSINESS
REQUIRES CONTINUED FUNDING. IF WE CANNONT RAISE THE MONEY WE NEED TO SUPPORT OUR
OPERATIONS UNTIL WE EARN SIGNIFICANT REVENUES, WE MAY BE REQUIRED TO CURTAIL OR
TO CEASE OUR OPERATIONS AND YOU COULD LOSE YOUR ENTIRE INVESTMENT.

Our ability to develop our business depends upon our receipt of money to
continue our operations while we introduce our products and a market for them
develops. If this funding is not received as needed, it is unlikely that we
could continue our business, in which case you would lose your entire
investment. Our ability to access the capital markets has been hindered
generally by the overall economic downturn in recent years and specifically by
the capital markets waning interest in small technology concept companies with
insignificant revenues.

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

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

Our future performance will depend to a substantial degree upon our ability to
effectuate and generate revenues from our licensing and royalty business model.
In this regard, we have licensed technology and generate royalty payments from
the sale of products utilizing such technology. However, there is no assurance
of our ability to effectively license our technologies or that a market for our
technologies will develop to generate sustainable revenues through royalty
payments.

WE MAY FACE STRONG COMPETITION FROM LARGER, ESTABLISHED COMPANIES.

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

WE MAY LOSE OUR ABILITY TO MAINTAIN DIRECTORS' AND OFFICERS' INSURANCE WHICH
COULD HAVE AN ADVERSE AFFECT ON OPERATIONS.

We have struggled to maintain adequate directors' and officers' insurance for
our management. The coverage is maintained at limited levels and carries a large
deductible cost to be born by the directors and officers. In light of
Sarbanes-Oxley Act of 2002, it has become increasingly difficult for
small-capitalized public companies to obtain such insurance at a reasonable
cost. If we are unable to maintain such insurance it could lead to the loss of
one or more officers and directors which would have a material adverse effect on
our operations and our ability to function as a public entity.

                                       12
<PAGE>
WE ARE DEPENDENT FOR OUR SUCCESS ON A FEW EMPLOYEES. THE LOSS OF ONE OR MORE OF
THESE EMPLOYEES COULD HAVE AN ADVERSE EFFECT ON OUR OPERATIONS.

Our future success will depend, to a significant degree, on the continued
services of our Chief Executive Officer, Marvin Maslow, our Chief Operating
Officer, Jack Harrod and on our ability to attract, motivate and retain highly
qualified and talented personnel as the need arises. Loss of the service of Mr.
Maslow or Mr. Harrod would have a material adverse effect on our business and
operations.

WE CANNOT ASSURE YOU THAT WE WILL BE SUCCESSFUL IN DEVELOPING AND
COMMERCIALIZING ADDITIONAL PRODUCTS.

Our ability to successfully develop any additional products is uncertain.
Potential new products may require additional research, development, testing,
regulatory approval and additional investment prior to their commercialization,
which may not be successful. There can be no assurance that we can develop
commercially successful products in the future.

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

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

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

If we were to become involved in disputes regarding the use or ownership of
intellectual property rights, we could incur substantial costs in defending or
prosecuting any such action and the defense or prosecution of the action would
likely result in a diversion of management resources. Any dispute relating to
our intellectual property could have a material adverse effect on our business.

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

Our existing directors, executive officers, and their respective affiliates are
the beneficial owners of 20.7% of the outstanding shares of common stock and
common stock equivalents, including convertible stock options. As a result, our
existing directors, executive officers, principal shareholders and their
respective affiliates, if acting together, would be able to exercise significant
influence over all matters requiring shareholder approval, including the
election of directors and the approval of significant corporate transactions.
Such concentration of ownership may also have the effect of delaying or
preventing a change in control of our company.


                                       13

<PAGE>
THE COMPANY'S LARGEST SHAREHOLDER FILED FOR BANKRUPTCY IN 2003 WHICH COULD HAVE
A NEGATIVE EFFECT ON OUR SHARE PRICE AND INHIBIT OUR ABILITY TO OPERATE.

Lancer Partners, an institutional hedge fund, filed for Chapter 11 bankruptcy
protection in June 2003. Lancer Partners, through its affiliate funds, owns
45,000,000 shares of our Common Stock as well as an option to purchase
10,000,000 shares of our common stock at a price of $0.05 per share. These
shares are now controlled by the bankruptcy trustee.

The control by the bankruptcy trustee of such a large block of stock could
adversely effect our share price if they decide to sell the shares on the
market. The effect of such a large concentration of shares on the market even
over a period of time could reduce our share price and hinder the liquidity of
other shareholders. In turn, a further reduction in our share price would hinder
our access to capital or negatively effect the terms upon which we are to
receive such capital. While we are seeking a solution with the bankruptcy
trustee as to the disposition of such shares, there is no guarantee that we will
come to a resolution that is favorable to our company.

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

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

     o    variations in anticipated or actual results of operations;

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

     o    changes in earnings estimates of operational results by analysts;

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

     o    an overall downturn in the financial markets and stock markets;

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

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

     o    developments or disputes concerning our intellectual property.

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

                                       14

<PAGE>
WE HAVE NO PAID CASH DIVIDENDS AND IT IS UNLIKELY THAT WE WILL PAY CASH
DIVIDENDS IN THE FORESEEABLE FUTURE.

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

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

Our Certificate of Incorporation currently authorize the Board of Directors to
issue up to 250,000,000 shares of Common Stock and 1,000,000 shares of Preferred
Stock. The power of the Board of Directors to issue shares of Common Stock or
warrants or options to purchase shares of Common Stock is generally not subject
to shareholder approval. Accordingly, any additional issuance of our Common
Stock may have the effect of further diluting your investment.

WE MAY RAISE ADDITIONAL CAPITAL THROUGH A SECURITIES OFFERING THAT COULD DILUTE
YOUR OWNERSHIP INTEREST.

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

WE MAY RUN OUT OF AUTHORIZED CAPITAL PRIOR TO RECEIVING SHAREHOLDER APPROVAL TO
AMEND OUR CERTIFICATE OF INCORPORATION TO INCREASE OUR AUTHORIZED CAPITAL.

As of March 23, 2006, we have 185,280,357 shares of common stock outstanding.
Our certificate of incorporation authorizes us to issue 250,000,000 shares of
common stock. If we are not able to increase our authorized capital, we may not
be able to raise additional funds or pay service providers which could be
harmful to our business or cause us to cease operations altogether.

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

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

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

Our common stock is subject to the "penny stock rules" adopted pursuant to Rule
15g-9 of the Securities and Exchange Acto of 1934, as amended, which apply to
non-NASDAQ companies whose common stock trades at less than $5.00 per share or
which has a tangible net worth of less than $5,000,000 -or $2,000,000 if we have
been operating for three or more years. The penny stock rules impose additional
sales practice requirements on broker-dealers which sell such securities to
persons other than established customers and institutional accredited investors.
For transactions covered by this rule, a broker-dealer must make a special
suitability determination for the purchase and have received the purchaser's
written consent to the transaction prior to sale. Consequently, the penny stock
rules affect the ability of broker-dealers to sell shares of our common stock
and may affect the ability of shareholders to sell their shares in the secondary
market if such a market should ever develop, as compliance with such rules may
delay and/or preclude certain trading transactions. The penny stock rules could
have an adverse effect on the liquidity and/or market price of our common stock.

                                       15
<PAGE>
WE ARE SUBJECT TO THE PROVISIONS OF THE DELAWARE BUSINESS COMBINATION ACT, WHICH
COULD DISCOURAGE OR PREVENT A POTENTIAL TAKEOVER OF OUR COMPANY THAT MIGHT
OTHERWISE RESULT IN YOU RECEIVING A PREMIUM OVER THE MARKET PRICE FOR YOUR
COMMON SHARES.

As a Delaware corporation, we are subject to the Delaware Business Combination
Act which precludes a shareholder who owns 15% or more of our shares from
entering into a "business combination" involving our company for a period of
three years, unless (1) our board of directors approves the combination before
the shareholder acquires the 15% interest; (2) the interested shareholder
acquires at least 85% of our shares as part of the transaction in which he
acquired the initial 15%, excluding shares owned by our officers who are also
directors and voting stock held by employee benefit plans; or (3) the
combination is approved by our board of directors by a majority vote and
two-thirds of our other shareholders at a duly called shareholders' meeting. A
"business combination" is defined as (1) a merger or consolidation requiring
shareholder approval, (2) the sale, lease, pledge, or other disposition of our
assets, including by dissolution, having at least 50% of the entire asset value
of our company, or (3) a proposed tender or exchange offer of 50% or more of our
voting stock.

THE ELIMINATION OF MONETARY LIABILITY AGAINST OUR DIRECTORS, OFFICERS AND
EMPLOYEES UNDER OUR CERTIFICATE OF INCORPORATION AND THE EXISTENCE OF
INDEMNIFICATION RIGHTS TO OUR DIRECTORS, OFFICERS AND EMPLOYEES MAY RESULT IN
SUBSTANTIAL EXPENDITURES BY OUR COMPANY AND MAY DISCOURAGE LAWSUITS AGAINST OUR
DIRECTORS, OFFICERS AND EMPLOYEES.

Our certificate of incorporation contains provisions which eliminate the
liability of our directors for monetary damages to our company and shareholders
to the maximum extent permitted under Delaware corporate law. Our bylaws also
require us to indemnify our directors to the maximum extent permitted by
Delaware corporate law. We may also have contractual indemnification obligations
under our agreements with our directors, officers and employees. The foregoing
indemnification obligations could result in our company incurring substantial
expenditures to cover the cost of settlement or damage awards against directors,
officers and employees, which we may be unable to recoup. These provisions and
resultant costs may also discourage our company from bringing a lawsuit against
directors, officers and employees for breaches of their fiduciary duties, and
may similarly discourage the filing of derivative litigation by our shareholders
against our directors, officers and employees, even though such actions, if
successful, might otherwise benefit our company and shareholders. To the extent
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of our company under
the above provisions, or otherwise, we have been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act, and is, therefore, unenforceable.

ITEM 2. DESCRIPTION OF PROPERTY

     Our principal executive office is at 405 Lexington Avenue, New York, New
York. We lease approximately 300 square feet of office space on a month-to-month
basis. The aggregate rental cost for this office space was $12,000 in 2005.

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

ITEM 3. LEGAL PROCEEDINGS

     In 2004, we commenced an action against NMXS.Com, Inc. and its CEO based on
their failure to honor our exercise of certain warrants. The case caption of
that action is Manhattan Scientifics, Inc. v. NMXS.Com, Inc. and Richard
Govatski, Supreme Court, New York Country, Index No. 601793/04. Counterclaims to
set aside the warrants have been asserted against us in this action. In January
2006, we settled the litigation with NMXS.Com, Inc. with NMXS.Com, Inc. agreeing
to pay us $50,000. We are subject from time to time to litigation, claims and
suits arising in the ordinary course of business. As of December 31, 2005, we
were not a party to any material litigation, claim or suit whose outcome could
have a material effect on our financial statements other than the litigation
described above which was subsequently settled.

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

         None.

                                       16
<PAGE>
                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     Our Common Stock trades on NASDAQ's Over-The-Counter Bulletin Board under
the symbol "MHTX.OB". The following table sets forth for the periods indicated,
the high and low per share bid information for our common stock for the last two
fiscal years as reported by Yahoo Finance. Such high and low bid information
reflects inter-dealer quotes, without retail mark-up, mark down or commissions
and may not represent actual transactions.


                                       17

<PAGE>
                                   Bid Prices

2005                                                             High      Low
                                                                ------    ------
First Quarter.......................................            $ .076    $.055
Second Quarter......................................              .065     .045
Third Quarter.......................................              .077     .032
Fourth Quarter......................................              .089     .052

2004                                                             High      Low
                                                                ------    ------
First Quarter.......................................            $  .16    $ .06
Second Quarter......................................               .16      .08
Third Quarter.......................................              .013      .06
Fourth Quarter......................................               .10      .05

     As of March 23, 2006, we had 592 registered shareholders and 185,280,357
shares of Common Stock issued and outstanding.

DIVIDENDS.

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

RECENT SALES OF UNREGISTERED SECURITIES

     During the past three years, we have issued unregistered securities in the
following transactions:

     In February 2006, the Company issued 795,324 shares for repayment of
research and development services valued at $42,955. This transaction was exempt
from registration pursuant to Section 4(2) of the Securities Act of 1933.

     In February 2006, the Company issued 155,000 shares for administrative
services valued at $7,750. This transaction was exempt from registration
pursuant to Section 4(2) of the Securities Act of 1933.

     In March 2005, the Company issued 250,000 shares for consulting services
values at $16,750. This transaction was exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933.

     In January 2005, the Company issued 100,000 shares for consulting services
valued at $6,200. This transaction was exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933.

     In January 2005, the Company issued 500,000 shares for legal services
valued at $31,000. This transaction was exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933.

     In December 2004, the Company issued 165,000 shares for professional
services valued $10,230. This transaction was exempt from registration pursuant
to Section 4(2) of the Securities Act of 1933.

     In December 2004, the Company issued 250,000 shares for consulting services
valued $15,500. This transaction was exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933.

     In November 2004, the Company issued 1,000,000 shares for legal services
valued at $62,000. This transaction was exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933.

     In November 2004, the Company issued 500,000 shares for consulting services
valued at $31,000. This transaction was exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933.

     In November 2004, the Company issued 350,000 shares for consulting services
valued at $19,600. This transaction was exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933.

                                       18
<PAGE>
     In November 2004, the Company issued 641,274 shares for repayment of a
promissory note with a conversion price of $0.056 per share. This transaction
was exempt from registration pursuant to Regulation D promulgated under the
Securities Act of 1933.

     In November 2004, the Company issued a four year warrant to purchase
4,000,000 shares with an exercise price of $0.05 per share and a two year 8%
promissory note in the amount of $200,000 to an accredited investor. This
transaction was exempt from registration pursuant to Regulation D promulgated
under the Securities Act of 1933.

     In August 2004, the Company issued 500,000 shares for professional services
valued at $40,000. This transaction was exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933.

     In May 2004, the Company issued 400,000 shares to a consultant for
consulting services values at $58,000. This transaction was exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933.

     In May 2004, the Company issued 866,000 shares upon the cashless exercise
of a stock option with an exercise price of $0.02. This transaction was exempt
from registration pursuant to Section 4(2) of the Securities Act of 1933.

     In March 2004, the Company issued 1,500,000 shares to outside counsel for
legal services valued at $240,000. This transaction was exempt from registration
pursuant to Section 4(2) of the Securities Act of 1933.

     In March 2004, the Company issued 100,000 shares to a consultant for
accounting services valued at $16,000. This transaction was exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933.

     In March 2004, the Company issued a total of 68,000 shares to four
consultants for secretarial and administrative services valued collectively at
$10,880. This transaction was exempt from registration pursuant to Section 4(2)
of the Securities Act of 1933.

     In October 2003, the Company issued 250,000 shares to outside counsel for
legal services valued at $20,000. This transaction was exempt from registration
pursuant to Section 4(2) of the Securities Act of 1933.

     In October 2003, the Company issued 335,000 shares to outside counsel for
legal services valued at $21,775. This transaction was exempt from registration
pursuant to Section 4(2) of the Securities Act of 1933.

     From April through June 2003, the Company granted a total of 6,695,000
shares in exchange for options to purchase shares of the Company's common stock.
The shares had a value of $267,800 at the time of the exchange. This transaction
was exempt from registration pursuant to Section 4(2) of the Securities Act of
1933.

     In June 2003, the Company granted a total of 2,000,000 options to purchase
common stock to two of the Company's directors as compensation with a total
value of $130,000. 50% of the options vest upon issuance and 50% vested in June
2004 . This transaction was exempt from registration pursuant to Section 4(2) of
the Securities Act of 1933.

     In June 2003, the Company issued 1,585,000 shares to three consultants for
services valued at $76,750. This transaction was exempt from registration
pursuant to Section 4(2) of the Securities Act of 1933.

     In March and April 2003, the Company granted a total of 24,750,000 shares
and 3,000,000 options to purchase common stock to the Company's officers and
directors as compensation with a total value of $892,000. This transaction was
exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

     In March 2003, the Company issued 1,600,000 to four consultants for
services related to legal issues and public relations and valued at $64,000.
This transaction was exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933.

     In March 2003, the Company issued 2,000,000 shares to outside securities
counsel for providing legal services valued at $80,000. This transaction was
exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

                                       19

<PAGE>
     In March 2003, the Company issued 20,000 shares to each of three
consultants (60,000 shares total) for providing secretarial and administrative
services valued at $2,700 to the Company. This transaction was exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933.

     In February 2003, we sold 1,000,000 shares of our common stock to one
accredited investor for $40,000. This transaction was exempt from registration
pursuant to Regulation D promulgated under the Securities Act of 1933.

     In October 2002, the Company issued 75,000 shares of common stock valued at
$6,150 to a consultant for providing services to the Company. This transaction
was exempt from registration pursuant to Section 4(2) of the Securities Act of
1933.

     From July to September 2002, the Company issued a total of 795,301 shares
of common stock valued at $89,530 to consultants for providing services to the
Company. These transactions were exempt from registration pursuant to Section
4(2) of the Securities Act of 1933.

     In May 2002, the Company issued 273,216 shares of common stock valued at
$65,067 to two service providers for services rendered to the Company. This
transaction was exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933.

     In May 2002, the Company issued 1,000,000 shares of common stock for
$100,000 to one accredited investor. This transaction was exempt from
registration pursuant to Regulation D promulgated under the Securities Act of
1933.

     In May 2002, the Company issued 200,000 shares of common stock for $30,000
to one accredited investor. This transaction was exempt from registration
pursuant to Regulation D promulgated under the Securities Act of 1933.

     In April 2002, the Company contracted to sell 400,000 shares of common
stock to one accredited investor for $100,000. This transaction was exempt from
registration pursuant to Regulation D promulgated under the Securities Act of
1933.

     In April 2002, the Company sold 600,000 shares of common stock to one
accredited investor for $150,000. This transaction was exempt from registration
pursuant to Regulation D promulgated under the Securities Act of 1933. In March
2002, the Company issued 100,000 shares of common stock in connection with the
conversion of Series B preferred shares at a rate of 1 Series B preferred share
to 10 common shares. This transaction was exempt from registration pursuant to
Regulation D promulgated under the Securities Act of 1933.

     In February 2002, the Company issued 620,000 shares of common stock valued
at $206,300 to consultants for services rendered. This transaction was exempt
from registration pursuant to Section 4(2) of the Securities Act of 1933.

     In February 2002, the Company issued 975,000 shares of common stock to a
consultant for research and development costs. This transaction was exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933.

     In January 2002, the Company sold 285,700 shares of common stock to one
accredited investor for $100,000. This transaction was exempt from registration
pursuant to Regulation D promulgated under the Securities Act of 1933.

     In January 2002, the Company sold 850,000 shares of common stock to one
accredited investor for $255,000. This transaction was exempt from registration
pursuant to Regulation D promulgated under the Securities Act of 1933.

     In January 2002, the Company issued 19,110 shares of common stock valued at
$7,644 to a consultant for services rendered. This transaction was exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933.

                                       20

<PAGE>
Securities Authorized for Issuance under Equity Incentive Plans

Set forth in the table below is information regarding awards made through
compensation plans or arrangements through December 31, 2005, the most recently
completed fiscal year.

<TABLE>
<CAPTION>
--------------------------------------- ----------------------------------- ------------------------ -------------------------------
                                                                                                     Number of securities
                                                                                                     remaining available for
                                                                            Weighted average         future issuance under
equity
                                        Number of securities to be issued   exercise price of        compensation plans
(excluding
                                        upon exercise of outstanding        outstanding options,     securities reflected in
Plan Category                           options, warrants and rights        warrants and rights      column 2)
--------------------------------------- ----------------------------------- ------------------------ -------------------------------
<S>                                                <C>                           <C>                   <C>
Equity Compensation Plans Approved by
Security Holders                                       N/A                                  N/A                      N/A
--------------------------------------- ----------------------------------- ------------------------ -------------------------------
Equity Compensation Plans Not
Approved by Security Holders                            0                                   N/A                  60,649,763
--------------------------------------- ----------------------------------- ------------------------ -------------------------------
</TABLE>
     Our 1998 Stock Option Plan (the "1998 Plan"), authorizes the issuance of
options and Common Stock to officers, employees and directors. We reserved
30,000,000 shares of our Common Stock for awards to be made under the 1998 Plan.
The 1998 Plan allows for the issuance of either incentive stock options (which,
pursuant to Section 422 of the Internal Revenue Code, can only be granted to
employees) or non-qualified stock options. The 1998 Plan is administered by a
committee of two or more members of the Board of Directors or, if no committee
is appointed, then by the Board of Directors. The committee, or the Board of
Directors if there is no committee, determines the type of option granted, the
exercise price, the option term, which may be no more than ten years, terms and
conditions of exercisability and methods of exercise. Options must vest within
ten years. Under the 1998 Plan, the exercise price may not be less than fair
market value on the date of grant for both incentive stock options and
non-qualified stock options. The number of options under the 1998 Plan available
for grant at December 31, 2005 was 30,000,000.

     In 2000, our Board of Directors adopted the 2000 Equity Incentive Plan (the
"2000 Plan"). The 2000 Plan authorizes the issuance of options, right to
purchase Common Stock and stock bonuses to officers, employees, directors and
consultants. We reserved 30,000,000 shares of our Common Stock for awards to be
made under the 2000 Plan. On September 14, 2001, we filed a registration
statement on Form S-8 to register 900,000 of these shares. On November 19, 2001,
we registered an additional 550,000 shares of our common stock for issuance
under the 2000 Plan. On January 30, 2002, we registered an additional 975,000
shares of our common stock for issuance under the 2000 Plan. On March 22, 2002,
we registered an additional 925,000 shares of our common stock for issuance
under the 2000 Plan. On July 12, 2002, we registered an additional 990,000
shares of our common stock for issuance under the 2000 Plan. On January 17,
2003, we registered an additional 8,000,000 of our common stock for issuance
under the 2000 Plan. The 2000 Plan is administered by a committee of two or more
members of the Board of Directors or, if no committee is appointed, then by the
Board of Directors. The 2000 Plan allows for the issuance of incentive stock
options (which, pursuant to Section 422 of the Internal Revenue Code, can only
be granted to employees), non-qualified stock options, stock appreciation
rights, stock awards, or stock bonuses. The committee, or the Board of Directors
if there is no committee, determines the type of option granted, the exercise
price, the option term, which may be no more than ten years, terms and
conditions of exercisability and methods of exercise. Options must vest within
ten-years. Under the 2000 Plan, the exercise price may not be less than fair
market value on the date of grant for the incentive stock options. The 2000 Plan
also allows for the granting of Stock Appreciation Rights. No Stock Appreciation
Rights have been granted. The number of shares under the 2000 Plan available for
grant at December 31, 2005 was 25,281,000.

                                       21

<PAGE>
     In November 2004, our Board of Directors adopted the 2004 Consultant Stock
Plan (the "2004 Plan"). The purpose of this 2004 Consultant Stock Plan is to
advance the interests of the Company by helping the Company obtain and retain
the services of persons providing consulting services upon whose judgment,
initiative, efforts and/or services the Company is substantially dependent, by
offering to or providing those persons with incentives or inducements affording
such persons an opportunity to become owners of capital stock of the Company. We
reserved 2,000,000 shares of our Common Stock for awards to be made under the
2004 Plan. We filed a registration statement of Form S-8 with the SEC on
November 26, 2004 to register the shares underlying the 2004 plan. The 2004 Plan
is administered by a committee of two or more members of the Board of Directors
or, if no committee is appointed, then by the Board of Directors. The committee,
or the Board of Directors if there is no committee, determines who is eligible
to receive awards under the plan, grant awards and interpret the 2004 Plan. The
number of shares under the 2004 Plan available for grant at December 31, 2005
was 500,000.

     On May 9, 2005, our Board of Directors adopted the 2005 Equity Compensation
Plan (the "2005 Plan"). The purpose of this Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to our success, by offering them an opportunity to
participate in the our future performance through awards of Options, the right
to purchase Common Stock and Stock Bonuses. We reserved 10,000,000 shares of our
Common Stock for awards to be made under the 2005 Plan. The 2005 Plan is
administered by a committee of two or more members of the Board of Directors or,
if no committee is appointed, then by the Board of Directors. The committee, or
the Board of Directors if there is no committee, determines who is eligible to
receive awards under the plan, grant awards and interpret the 2005 Plan. We
filed a registration statement of Form S-8 with the SEC on June 8, 2005 to
register the shares underlying the 2005 plan. The number of shares under the
2005 Plan available for grant at December 31, 2005 was 4,868,763.

                                       22

<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

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

OVERVIEW

In January 1998, Manhattan Scientifics, Inc. then a non-operating public
corporation with nominal net assets acquired all of the outstanding common stock
of Tamarack Storage Devices, Inc. by issuing 44 million shares of its common
stock including approximately 43,120,000 shares issued to Projectavision, a
public company which gave the stockholders of Tamarack actual control of the
combined company. In addition, Manhattan Scientifics, Inc. issued 182,525 shares
Series A preferred stock and a warrant to purchase 750,000 shares of its common
stock at an exercise price of 10 cents per share in exchange for a note payable
of $1.5 million plus accrued interest of $330,000 due to Projectavision from
Tamarack. In connection with the legal form of this transaction, Tamarack became
a wholly-owned subsidiary of Manhattan Scientifics, Inc. For accounting
purposes, the acquisition was treated as a recapitalization of Tamarack rather
than a business combination. Tamarack as the accounting acquirer of the public
shell did not record goodwill or any other intangible asset for this "Reverse
Acquisition". The historical financial statements are those of Tamarack.
Tamarack, a development stage enterprise, was a Texas corporation formed in July
1992. Since inception, Tamarack was involved in the research and development of
products based on holographic data storage technology. Loss per share has been
restated for all periods prior to the acquisition to include the number of
equivalent shares received by Tamarack's stockholders in the Reverse
Acquisition.

Since the Reverse Acquisition we have been acquiring and licensing technologies,
directing, supervising and coordinating our research and development efforts,
raising capital, and initiating commercialization activities and dialogue with
potential customers.

As of December 31, 2005, we had an accumulated loss since inception, 1992, of
$40,788,000. Included in this accumulated loss are charges amounting to
approximately $19,981,000 relating to the issuance of equity instruments for
services and approximately $6,700,000 from Tamarack prior to our acquisition of
Tamarack. We expect operating losses to continue for the foreseeable future
because of general and administrative expenses, although the commercialization
process has begun on three of the Company's four technology investments.

We do not know if our marketing efforts will be successful, that we will ever
have commercially acceptable products, or that we will achieve significant sales
of any such products. We operate in an environment of rapid change in technology
and we are dependent upon the services of our employees, consultants and
independent contractors. If we are unable to successfully bring our technologies
to commercialization, we would likely have to significantly alter our business
plan and may cease operations.

                                       23
<PAGE>
COMPARISON OF YEAR ENDED DECEMBER 31, 2005 TO YEAR ENDED DECEMBER 31, 2004.

NET LOSS. We reported a net loss of $219,000, $.00 per common share, basic and
diluted, for the year December 31, 2005, versus a net loss of $1,517,000, or
$.00 per common share, basic and diluted, for the year ended December 31, 2004.
The decrease of $1,298,000 or 86% resulted from our sale of equity interest in
the licensee for the mid-range fuel cell technology for approximately $885,000.

REVENUES. We had no revenues for the year ended December 31, 2005 and
revenues of $150,000 for the year ended December 31, 2004. The decrease of
$150,000 resulted from us not entering any new licensing agreement during 2005.

OPERATING COSTS AND EXPENSES. Operating costs and expenses for the year ended
December 31, 2005 totaled $1,618,000, a decrease of $661,000, or 29%, versus
costs and expenses of $2,279,000 for the year ended December 31, 2004. These
costs and expenses are detailed below.

GENERAL AND ADMINISTRATIVE. General and administrative expenses were $1,391,000
for the year ended December 31, 2005, which consisted of consultants,
contractors, accounting, legal, travel, rent, telephone and other day to day
operating expenses, versus general and administrative expenses of $1,946,000 for
the year ended December 31, 2004. This decrease of $555,000, or 29%, is
primarily a result of the fact that, in 2004, we recorded charges for the
issuance of stock and stock options for services, whereas in the fiscal 2005
period, we issued less stock for services. We anticipate no significant change
in general and administrative expenses in the near future.

RESEARCH AND DEVELOPMENT. Research and development expenses were $227,000 for
year ended December 31, 2005, which consisted of amortization of patents and
contract research services. Research and development expenses amounted to
$333,000 for the year ended December 31, 2004.

LIQUIDITY AND PLAN OF OPERATIONS

We are a development stage company and are in the technology 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, and as described below, we have also relied
upon borrowing from the Company's two senior officers, CEO Maslow and COO
Harrod, and through a bank guarantee made by Mr. Maslow of a traditional loan
which has been retired. 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 these 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.

                                       24
<PAGE>
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 2,061,410 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.

Stockholders' equity totaled a deficit of $1,662,000 on December 31, 2005 and
the working capital was a deficit of $2,319,000 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 milestone payments, intellectual property protection,
utilities and telephone, office supplies, additional consultants, legal and
accounting. As of December 31, 2005, we had $364,000 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.

                                       25
<PAGE>
RECENTLY ISSUED ACCOUNTING STANDARDS

In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based
Payment" ("SFAS 123(R)"). SFAS 123(R) will provide investors and other users of
financial statements with more complete and neutral financial information by
requiring that the compensation cost relating to share-based payment
transactions be recognized in financial statements. That cost will be measured
based on the fair value of the equity or liability instruments issued. SFAS
123(R) covers a wide range of share-based compensation arrangements including
share options, restricted share plans, performance-based awards, share
appreciation rights, and employee share purchase plans. SFAS 123(R)replaces SFAS
No. 123, "Accounting for Stock-Based Compensation", and supersedes APB Opinion
No. 25, "Accounting for Stock Issued to Employees". SFAS 123, as originally
issued in 1995, established as preferable a fair-value-based method of
accounting for share-based payment transactions with employees. However, that
Statement permitted entities the option of continuing to apply the guidance in
Opinion 25, as long as the footnotes to financial statements disclosed what net
income would have been had the preferable fair-value-based method been used.
Public entities (other than those filing as small business issuers) will be
required to apply SFAS 123(R) as of the first interim or annual reporting period
that begins after December 15, 2005. The Company has evaluated the impact of the
adoption of SFAS 123(R), and believes that it could have an impact to the
Company's overall results of operations depending on the number of stock options
granted in a given year.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets, an amendment of APB Opinion No. 29, Accounting for Nonmonetary
Transactions" ("SFAS 153"). The amendments made by SFAS 153 are based on the
principle that exchanges of nonmonetary assets should be measured asset not the
fair value of the assets exchanged. Further, the amendments eliminate the narrow
exception for nonmonetary exchanges of similar productive assets and replace it
with a broader exception for exchanges of nonmonetary assets that do not have
commercial substance. Previously, Opinion 29 required that the accounting for an
exchange of a productive asset for a similar productive asset or an equivalent
interest in the same or similar productive asset should be based on the recorded
amount of the asset relinquished. Opinion 29 provided an exception to its basic
measurement principle (fair value) for exchanges of similar productive assets.
That exception required that some nonmonetary exchanges, although commercially
substantive, to be recorded on a carryover basis. By focusing the exception on
exchanges that lack commercial substance, the FASB believes SFAS 153 produces
financial reporting that more faithfully represents the economics of the
transactions. SFAS 153 is effective for non-monetary asset exchanges occurring
in fiscal periods beginning after June 15, 2005. Earlier application is
permitted for non-monetary asset exchanges occurring in fiscal periods beginning
after the date of issuance. The provisions of SFAS 153 shall be applied
prospectively. The Company has adopted of SFAS 153,
and there was no impact to the Company's overall
results of operations or financial position.

Going Concern
-------------

Our independent registered public accounting firm has stated in their audit
report on the Company's December 31, 2005 consolidated financial statements,
that we have experienced recurring losses and have working capital deficit. The
conditions, among others, raise substantial doubt about our ability to continue
as a going concern.

                                       26
<PAGE>
Critical Accounting Policies and Estimates
------------------------------------------

Our discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements, which have been prepared
in accordance with accounting principals generally accepted in the United States
of America. The preparation of these consolidated financial statements requires
us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses and related disclosures of contingent assets
and liabilities. On an ongoing basis, we evaluate our estimates, including those
related to reserves, impairment of long-lived assets, value of out stock issued
to consultants for services and estimates of costs to complete contracts. We
base our estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying value assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions; however,
we believe that our estimates, including those for the above-described items,
are reasonable.

Off Balance Sheet Arrangements
------------------------------

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


                                       27
<PAGE>
ITEM 7. FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                                                  PAGE
                                                                                  ----
CONSOLIDATED FINANCIAL STATEMENTS
<S>                                                                                  <C>

    Report of Independent Registered Public Accounting Firm                        F-2

    Consolidated Balance Sheet as of December 31, 2005                             F-3

    Consolidated Statements of Operations for the years ended
        December 31, 2005, 2004 and the period from July 31, 1992
        (inception) through December 31, 2005                                      F-4

    Consolidated Statements of Stockholders' equity (capital deficit)
        for the years ended December 31, 2004 and for the cumulative
        period from July 31, 1992 (inception) through December 31, 2005            F-5

    Consolidated Statements of Cash Flows for the years ended
        December 31, 2005, 2004 and for the period from July 31, 1992
        (inception) through December 31, 2005                                      F-22

    Notes to consolidated financial statements                                     F-24
</TABLE>
                                      F-1
<PAGE>

                 AJ. ROBBINS, P.C. CERTIFIED PUBLIC ACCOUNTANTS
                              216 SIXTEENTH STREET
                                    SUITE 600
                             DENVER, COLORADO 80202

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Manhattan Scientifics, Inc.
New York, New York

We have audited the accompanying consolidated balance sheet of Manhattan
Scientifics, Inc. (a development stage company) as of December 31, 2005, and the
related consolidated statements of operations, changes in stockholders' equity
(capital deficit), and cash flows for each of the years in the two year period
then ended. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Manhattan
Scientifics, Inc. as of December 31, 2005, and the results of its operations and
its cash flows for each of the years in the two year period then ended, in
conformity with generally accepted accounting principles in the United States of
America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note B to the
financial statements, the Company has experienced recurring losses and negative
cash flows from operations and has both a working capital and a capital deficit
at December 31, 2005, that raise substantial doubt about its ability to continue
as a going concern. Management's plans in regard to these matters are also
described in Note B. The financial statements do not include any adjustments
that might results from the outcome of this uncertainty.


                                AJ. ROBBINS, P.C.
                          CERTIFIED PUBLIC ACCOUNTANTS

Denver, Colorado
March 1, 2006


                                      F-2


<PAGE>
                  MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
                        (a development stage enterprise)

                           CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>


ASSETS                                                                                                December 31, 2005
                                                                                                   ---------------------
<S>                                                                                                            <C>
Current assets:
Cash and cash equivalents                                                                          $             364,000
Prepaid expenses and other assets                                                                                149,000
                                                                                                   ---------------------
Total current assets                                                                                             513,000

Property and equipment, net                                                                                       43,000
Investments                                                                                                        2,000
Patents, net of accumulated amoritization of $1,470,000                                                          610,000
Other asset                                                                                                        2,000
                                                                                                   ---------------------

Total assets                                                                                       $           1,170,000
                                                                                                   =====================
                         LIABILITIES AND CAPITAL DEFICIT

LIABILITIES
Current liabilities
Accounts payable and accrued expenses                                                              $           1,215,000
Accrued interest and expenses - related parties                                                                  255,000
Notes payable to officers                                                                                      1,100,000
Notes payable - other                                                                                            262,000
                                                                                                   ---------------------

Total current liabilities                                                                                      2,832,000
                                                                                                   ---------------------

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, 183,830,033 shares issued and outstanding                                 183,000
Additional paid-in-capital                                                                                    43,948,000
Deficit accumulated during the development stage                                                             (45,793,000)
                                                                                                   ---------------------

Total capital deficit                                                                                         (1,662,000)
                                                                                                   ---------------------

                                                                                                   $           1,170,000
                                                                                                   =====================
</TABLE>
See notes to consolidated financial statements.

                                      F-3
<PAGE>
                  MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
                        (a development stage enterprise)

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                                     PERIOD FROM
                                                                                                    JULY 31, 1992
                                                                   YEAR ENDED                        (INCEPTION)
                                                                  DECEMBER 31,                         THROUGH
                                                             2005             2004                December 31, 2005
                                                        ----------------  ---------------          ---------------
<S>                                                          <C>               <C>                     <C>
Revenue                                                 $              -  $       150,000          $       856,000

Operating costs and expenses:
General and administrative                                     1,391,000        1,946,000               37,785,000
Research and development                                         227,000          333,000                8,391,000
Impairment charge of certain patents                                   -                -                  189,000
                                                        ----------------  ---------------          ---------------

Total operating costs and expenses                             1,618,000        2,279,000               46,365,000
                                                        ----------------  ---------------          ---------------

Loss from operations before other income and expenses         (1,618,000)      (2,129,000)             (45,509,000)

Other income and expenses:
 Gain from sale of equity interest                               885,000                -                  885,000
 Proceeds from sale of NMSX.com common stock                           -                -                  393,000
 Gain from sale of Novint Technologies Inc.
 common stock                                                    616,000          578,000                1,194,000
 Gain on issuance of investor common stock                             -          531,000                  531,000
 Contract revenue                                                      -           90,000                3,741,000
 Interest and other expenses                                    (105,000)         (95,000)                (941,000)
 Interest income                                                   3,000                -                  172,000
 Equity in losses of investees                                         -         (492,000)              (1,243,000)
Gain / (Loss) on disposal of equipment                                 -                -                  (11,000)
                                                        ----------------  ---------------          ---------------

NET LOSS                                                $       (219,000) $    (1,517,000)             (40,788,000)
                                                        ================  ===============          ===============

BASIC AND DILUTED LOSS PER COMMON SHARE:
Weighted average number of common shares
outstanding                                                  181,011,431      174,407,378
                                                        ================  ===============

Basic and diluted loss per common share                 $          (0.00) $         (0.00)
                                                        ================  ===============
</TABLE>
See notes to consolidated financial statements.

                                      F-4
<PAGE>
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
(a development stage enterprise)

Consolidated Statements of Stockholders' Equity
(Capital Deficit) (Notes A and H)
For the Cumulative Period From July 31, 1992 (Inception)
Through December 31, 2005
<TABLE>
<CAPTION>
                                                                          Preferred Stock    Preferred Stock
                                                                         $.001 Par Value   $.001 Par Value
                                                                          ----------------  ----------------        Common Stock
                                                                              Series B          Series c           $.001 Par Value
                                                                          ----------------  ---------------- -----------------------
                                                        Series A
                                                     Preferred Stock      Shares   Amount  Shares   Amount     Shares      Amount
                                                     ---------------     --------- ------- ------- --------  -----------  ----------
<S>                                                                      <C>        <C>      <C>     <C>       <C>         <C>
 Balance, December 31, 2002                                               74,999        -       -        -   124,262,522     122,000
                                                                         ========= ======= ======= ========  ===========  ==========
Issuance of shares at market price for services rendered                                                       1,000,000       1,000
Issuance of shares in connection with private placement
offering                                                                                                       1,000,000       1,000
Issuance of shares at market price for services rendered                                                         125,000          -
Issuance of shares at market price for services rendered                                                       1,000,000       1,000
Issuance of shares at market price for services rendered                                                         300,000       1,000
Issuance of shares at market price for services rendered                                                       2,000,000       2,000
Issuance of shares at market price for services rendered                                                       2,000,000       2,000
Issuance of shares at market price for services rendered                                                       1,000,000       1,000
Issuance of shares at market price for services rendered                                                         400,000       1,000
Issuance of shares at market price for services rendered                                                          20,000           -
Issuance of shares at market price for services rendered                                                          20,000           -
Issuance of shares at market price for services rendered                                                          20,000           -
Issuance of shares at market price for services rendered                                                         400,000       1,000
Issuance of shares at market price for services rendered                                                         500,000       1,000
Issuance of shares at market price for services rendered                                                       1,011,000       1,000
Issuance of shares at market price for services rendered                                                         250,000           -
Issuance of shares at market price for services rendered                                                         260,000           -
Issuance of shares at market price for services rendered                                                         250,000           -
Issuance of shares at market price for services rendered                                                         125,000           -
Issuance of shares at market price for services rendered                                                         600,000       1,000
Issuance of shares at market price for services rendered                                                         500,000       1,000
Issuance of shares at market price for services rendered                                                         100,000           -
Issuance of shares at market price for director/officer
services rendered                                                                                             13,500,000      14,000
Issuance of shares at market price for director/officer
services rendered                                                                                              5,250,000       5,000
Issuance of shares upon cancelation of stock options                                                           2,750,000       3,000
Issuance of shares at market price for director/officer
services rendered                                                                                              1,750,000       2,000
Issuance of shares upon cancelation of stock options                                                             990,000       1,000
Issuance of shares at market price for director/officer
services rendered                                                                                              2,250,000       2,000
Issuance of shares at market price for director/officer
services rendered                                                                                              1,000,000       1,000
Issuance of shares at market price for director/officer
services rendered                                                                                                250,000           -
Issuance of shares at market price for director/officer
services rendered                                                                                                250,000           -
Issuance of shares at market price for director/officer
services rendered                                                                                              1,000,000       1,000
Issuance of shares at market price for director/officer
services rendered                                                                                                250,000           -
Issuance of shares at market price for director/officer
services rendered                                                                                                250,000           -
Issuance of shares upon cancelation of stock options                                                             500,000       1,000
Issuance of shares at market price for services rendered                                                          50,000           -
Issuance of shares at market price for services rendered                                                       1,000,000       1,000
Issuance of shares at market price for services rendered                                                          35,000           -
Issuance of shares at market price for services rendered                                                         500,000       1,000
Issuance of shares upon cancelation of stock options                                                             500,000       1,000
Issuance of shares upon cancelation of stock options                                                             675,000       1,000
Issuance of shares for options exchanged                                                                         200,000           -
Issuance of shares for options exchanged                                                                         100,000           -
Issuance of shares for options exchanged                                                                         200,000           -
Issuance of shares for options exchanged                                                                         250,000           -
Issuance of shares for options exchanged                                                                         130,000           -
Issuance of shares for options exchanged                                                                         100,000           -
Issuance of shares for options exchanged                                                                         200,000           -
Issuance of shares for options exchanged                                                                         100,000           -
Conversion of series B preferred stock to common                         (25,000)                                250,000           -
Issuance of shares at market price for services rendered                                                         250,000
Issuance of shares at market price for services rendered                                                         335,000       1,000
Stock options issued for services
Amortization of deferred compensation
Net loss/comprehensive loss
                                                               ---------------------------------------------------------------------

Balance December 31, 2003                                                 49,999        -       -        -   172,008,522     172,000

Issuance of shares at market price for services rendered                                                       4,833,000       5,000
Issuance of shares on exercise of options                                                                        866,000
Issuance of shares for the payment of notes payable                                                              641,274       1,000
Issuance of stock warrants in connection with note payable
net loss

Balance December 31, 2004                                                 49,999                             178,348,796     178,000


Stock option issued in exchange for prevously issued options
Issuance of shares at market price for services rendered                                                       1,023,000        1000
Issuance of shares in satisfaction of accured expenses                                                         4,458,237       4,000
Net loss

Balance December 31, 2005                                                 49,999   $    -                -   183,830,033  $  183,000
                                                               =====================================================================
See notes to consolidated financial statements

                                      F-5
<PAGE>
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
(a development stage enterprise)
Consolidated Statements of Stockholders' Equity
(Capital Deficiency) (Notes A and H)
For the Cumulative  Period From July 31, 1992  (Inception)
Through December 31, 2004 (continued)
                                                                                                     Deficit
                                                                                        Amounts      Accumulated
                                                              Additional    Deferred   Receivable    During the
                                              Series A          Paid-in      Compe-      From       Development  Treasury
                                           Preferred Stock      Capital      nsation  Stockholders    Stage       Stock       Total
                                           ---------------     ----------  ---------  ------------  -----------  --------  ---------
 Balance, December 31, 2002                                    40,875,000   (142,000)               (41,488,000)           (633,000)
                                                               ==========  ========== ============  ===========  ========  =========
Issuance of shares at market price for services rendered           70,000                                                    71,000
Issuance of shares in connection with private placement
offering                                                           40,000                                                    41,000
Issuance of shares at market price for services rendered            1,000                                                     1,000
Issuance of shares at market price for services rendered           50,000                                                    51,000
Issuance of shares at market price for services rendered           20,000                                                    21,000
Issuance of shares at market price for services rendered          100,000                                                   102,000
Issuance of shares at market price for services rendered           79,000                                                    81,000
Issuance of shares at market price for services rendered           49,000                                                    50,000
Issuance of shares at market price for services rendered           20,000                                                    21,000
Issuance of shares at market price for services rendered            1,000                                                     1,000
Issuance of shares at market price for services rendered            1,000                                                     1,000
Issuance of shares at market price for services rendered            1,000                                                     1,000
Issuance of shares at market price for services rendered           16,000                                                    17,000
Issuance of shares at market price for services rendered           25,000                                                    26,000
Issuance of shares at market price for services rendered           40,000                                                    41,000
Issuance of shares at market price for services rendered           10,000                                                    10,000
Issuance of shares at market price for services rendered           10,000                                                    10,000
Issuance of shares at market price for services rendered           10,000                                                    10,000
Issuance of shares at market price for services rendered            5,000                                                     5,000
Issuance of shares at market price for services rendered           25,000                                                    26,000
Issuance of shares at market price for services rendered           20,000                                                    21,000
Issuance of shares at market price for services rendered            4,000                                                     4,000
Issuance of shares at market price for director/officer
services rendered                                                 392,000                                                   406,000
Issuance of shares at market price for director/officer
services rendered                                                 153,000                                                   158,000
Issuance of shares upon cancelation of stock options               82,000                                                    85,000
Issuance of shares at market price for director/officer
services rendered                                                  52,000                                                    54,000
Issuance of shares upon cancelation of stock options               30,000                                                    31,000
Issuance of shares at market price for director/officer
services rendered                                                  65,000                                                    67,000
Issuance of shares at market price for director/officer
services rendered                                                  49,000                                                    50,000
Issuance of shares at market price for director/officer
services rendered                                                  12,000                                                    12,000
Issuance of shares at market price for director/officer
services rendered                                                  12,000                                                    12,000
Issuance of shares at market price for director/officer
services rendered                                                  50,000                                                    51,000
Issuance of shares at market price for director/officer
services rendered                                                  12,000                                                    12,000
Issuance of shares at market price for director/officer
services rendered                                                  12,000                                                    12,000
Issuance of shares upon cancelation of stock options               30,000                                                    31,000
Issuance of shares at market price for services rendered            2,000                                                     2,000
Issuance of shares at market price for services rendered           50,000                                                    51,000
Issuance of shares at market price for services rendered            2,000                                                     2,000
Issuance of shares at market price for services rendered           25,000                                                    26,000
Issuance of shares upon cancelation of stock options               30,000                                                    31,000
Issuance of shares upon cancelation of stock options               40,000                                                    41,000
Issuance of shares for options exchanged                                                                                          -
Issuance of shares for options exchanged                                                                                          -
Issuance of shares for options exchanged                                                                                          -
Issuance of shares for options exchanged                                                                                          -
Issuance of shares for options exchanged                                                                                          -
Issuance of shares for options exchanged                                                                                          -
Issuance of shares for options exchanged                                                                                          -
Issuance of shares for options exchanged                                                                                          -
Conversion of series B preferred stock to common                                                                                  -
Issuance of shares at market price for services rendered           21,000                                                    21,000
Issuance of shares at market price for services rendered           20,000                                                    21,000
Stock options issued for services                                 113,000                                                   113,000
Amortization of deferred compensation                                        142,000                                        142,000
Net loss/comprehensive loss                                                                          (2,569,000)         (2,569,000)
                                                               ---------------------------------------------------------------------

Balance December 31, 2003                                      42,726,000          -      -         (44,057,000)   -     (1,159,000)

Issuance of shares at market price for services rendered          487,000
Issuance of shares on exercise of options                         126,000                                                   492,000
Issuance of shares for the payment of notes payable                47,000                                                   126,000
Issuance of stock warrants in connection with note                                                                           48,000
payable                                                           214,000                                                   214,000
net loss/comprehensive loss                                                                          (1,517,000)         (1,517,000)

Balance December 31, 2004                                      43,600,000                           (45,574,000)         (1,796,000)

Stock options issued in exchange for prevously issued options      46,000                                                    46,000
Issuance of shares at market price for services rendered           64,000                                                    65,000
Issuance of shares in satisfaction of accured expenses            238,000                                                   242,000
Net loss/comprehensive loss                                                                            (219,000)           (219,000)

Balance December 31, 2005                                     $43,948,000  $       -  $   -        $(45,793,000) $ -    $(1,662,000)
                                                               =====================================================================

</TABLE>
See notes to consolidated financial statements

                                      F-6
<PAGE>
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
(a development stage enterprise)

Consolidated Statements of Stockholders' Equity
(Capital Deficit) (Notes A and H)
For the Cumulative Period From July 31, 1992 (Inception)
Through December 31, 2005
<TABLE>
<CAPTION>
                                                                                 Preferred Stock             Preferred Stock
                                                            Series A             $.001 Par Value             $.001 Par Value
                                                           Preferred                Series B                    Series C
                                                            Stock              Shares       Amount        Shares        Amount
<S>                                                        <C>                  <C>           <C>           <C>          <C>
Initial issuance of shares to founders on contribution
of intangible assets at historic cost basis
Additional founders' contribution
Issuance of 1,037,000 shares of Series A preferred
stock, net of issuance costs                             $    10,000
Net loss

Balance, March 31, 1993                                       10,000
Issuance of shares to investor at approximately
$.21 per share
Issuance of shares on exercise of options
Services performed in exchange for Series A
preferred stock issued in fiscal 1993
Net loss

Balance, March 31, 1994                                       10,000
Services performed for Series A preferred stock
issued in fiscal 1993
Issuance of shares at approximately $.52 per share
Net loss

Balance, December 31, 1994                                    10,000
Issuance of 163,000 shares of Series A preferred stock         2,000
Write-off of amounts receivable from stockholders
Net loss

Balance, December 31, 1995                                    12,000
Issuance of shares upon exercise of option for $15,000
Net loss

Balance, December 31, 1996                                    12,000
Purchase and retirement of 1,200,000 shares of
Series A preferred stock                                     (12,000)
Purchase of 7,195,814 treasury shares of common
stock for $15,000
Net loss/comprehensive loss

Balance, December 31, 1997 (carried forward)                       0

See notes to consolidated financial statements

                                      F-7
<PAGE>
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
(a development stage enterprise)

Consolidated Statements of Stockholders' Equity
(Capital Deficit) (Notes A and H)
For the Cumulative Period From July 31, 1992 (Inception)
Through December 31, 2005

                                                               Common Stock           Additional
                                                             $.001 par value           Paid-in       Deferred
                                                            Shares        Amount       Capital     Compensation

Initial issuance of shares to founders on contribution
of intangible assets at historic cost basis               14,391,627   $    14,500   $       500
Additional founders' contribution                                                         40,000
Issuance of 1,037,000 shares of Series A preferred
stock, net of issuance costs                                                           1,020,000
Net loss

Balance, March 31, 1993                                   14,391,627        14,500     1,060,500
Issuance of shares to investor at approximately
$.21 per share                                            14,391,627        14,500     2,985,500
Issuance of shares on exercise of options                    479,720         1,000        49,000
Services performed in exchange for Series A
preferred stock issued in fiscal 1993
Net loss

Balance, March 31, 1994                                   29,262,974        30,000     4,095,000
Services performed for Series A preferred stock
issued in fiscal 1993
Issuance of shares at approximately $.52 per share           345,399                     182,000
Net loss

Balance, December 31, 1994                                29,608,373        30,000     4,277,000
Issuance of 163,000 shares of Series A preferred stock                                   161,000
Write-off of amounts receivable from stockholders                                        (40,000)
Net loss

Balance, December 31, 1995                                29,608,373        30,000     4,398,000
Issuance of shares upon exercise of option for $15,000    14,391,627        14,000         1,000
Net loss

Balance, December 31, 1996                                44,000,000        44,000     4,399,000
Purchase and retirement of 1,200,000 shares of
Series A preferred stock                                                                 (58,000)
Purchase of 7,195,814 treasury shares of common
stock for $15,000
Net loss/comprehensive loss

Balance, December 31, 1997 (carried forward)              44,000,000        44,000     4,341,000

See notes to consolidated financial statements

                                      F-8
<PAGE>
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
(a development stage enterprise)

Consolidated Statements of Stockholders' Equity
(Capital Deficit) (Notes A and H)
For the Cumulative Period From July 31, 1992 (Inception)
Through December 31, 2005
                                                                           Deficit
                                                              Amounts     Accumulated
                                                             Receivable   During The
                                                                From      Development      Treasury
                                                            Stockholders     Stage          Stock        Total

Initial issuance of shares to founders on contribution
of intangible assets at historic cost basis                                                           $    15,000
Additional founders' contribution                               (40,000)                                        -
Issuance of 1,037,000 shares of Series A preferred
stock, net of issuance costs                                   (286,000)                              $   744,000
Net loss                                                                    ($543,000)                $  (543,000)
                                                                            ----------                ------------
Balance, March 31, 1993                                        (326,000)     (543,000)                $   216,000
Issuance of shares to investor at approximately
$.21 per share                                                                                        $ 3,000,000
Issuance of shares on exercise of options                                                             $    50,000
Services performed in exchange for Series A
preferred stock issued in fiscal 1993                           127,000                               $   127,000
Net loss                                                                   (2,292,000)                $(2,292,000)
                                                                            ----------                ------------
Balance, March 31, 1994                                        (199,000)   (2,835,000)                $ 1,101,000
Services performed for Series A preferred stock
issued in fiscal 1993                                           159,000                               $   159,000
Issuance of shares at approximately $.52 per share                                                    $   182,000
Net loss                                                                   (2,250,000)                $(2,250,000)
                                                                            ----------                ------------
Balance, December 31, 1994                                      (40,000)   (5,085,000)                $  (808,000)
Issuance of 163,000 shares of Series A preferred stock                                                $   163,000
Write-off of amounts receivable from stockholders                40,000                               $         0
Net loss                                                                     (972,000)                $  (972,000)
                                                                            ----------                ------------
Balance, December 31, 1995                                            -    (6,057,000)                $(1,617,000)
Issuance of shares upon exercise of option for $15,000                                                $    15,000
Net loss                                                                     (284,000)                $  (284,000)
                                                                            ----------                ------------
Balance, December 31, 1996                                            -    (6,341,000)                $(1,886,000)
Purchase and retirement of 1,200,000 shares of
Series A preferred stock                                                                              $   (70,000)
Purchase of 7,195,814 treasury shares of common
stock for $15,000                                                                          ($15,000)  $   (15,000)
Net loss/comprehensive loss                                                  (335,000)                $  (335,000)
                                                                            ----------                ------------
Balance, December 31, 1997 (carried forward)                          -    (6,676,000)      (15,000)  $(2,306,000)

See notes to consolidated financial statements

                                      F-9
<PAGE>
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
(a development stage enterprise)

Consolidated Statements of Stockholders' Equity
(Capital Deficit) (Notes A and H)
For the Cumulative Period From July 31, 1992 (Inception)
Through December 31, 2005
(continued)

                                                                                 Preferred Stock             Preferred Stock
                                                            Series A             $.001 Par Value             $.001 Par Value
                                                            Preferred                Series B                    Series C
                                                              Stock              Shares       Amount        Shares        Amount

Balance, December 31, 1997 (brought forward)                $      0
Purchase of 7,195,813 treasury shares of common
stock for $15,000
Special distribution of 14,391,627 shares of
common stock to Projectavision, Inc.
Shares deemed issued in connection with reverse
Merger
Issuance of 182,525 shares of Series A preferred stock
and warrants exercisable into 750,000 shares of
common stock at an exercise price of $.10 per
share in exchange for note payable of $1,500,000
and accrued interest of $330,000 including deemed
dividend in connection with beneficial conversion
feature of preferred stock
Issuance of shares at $.20 per share, net of
issuance costs
Issuance of shares to purchase intangible assets
Issuance of shares at $.58 per share for
consulting services
Issuance of warrants on February 10, 1998 to
purchase 2,000,000 shares of common stock
exercisable at $.75 per share at fair value for
services resulting from cashless exercise feature
Issuance of shares at $.18 per share
Issuance of shares on conversion of 182,525 shares
of Series A preferred stock
Issuance of shares at $.05 per share
Issuance of stock options and warrants at fair value
for services
Net loss/comprehensive loss

Balance, December 31, 1998 (carried forward)                       0

See notes to consolidated financial statements

                                      F-10
<PAGE>
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
(a development stage enterprise)

Consolidated Statements of Stockholders' Equity
(Capital Deficit) (Notes A and H)
For the Cumulative Period From July 31, 1992 (Inception)
Through December 31, 2005
(continued)


                                                               Common stock          Additional
                                                             $.001 par value          Paid-in       Deferred
                                                           Shares        Amount       Capital     Compensation

Balance, December 31, 1997 (brought forward)             44,000,000   $    44,000   $ 4,341,000
Purchase of 7,195,813 treasury shares of common
stock for $15,000
Special distribution of 14,391,627 shares of
common stock to Projectavision, Inc.                                                    346,000
Shares deemed issued in connection with reverse
Merger                                                   11,000,000        11,000       (11,000)
Issuance of 182,525 shares of Series A preferred stock
and warrants exercisable into 750,000 shares of
common stock at an exercise price of $.10 per
share in exchange for note payable of $1,500,000
and accrued interest of $330,000 including deemed
dividend in connection with beneficial conversion
feature of preferred stock                                                            2,850,000
Issuance of shares at $.20 per share, net of
issuance costs                                            5,000,000         5,000       970,000
Issuance of shares to purchase intangible assets          7,200,000         7,000     1,433,000
Issuance of shares at $.58 per share for
consulting services                                       1,000,000         1,000       579,000
Issuance of warrants on February 10, 1998 to
purchase 2,000,000 shares of common stock
exercisable at $.75 per share at fair value for
services resulting from cashless exercise feature                                       660,000
Issuance of shares at $.18 per share                        275,000                      50,000
Issuance of shares on conversion of 182,525 shares
of Series A preferred stock                               9,435,405        10,000       (10,000)
Issuance of shares at $.05 per share                     20,340,000        20,000       997,000
Issuance of stock options and warrants at fair value
for services                                                                          2,165,000
Net loss/comprehensive loss

Balance, December 31, 1998 (carried forward)             98,250,405        98,000    14,370,000

See notes to consolidated financial statements

                                      F-11
<PAGE>
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
(a development stage enterprise)

Consolidated Statements of Stockholders' Equity
(Capital Deficit) (Notes A and H)
For the Cumulative Period From July 31, 1992 (Inception)
Through December 31, 2005
(continued)

                                                                            Deficit
                                                            Amounts       Accumulated
                                                           Receivable     During The
                                                              From        Development     Treasury
                                                          Stockholders       Stage         Stock      Total

Balance, December 31, 1997 (brought forward)              $         0     ($6,676,000)    ($15,000)  $(2,306,000)
Purchase of 7,195,813 treasury shares of common
stock for $15,000                                                                          (15,000)      (15,000)
Special distribution of 14,391,627 shares of
common stock to Projectavision, Inc.                                                        30,000   $   376,000
Shares deemed issued in connection with reverse
Merger                                                                                               $         -
Issuance of 182,525 shares of Series A preferred stock
and warrants exercisable into 750,000 shares of
common stock at an exercise price of $.10 per
share in exchange for note payable of $1,500,000
and accrued interest of $330,000 including deemed
dividend in connection with beneficial conversion
feature of preferred stock                                                 (1,020,000)               $ 1,830,000
Issuance of shares at $.20 per share, net of
issuance costs                                                                                       $   975,000
Issuance of shares to purchase intangible assets                                                     $ 1,440,000
Issuance of shares at $.58 per share for
consulting services                                                                                  $   580,000
Issuance of warrants on February 10, 1998 to
purchase 2,000,000 shares of common stock
exercisable at $.75 per share at fair value for
services resulting from cashless exercise feature                                                    $   660,000
Issuance of shares at $.18 per share                                                                 $    50,000
Issuance of shares on conversion of 182,525 shares
of Series A preferred stock                                                                                    -
Issuance of shares at $.05 per share                                                                 $ 1,017,000
Issuance of stock options and warrants at fair value
for services                                                                                         $ 2,165,000
Net loss/comprehensive loss                                                (4,580,000)                (4,580,000)
                                                                           -----------               ------------
Balance, December 31, 1998 (carried forward)                        -     (12,276,000)           -   $ 2,192,000

See notes to consolidated financial statements

                                      F-12
<PAGE>
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
(a development stage enterprise)

Consolidated Statements of Stockholders' Equity
(Capital Deficit) (Notes A and H)
For the Cumulative Period From July 31, 1992 (Inception)
Through December 31, 2005
(continued)

                                                                                 Preferred Stock             Preferred Stock
                                                            Series A             $.001 Par Value             $.001 Par Value
                                                           Preferred                Series B                    Series C
                                                            Stock              Shares       Amount        Shares        Amount

Balance, December 31, 1998 (brought forward)               $     0
Issuance of shares in satisfaction of accrued
expenses
Issuance of shares at $.49 per share for consulting
services
Issuance of shares at $.49 per share to purchase
furniture and fixtures
Issuance of shares at market prices as consulting
  services were performed
Issuance of shares to purchase intangible assets
Issuance of shares at $1.25 per share for services
Issuance of stock options Immediately exercisable
at fair value for services
Issuance of warrants on February 10, 1998 to
purchase 2,000,000 shares of common stock
exercisable at $.75 per share for consulting
services resulting from notification of warrant
holder of intent to exercise
Shares issuable at $1.27 per share in connection
with note payable
Issuance of shares on exercise of 100,000 options
at $.20 per share
Issuance of Series B convertible preferred shares
at $6.00 per share including deemed dividend
in connection with beneficial conversion
feature of preferred stock                                                   245,165
Issuance of shares at $.75 per share
Net loss/comprehensive loss
Issuance of shares at $.75 per share
Issuance of shares at market price for service
Issuance of common stock to Equilink, LLC on
exercise of cashless warrants

Balance, December 31, 1999 (carried forward)                     0           245,165           0

See notes to consolidated financial statements

                                      F-13
<PAGE>
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
(a development stage enterprise)

Consolidated Statements of Stockholders' Equity
(Capital Deficit) (Notes A and H)
For the Cumulative Period From July 31, 1992 (Inception)
Through December 31, 2005
(continued)

                                                                                                                Amounts
                                                               Common Stock        Additional                  Receivable
                                                             $.001 par value        Paid-in       Deferred        From
                                                            Shares        Amount    Capital     Compensation  Stockholders

Balance, December 31, 1998 (brought forward)              98,250,405    98,000   $ 14,370,000                  $         0
Issuance of shares in satisfaction of accrued
expenses                                                      78,000                   15,000
Issuance of shares at $.49 per share for consulting
services                                                      10,000                    5,000
Issuance of shares at $.49 per share to purchase
furniture and fixtures                                       100,000                   49,000
Issuance of shares at market prices as consulting
  services were performed                                     17,269                   15,000
Issuance of shares to purchase intangible assets           1,000,000     1,000        999,000
Issuance of shares at $1.25 per share for services             1,600                    2,000
Issuance of stock options Immediately exercisable
at fair value for services                                                          6,572,000
Issuance of warrants on February 10, 1998 to
purchase 2,000,000 shares of common stock
exercisable at $.75 per share for consulting
services resulting from notification of warrant
holder of intent to exercise                                                        1,090,000
Shares issuable at $1.27 per share in connection
with note payable                                                                     191,000
Issuance of shares on exercise of 100,000 options
at $.20 per share                                           100,000                    20,000
Issuance of Series B convertible preferred shares
at $6.00 per share including deemed dividend
in connection with beneficial conversion
feature of preferred stock                                                          2,942,000
Issuance of shares at $.75 per share                        533,000      1,000        399,000
Net loss/comprehensive loss
Issuance of shares at $.75 per share                        515,000      1,000        385,000
Issuance of shares at market price for service                4,942
Issuance of common stock to Equilink, LLC on
exercise of cashless warrants                             1,076,923      1,000         (1,000)

Balance, December 31, 1999 (carried forward)            101,687,139    102,000     27,053,000                            -

See notes to consolidated financial statements

                                      F-14
<PAGE>
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
(a development stage enterprise)

Consolidated Statements of Stockholders' Equity
(Capital Deficit) (Notes A and H)
For the Cumulative Period From July 31, 1992 (Inception)
Through December 31, 2005
(continued)

                                                            Deficit
                                                          Accumulated
                                                           During The
                                                          Development         Treasury
                                                            Stage              Stock        Total

Balance, December 31, 1998 (brought forward)              ($12,276,000)   $         0    $ 2,192,000
Issuance of shares in satisfaction of accrued
expenses                                                                                      15,000
Issuance of shares at $.49 per share for consulting
services                                                                                       5,000
Issuance of shares at $.49 per share to purchase
furniture and fixtures                                                                        49,000
Issuance of shares at market prices as consulting
  services were performed                                                                     15,000
Issuance of shares to purchase intangible assets                                           1,000,000
Issuance of shares at $1.25 per share for services                                             2,000
Issuance of stock options Immediately exercisable
at fair value for services                                                                 6,572,000
Issuance of warrants on February 10, 1998 to
purchase 2,000,000 shares of common stock
exercisable at $.75 per share for consulting
services resulting from notification of warrant
holder of intent to exercise                                                               1,090,000
Shares issuable at $1.27 per share in connection
with note payable                                                                            191,000
Issuance of shares on exercise of 100,000 options
at $.20 per share                                                                             20,000
Issuance of Series B convertible preferred shares
at $6.00 per share including deemed dividend
in connection with beneficial conversion
feature of preferred stock                                  (1,471,000)                    1,471,000
Issuance of shares at $.75 per share                                                         400,000
Net loss/comprehensive loss                                 (9,800,000)                   (9,800,000)
Issuance of shares at $.75 per share                                                         386,000
Issuance of shares at market price for service
Issuance of common stock to Equilink, LLC on
exercise of cashless warrants

Balance, December 31, 1999 (carried forward)               (23,547,000)             -      3,608,000

See notes to consolidated financial statements

                                      F-15
<PAGE>
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
(a development stage enterprise)

Consolidated Statements of Stockholders' Equity
(Capital Deficit) (Notes A and H)
For the Cumulative Period From July 31, 1992 (Inception)
Through December 31, 2005
(continued)
                                                                            Preferred Stock             Preferred Stock
                                                           Series A        $.001 Par Value             $.001 Par Value
                                                           Preferred           Series B                    Series C
                                                            Stock          Shares      Amount        Shares        Amount

Balance, December 31, 1999 (brought forward)                $     0         245,165    $    0
Shares issued of Series C convertible preferred
shares at $100.00 per share including deemed
dividend in connection with beneficial conversion
feature of preferred stock                                                                            14,000        $    0
Issuance of shares in connection with Series C
preferred stock private placement investment
Shares issuable at $2.23 per share in connection with
research and development and license agreement
Issuance of shares at market price for services
Issuance of options at market value for services
Issuance of options to purchase 100,000 shares
@$.40 per share for services
Issuance of stock options in connection with deferred
compensation agreement
Amortization of deferred compensation
Issuance of shares to purchase furniture and fixtures
Issuance of shares in connection with Series C
preferred stock private placement
Issuance of shares at $1.25 per share
Conversion of Series B preferred stock to common                            (60,000)
Issuance of shares at market price for services
Shares issuable at market price for services
Net loss/comprehensive loss

Balance, December 31, 2000                                        0         185,165         0         14,000              0
Issuance of shares in connection with private
placement offerings
Issuance of shares upon conversion of Series B
preferred stock                                                            (100,166)
Issuance of shares upon conversion of Series C
preferred stock                                                                                      (14,000)
Issuance of shares upon exercise of stock options
Issuance of shares to acquire Teneo Computing Inc.
Issuance of shares to purchase 42% of Novint
Technologies, Inc.
Issuance of shares for services at fair market value
Exercise of warrants issued for services
Issuance of stock options for services
Amortization of deferred compensation
Net loss/comprehensive loss

Balance, December 31, 2001 (carried forward)                       0         84,999         0              0              0

See notes to consolidated financial statements

                                      F-16
<PAGE>
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
(a development stage enterprise)

Consolidated Statements of Stockholders' Equity
(Capital Deficit) (Notes A and H)
For the Cumulative Period From July 31, 1992 (Inception)
Through December 31, 2005
(continued)
                                                                                                                   Amounts
                                                               Common Stock           Additional                  Receivable
                                                             $.001 par value           Paid-in       Deferred        From
                                                            Shares        Amount       Capital     Compensation  Stockholders

Balance, December 31, 1999 (brought forward)              101,687,139   $    102,000   $ 27,053,000                $        0
Shares issued of Series C convertible preferred
shares at $100.00 per share including deemed
dividend in connection with beneficial conversion
feature of preferred stock                                                                2,199,000
Issuance of shares in connection with Series C
preferred stock private placement investment                  700,000          1,000        600,000
Shares issuable at $2.23 per share in connection with
research and development and license agreement                                            1,115,000
Issuance of shares at market price for services                11,083                        24,000
Issuance of options at market value for services                                            229,000
Issuance of options to purchase 100,000 shares
@$.40 per share for services
Issuance of stock options in connection with deferred
compensation agreement                                                                      425,000      ($425,000)
Amortization of deferred compensation                                                                      113,000
Issuance of shares to purchase furniture and fixtures          10,500                        40,000
Issuance of shares in connection with Series C
preferred stock private placement                              10,000
Issuance of shares at $1.25 per share                       1,600,050          2,000      1,998,000
Conversion of Series B preferred stock to common              600,000
Issuance of shares at market price for services                51,000                       102,000
Shares issuable at market price for services                                                 88,000
Net loss/comprehensive loss

BALANCE, DECEMBER 31, 2000                                104,669,772        105,000     33,873,000       (312,000)         0
Issuance of shares in connection with private
placement offerings                                         1,097,500          1,098        694,000
Issuance of shares upon conversion of Series B
preferred stock                                             1,001,660          1,002
Issuance of shares upon conversion of Series C
preferred stock                                             2,800,000          2,800
Issuance of shares upon exercise of stock options              15,000             15          3,000
Issuance of shares to acquire Teneo Computing Inc.          1,400,000          1,400        784,000
Issuance of shares to purchase 42% of Novint
Technologies, Inc.                                          1,000,000          1,000        560,000
Issuance of shares for services at fair market value        3,388,097          1,743      2,138,000
Exercise of warrants issued for services                      942,281            942        782,000
Issuance of stock options for services                                                      250,000
Amortization of deferred compensation                                                                       85,000
Net loss/comprehensive loss

Balance, December 31, 2001 (carried forward)              116,314,310        115,000     39,084,000       (227,000)         -


See notes to consolidated financial statements

                                      F-17
<PAGE>
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
(a development stage enterprise)

Consolidated Statements of Stockholders' Equity
(Capital Deficit) (Notes A and H)
For the Cumulative Period From July 31, 1992 (Inception)
Through December 31, 2005
(continued)
                                                             Deficit
                                                           Accumulated
                                                            During The
                                                           Development      Treasury
                                                             Stage           Stock           Total

Balance, December 31, 1999 (brought forward)                ($23,547,000)     $   -       $  3,608,000
Shares issued of Series C convertible preferred
shares at $100.00 per share including deemed
dividend in connection with beneficial conversion
feature of preferred stock                                    (1,400,000)                 $    799,000
Issuance of shares in connection with Series C
preferred stock private placement investment                                              $    601,000
Shares issuable at $2.23 per share in connection with
research and development and license agreement                (1,115,000)
Issuance of shares at market price for services                                           $     24,000
Issuance of options at market value for services                                          $    229,000
Issuance of options to purchase 100,000 shares
@$.40 per share for services
Issuance of stock options in connection with deferred
compensation agreement                                                                    $          -
Amortization of deferred compensation                                                     $    113,000
Issuance of shares to purchase furniture and fixtures                                     $     40,000
Issuance of shares in connection with Series C
preferred stock private placement
Issuance of shares at $1.25 per share                                                     $  2,000,000
Conversion of Series B preferred stock to common
Issuance of shares at market price for services                                           $    102,000
Shares issuable at market price for services                                              $     88,000
Net loss/comprehensive loss                                   (4,736,000)                 $ (4,736,000)
                                                             ------------                 -------------
BALANCE, DECEMBER 31, 2000                                   (30,798,000)         -       $  2,868,000
Issuance of shares in connection with private
placement offerings                                                                       $    695,098
Issuance of shares upon conversion of Series B
preferred stock                                                                           $      1,002
Issuance of shares upon conversion of Series C
preferred stock                                                                           $      2,800
Issuance of shares upon exercise of stock options                                         $      3,015
Issuance of shares to acquire Teneo Computing Inc.                                        $    785,400
Issuance of shares to purchase 42% of Novint
Technologies, Inc.                                                                        $    561,000
Issuance of shares for services at fair market value                                      $  2,139,743
Exercise of warrants issued for services                                                  $    782,942
Issuance of stock options for services                                                    $    250,000
Amortization of deferred compensation                                                     $     85,000
Net loss/comprehensive loss                                   (6,662,000)                 $ (6,662,000)
                                                             ------------                 -------------
BALANCE, DECEMBER 31, 2001 (CARRIED FORWARD)                 (37,460,000)         -       $  1,512,000

See notes to consolidated financial statements

                                      F-18
<PAGE>
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
(a development stage enterprise)

Consolidated Statements of Stockholders' Equity
(Capital Deficit) (Notes A and H)
For the Cumulative Period From July 31, 1992 (Inception)
Through December 31, 2005
(continued)
                                                                              Preferred Stock             Preferred Stock
                                                            Series A          $.001 Par Value             $.001 Par Value
                                                           Preferred              Series B                    Series C
                                                             Stock           Shares       Amount          Shares      Amount

Balance, December 31, 2001 (brought forward)            $          0        84,999   $          0              0   $       0
Issuance of shares in connection with private
placement offering
Issuance of shares for the payment of research and
development
Issuance of shares at market price for services
rendered
Issuance of shares in connection with private
placement offering
Issuance of shares for the payment of research and
development
Issuance of shares at market price for services
rendered
Issuance of shares in connection with private
placement offering
Issuance of shares upon conversion of Series B
preferred stock                                                            (10,000)
Issuance of shares  at  market price for services
rendered
Issuance of shares for the payment of research and
development
Issuance of shares in connection with private
placement offering
Issuance of shares at market price for services
rendered
Issuance of shares in connection with private
placement offering
Issuance of shares in connection with private
placement offering
Issuance of shares at market price for services
rendered
Issuance of shares at market price for services
rendered
Issuance of shares at market price for services
rendered
Issuance of shares at market price for services
rendered
Issuance of shares at market price for services
rendered
Amortization of deferred compensation
Net loss/comprehensive loss

Balance, December 31, 2002                              $          0        74,999   $          0              0   $       0
                                                        ============        ======   ============     ==========   ============

See notes to consolidated financial statements

                                      F-19
<PAGE>
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
(a development stage enterprise)

Consolidated Statements of Stockholders' Equity
(Capital Deficit) (Notes A and H)
For the Cumulative Period From July 31, 1992 (Inception)
Through December 31, 2005
(continued)
                                                                                                                        Amounts
                                                                 Common Stock             Additional                   Receivable
                                                               $.001 par value             Paid-in       Deferred        From
                                                            Shares           Amount        Capital     Compensation   Stockholders

Balance, December 31, 2001 (brought forward)                116,314,310   $    115,000   $ 39,084,000   ($   227,000)   $       -
Issuance of shares in connection with private                   850,000          1,000        253,000
placement offering
Issuance of shares for the payment of research and               75,000              -         30,000
development
Issuance of shares at market price for services                   5,000              -          2,000
rendered
Issuance of shares in connection with private                   285,700                       100,000
placement offering
Issuance of shares for the payment of research and              975,000          1,000        360,000
development
Issuance of shares at market price for services                 620,000          1,000        203,000
rendered
Issuance of shares in connection with private                   400,000                       100,000
placement offering
Issuance of shares upon conversion of Series B
preferred stock                                                 100,000
Issuance of shares  at  market price for services
rendered                                                        500,000          1,000        135,000
Issuance of shares for the payment of research and
development                                                     150,000                        40,000
Issuance of shares in connection with private
placement offering                                              600,000          1,000        149,000
Issuance of shares at market price for services
rendered                                                         25,277                         8,000
Issuance of shares in connection with private
placement offering                                            1,000,000          1,000         99,000
Issuance of shares in connection with private
placement offering                                              200,000                        30,000
Issuance of shares at market price for services
rendered                                                        247,904                        59,000
Issuance of shares at market price for services
rendered                                                      1,285,301          1,000        169,000
Issuance of shares at market price for services
rendered                                                        394,000              -         39,000
Issuance of shares at market price for services
rendered                                                         60,000              -          8,000
Issuance of shares at market price for services
rendered                                                         75,000              -          7,000
Amortization of deferred compensation                                                                         85,000
Net loss/comprehensive loss

Balance, December 31, 2002                                  124,262,522   $    122,000   $ 40,875,000      ($142,000)   $       -
                                                            ===========   ============   ============      ==========   ============

See notes to consolidated financial statements

                                      F-20
<PAGE>
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
(a development stage enterprise)

Consolidated Statements of Stockholders' Equity
(Capital Deficit) (Notes A and H)
For the Cumulative Period From July 31, 1992 (Inception)
Through December 31, 2005
(continued)
                                                             Deficit
                                                           Accumulated
                                                            During The
                                                            Development       Treasury
                                                             Stage             Stock           Total
Balance, December 31, 2001 (brought forward)               ($37,460,000)   $         -     $ 1,512,000
Issuance of shares in connection with private
placement offering                                                                         $   254,000
Issuance of shares for the payment of research and
development                                                                                $    30,000
Issuance of shares at market price for services
rendered                                                                                   $     2,000
Issuance of shares in connection with private
placement offering                                                                         $   100,000
Issuance of shares for the payment of research and
development                                                                                $   361,000
Issuance of shares at market price for services
rendered                                                                                   $   204,000
Issuance of shares in connection with private
placement offering                                                                         $   100,000
Issuance of shares upon conversion of Series B
preferred stock                                                                            $         -
Issuance of shares  at  market price for services
rendered                                                                                   $   136,000
Issuance of shares for the payment of research and
development                                                                                $    40,000
Issuance of shares in connection with private
placement offering                                                                         $   150,000
Issuance of shares at market price for services
rendered                                                                                   $     8,000
Issuance of shares in connection with private
placement offering                                                                         $   100,000
Issuance of shares in connection with private
placement offering                                                                         $    30,000
Issuance of shares at market price for services
rendered                                                                                   $    59,000
Issuance of shares at market price for services
rendered                                                                                   $   170,000
Issuance of shares at market price for services
rendered                                                                                   $    39,000
Issuance of shares at market price for services
rendered                                                                                   $     8,000
Issuance of shares at market price for services
rendered                                                                                   $     7,000
Amortization of deferred compensation                                                      $    85,000
Net loss/comprehensive loss                                  (4,028,000)                   $(4,028,007)
                                                           -------------                   -----------
Balance, December 31, 2002                                 ($41,488,000)   $         -     $  (633,000)
                                                           =============   ============    ============
</TABLE>
See notes to consolidated financial statements

                                      F-21
<PAGE>
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
(a development stage enterprise)

CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                            PERIOD FROM
                                                                   YEAR ENDED              JULY 31, 1992
                                                                  December 31,              (INCEPTION)
                                                              -----------------------         THROUGH
                                                                2005        2004          December 31, 2005
                                                              ------------- -----------    -----------
<S>                                                            <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                      $   (219,000)  (1,517,000)   (40,788,000)
Adjustments to reconcile net loss to net
cash used in operating activities:
Gain on sale of investments                                       (616,000)    (578,000)    (1,587,000)
Gain from sale of equity interest in Horizon                      (885,000)           -       (885,000)
Gain on issuance of investee common stock                                -     (531,000)      (531,000)
Common stock issued for services                                   307,000      471,000      6,245,000
Preferred stock issued for services                                      -            -        598,000
Stock options issued for services                                   46,000            -      9,841,000
Cashless stock option exercise                                           -      126,000        126,000
Warrants issued for services                                             -       24,000      2,556,000
Convertible note issued for services                                     -       92,000         92,000
Financing costs payable with common stock                                -            -        191,000
Loss of equity investee                                                  -      492,000      1,207,000
Amortization of technology license                                       -            -        537,000
Amortization of patents                                            208,000      208,000      1,470,000
Loss on disposal of equipment                                            -            -         26,000
Impairment charge of certain patents                                     -            -        189,000
Depreciation                                                         3,000            -      1,122,000
Changes in:
Prepaid expenses and other assets                                  166,000      (29,000)        53,000
Accounts payable and accrued expenses                              272,000      509,000      2,709,000
Accrued interest and expenses - related parties                    (33,000)     288,000        255,000
                                                              ------------- -----------    -----------

Net cash provided by operating activities;                        (751,000)    (445,000)   (16,574,000)
                                                              ------------- -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of equipment                                                    -       (9,000)      (432,000)
Purchase of investment                                                   -            -       (100,000)
Proceeds from sale of equipment                                      4,000            -         18,000
Proceeds from sale of equity interest                              885,000            -        885,000
Proceeds received from sale of investment                          616,000      615,000      1,624,000
                                                              ------------- -----------    -----------

Net cash provided by (used in) investing activities              1,505,000      606,000      1,995,000
                                                              ------------- -----------    -----------

REPAYMENT OF CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock                                               -            -       (100,000)
Repayment of note payable to stockholders                                -      (25,000)     2,374,000
Proceeds from note payable - other                                       -      200,000        634,000
Repayment of note payable - other                                   19,000     (300,000)      (435,000)
Repayment of note payable to officers                             (525,000)           -       (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                                               -       24,000         16,000
                                                              ------------- -----------    -----------

Net cash provided by (used in) financing activities               (506,000)    (101,000)    14,943,000
                                                              ------------- -----------    -----------


NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS               248,000       60,000        364,000
Cash and cash equivalents, beginning of period                     116,000       56,000              -
                                                              ------------- -----------    -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                      $    364,000  $   116,000    $   364,000
                                                              ============  ===========    ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid                                                       97,000        6,000        117,000

                                      F-22
<PAGE>
MANHATTAN SCIENTIFICS, INC. AND SUBSIDIARIES
(a development stage enterprise)

CONSOLIDATED STATEMENT OF CASH FLOWS (continued)


SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND F
INANCING 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
fixtuers                                                                 -            -         49,000
Issuance of 78,000 common shares in satisfaction of
accrued expenes                                                          -            -         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 200,000 shares of common stock in connection
with the conversion of Series B preferred shares                         -            -              -
Issuance of 641,274 shares of common stock in settlement
of note payable 48,000                                                   -       48,000
 Issuance of 3,180,552 common shares in satisfaction
of accrued penses                                                  159,000            -        159,000
 Issuance of 1,277,685 common shares in satisfaction
of accrued penses                                                   83,000            -         83,000

</TABLE>

See notes to consolidated financial statements

                                      F-23
<PAGE>
MANHATTAN SCIENTIFICS, INC.
NOTES TO FINANCIAL STATEMENTS
(A Development Stage Enterprise)


NOTE A - ORGANIZATION AND OPERATIONS

Manhattan Scientifics, Inc. (formerly Grand Enterprises, Inc. ("Grand") a
Delaware corporation, and its wholly-owned subsidiaries Tamarack Storage
Devices, Inc. and Teneo Computing, Inc. ("Teneo") (collectively "the Company"),
operates in a single business segment that seeks to commercialize technologies
with an emphasis on consumer and commercial electronics. The Company is in the
development stage as defined in Financial Accounting Standards Board Statement
No. 7. The fiscal year end is December 31.

The Company has been engaged primarily in the commercialization of its
technology. The Company conducts its operations primarily in the United States
and Germany.

NOTE B - GOING CONCERN UNCERTAINTY

These financial statements have been prepared on a going concern basis, which
contemplated the realization of assets and the satisfaction of liabilities in
the normal course of business. The Company has incurred recurring losses and at
December 31, 2005, had an accumulated deficit of $45,793,000. For the year ended
December 31, 2005, the Company sustained a net loss of $219,000. 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.

                                      F-24
<PAGE>
MANHATTAN SCIENTIFICS, INC.
NOTES TO FINANCIAL STATEMENTS
(A Development Stage Enterprise)


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] PROPERTY AND EQUIPMENT

Property and equipment consists of artwork ($37,000) and office equipment
($9,000) and is recorded at cost less accumulated depreciation. Depreciation is
provided for office equipment on the straight-line method over the estimated
useful lives of the assets, generally three years. Total depreciation expense
was $3,000 and $0 for the years ended December 31, 2005 and 2004, respectively.
As of December 31, 2005, accumulated depreciation was $3,000.

[3] 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 expenses was $208,000 for each of the years ended December 31, 2005
and 2004 and $1,470,000 for the period from July 31, 1992 (inception) through
December 31, 2005. The estimated aggregate amortization expense for each of the
three succeeding years is $208,000 per year.

[4] INCOME TAXES:

The Company recognizes deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined on the basis of the differences between the tax basis of
assets and liabilities and their respective financial reporting amounts
("temporary differences") at enacted tax rates in effect for the years in which
the differences are expected to reverse. The Company has provided a full
valuation allowance on its deferred tax assets as the Company feels that it is
more likely than not that it will not realize the benefits of these assets.

[5] PER SHARE DATA:

The basic and diluted per share data has been computed on the basis of the net
loss available to common stockholders for the period divided by the historic
weighted average number of shares of common stock outstanding. All potentially
dilutive securities have been excluded from the computations since
they would be antidilutive.

[6] ADVERTISING EXPENSES:

The Company expenses advertising costs which consist primarily of promotional
items and print media, as incurred. Advertising expenses amounted to $1,000 and
$2,000 for the years ended December 31, 2005 and 2004.

                                      F-25
<PAGE>
MANHATTAN SCIENTIFICS, INC.
NOTES TO FINANCIAL STATEMENTS
(A Development Stage Enterprise)



NOTE C - SUMMARY OF SIGNIFICANT ACCOUTING POLICIES AND RELATED MATTERS
(CONTINUED)

[7] 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. Actual results could differ from these estimates.

[8] 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 year ended December 31, 2005. The Company's share of
loss not recorded amounted to $514,000. The Company will continue to account for
it's investment under the equity method of accounting, however, it will record
it's proportionate share of net income only after it has recovered all losses in
excess of its basis. For the years ended December 31, 2005 and 2004, the Company
sold certain shares in Novint and has recorded a gain on sale of those shares of
$616,000 and $578,000, respectively. As of December 31, 2005, the Company owned
2,061,410 shares of Novint common stock or 15%. The Company continues to account
for its investment in Novint using the equity method since the Company exercises
significant influence over Novint.

[9] REVENUE RECOGNITION:

When the Company earns revenues from the sale of licensing of its products, such
revenue will be recognized in accordance with the terms of the underlying
agreements at the time such transactions are consummated.

In January 2004, the Company licensed its mid-range fuel cell technology to a
Singapore company with manufacturing in China as part of its efforts to provide
low cost fuel cell systems to Asian and other worldwide markets. Among other
things, the contract gave the licensee non-exclusive rights to produce and sell
fuel cell engines based on the NovArs technology. The agreement included an up
front payment of $150,000, royalties and 17.5% equity interest in the Singapore
company. In December 2005, the Company sold its equity interest in the licensee
back to the licensee for $885,000.

                                      F-26
<PAGE>
MANHATTAN SCIENTIFICS, INC.
NOTES TO FINANCIAL STATEMENTS
(A Development Stage Enterprise)


NOTE C - SUMMARY OF SIGNIFICANT ACCOUTING POLICIES AND RELATED MATTERS
(CONTINUED)


In April 2003, the Company entered into a nonexclusive license agreement with a
third party for rights to its mid-range fuel cell technology. The Company
received $300,000 upon signing of the agreement and is entitled to receive an
additional $200,000 upon commercial launch (as defined) by the third party. To
date the licensee has not commenced it's commercial launch.

In September 2002, the Company entered into an agreement to sell certain
holographic data storage intellectual property and related research equipment to
a privately held company (the "buyer"). As consideration for the intellectual
property and the related research equipment, the Company received cash and a
warrant which was exercised in November of 2004, to purchase 238,998 shares of
the buyer's junior preferred stock (the "warrants").

The junior preferred stock has a liquidation preference of $2.50 per share and
it is junior in all respects to other classes of preferred stock of the buyer.
Each share of junior preferred stock can be converted into one share of the
buyer's common stock. The junior preferred stock is also not eligible to receive
any dividends.


                                      F-27
<PAGE>
MANHATTAN SCIENTIFICS, INC.
NOTES TO FINANCIAL STATEMENTS
(A Development Stage Enterprise)


NOTE C - SUMMARY OF SIGNIFICANT ACCOUTING POLICIES AND RELATED MATTERS
(CONTINUED)

[10] IMPAIRMENT OF LONG-LIVED ASSETS:

Long-lived assets, including patents and technology licenses to be held and used
are reviewed for impairment whenever events or changes in circumstances indicate
that the related carrying amounts may not be recoverable using expected future
undiscounted cash flows. When required, impairment losses on assets to be held
and used are recognized based on the excess of the asset's carrying amount over
its fair value as determined by selling prices for similar assets or application
of other appropriate valuation techniques. Long-lived assets to be disposed of
are reported at the lower of their carrying amount or fair value less disposal
costs. The Company has reviewed its patents and technology licenses for
impairment and determined that its solar fuel cell patents have become impaired.
As a result, in the fourth quarter of 2002, the Company recorded a charge of
approximately $189,000 to reduce the carrying value of these patents to zero.

[11] STOCK-BASED COMPENSATION:

The Company accounts for stock-based employee compensation under Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees" and related interpretations. The Company has adopted the
disclosure-only provisions of Statement of Financial Accounting Standards
("SFAS") No. 123, "Accounting for Stock-Based Compensation" and SFAS No. 148,
"Accounting for Stock-Based Compensation - Transition and Disclosure," which was
released in December 2002 as an amendment of SFAS No. 123. The following table
illustrates the effect on net loss and net loss per share if the fair value
based method had been applied to all awards.
<TABLE>
<CAPTION>
                                                                      For the Years Ended December 31
                                                                     2005                         2004
<S>                                                              <C>                          <C>
Reported Net loss                                                $    (219,000)               $ (1,517,000)
Stock-based employee compensation expense
included in reported net loss, net of                                       --                          --
related tax effects

Stock-based employee compensation determined
under the fair value based method, net of
related tax effects
                                                                            --                          --
                                                                 -------------               -------------

Pro forma net loss                                               $    (219,000)              $  (1,517,000)
                                                                 =============               =============

Basic and diluted loss per share:
  As reported                                                    $        (.00)              $        (.00)
                                                                 =============               =============

Pro forma                                                        $        (.00)              $        (.00)
                                                                 =============               =============

</TABLE>
                                      F-28
<PAGE>
MANHATTAN SCIENTIFICS, INC.
NOTES TO FINANCIAL STATEMENTS
(A Development Stage Enterprise)


NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS
(CONTINUED)

[12] CASH EQUIVALENTS:

For purposes of reporting cash flows, the Company considers all short term,
interest bearing deposits with original maturities of three months or less to be
cash equivalents.

[13] FAIR VALUE OF FINANCIAL INSTRUMENTS:

The carrying amounts of cash, accounts receivable, notes receivable, accounts
payable, accrued expenses and notes payable approximate fair value because of
the short maturity of these items.

[14] CONCENTRATION OF CREDIT RISK:

The Company maintains all cash in bank accounts, which at times may exceed
federally insured limits. The Company has not experienced a loss in such
accounts.

[15]  RECLASSIFICATION

Certain amounts in the prior period financial statements have been reclassified
to conform to the 2005 presentation.

[16] RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based
Payment" ("SFAS 123(R)"). SFAS 123(R) will provide investors and other users of
financial statements with more complete and neutral financial information by
requiring that the compensation cost relating to share-based payment
transactions be recognized in financial statements. That cost will be measured
based on the fair value of the equity or liability instruments issued. SFAS
123(R) covers a wide range of share-based compensation arrangements including
share options, restricted share plans, performance-based awards, share
appreciation rights, and employee share purchase plans. SFAS 123(R)replaces SFAS
No. 123, "Accounting for Stock-Based Compensation", and supersedes APB Opinion
No. 25, "Accounting for Stock Issued to Employees". SFAS 123, as originally
issued in 1995, established as preferable a fair-value-based method of
accounting for share-based payment transactions with employees. However, that
Statement permitted entities the option of continuing to apply the guidance in
Opinion 25, as long as the footnotes to financial statements disclosed what net
income would have been had the preferable fair-value-based method been used.
Public entities (other than those filing as small business issuers) will be
required to apply SFAS 123(R) as of the first interim or annual reporting period
that begins after December 15, 2005. The Company has evaluated the impact of the
adoption of SFAS 123(R), and believes that it could have an impact to the
Company's overall results of operations depending on the number of stock options
granted in a given year.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets, an amendment of APB Opinion No. 29, Accounting for Nonmonetary
Transactions" (SFAS 153). The amendments made by SFAS 153 are based on the
principle that exchanges of nonmonetary assets should be measured asset not the
fair value of the assets exchanged. Further, the amendments eliminate the narrow
exception for nonmonetary exchanges of similar productive assets and replace it
with a broader exception for exchanges of nonmonetary assets that do not have
commercial substance. Previously, Opinion 29 required that the accounting for an
exchange of a productive asset for a similar productive asset or an equivalent
interest in the same or similar productive asset should be based on the recorded
amount of the asset relinquished. Opinion 29 provided an exception to its basic
measurement principle (fair value) for exchanges of similar productive assets.
That exception required that some nonmonetary exchanges, although commercially
substantive, to be recorded on a carryover basis. By focusing the exception on
exchanges that lack commercial substance, the FASB believes SFAS 153 produces
financial reporting that more faithfully represents the economics of the
transactions. SFAS 153 is effective for non-monetary asset exchanges occurring
in fiscal periods beginning after June 15, 2005. Earlier application is
permitted for non-monetary asset exchanges occurring in fiscal periods beginning
after the date of issuance. The provisions of SFAS 153 shall be applied
prospectively. The Company has adopted SFAS 153, and it did not have an impact
on the Company's overall results of operations or financial position.


                                      F-29
<PAGE>
MANHATTAN SCIENTIFICS, INC.
NOTES TO FINANCIAL STATEMENTS
(A Development Stage Enterprise)

NOTE D - INVESTMENTS IN NOVINT

At December 31, 2005, the Company owns approximately 15% of the outstanding
shares of Novint. The following is a summary of financial data regarding
financial position and results of operations derived from the December 31, 2005
financial statements of Novint as of December 31, 2005.


         --------------------------------------------------------------------
         Current assets (including cash of $42,127)                $  129,453
         Property and equipment                                        41,139
         Other assets                                                 167,191
                                                                   ----------
         --------------------------------------------------------------------
                                                                   $  337,783
                                                                   ==========
         --------------------------------------------------------------------
         Liabilities                                               $2,118,985
         --------------------------------------------------------------------
         Deficit                                                   (1,781,202)
                                                                   ----------
         --------------------------------------------------------------------
                                                                   $  337,783
                                                                   ==========
         --------------------------------------------------------------------
         Revenue                                                   $  365,121
         --------------------------------------------------------------------
         Net (Loss)                                               ($3,416,010)
                                                                   ==========
         --------------------------------------------------------------------


During the year ended December 31, 2005 the Company sold 1,077,200 shares of
Novint for $616,000.

During 2005 Novint filed a Form SB-2 registration statement for its initial
public offering. The registration statement was declared effective on February
6, 2006; however they are currently not listed on a trading market.

In connection with a financing transaction of Novint the Company agreed to not
sell their shares of Novint stock for a period of 1 year after the first day on
which shares of Novint common stock is quoted or listed on a trading market. The
lock up, however, does not apply to 300,000 shares of Novint stock held by the
Company. Further the Company may sell up to an additional 200,000 shares subject
to share price and volume limitations.


                                      F-30
<PAGE>
MANHATTAN SCIENTIFICS, INC.
NOTES TO FINANCIAL STATEMENTS
(A Development Stage Enterprise)

NOTE E - 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 year ended December 31, 2005 and 2004 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.

NOTE F - NOTES PAYABLE - OFFICERS

In August 1999, the Company borrowed $275,000 from the Chief Operating Officer.
The loan bears interest at 5.5% per annum and is due the earlier of 18 months
from the date of a private placement raising at least $1,500,000. This loan was
due December 31, 2002. In April of 2004, the Company and the Chief Operating
Officer agreed to extend the term of the loan to December 31, 2004. The Company
and the Chief Operating Officer also agreed to convert $500,000 in accrued
salaries to a note payable with the same terms as the original $275,000 loan.
Interest expense for the years ended December 31, 2005 and 2004 was
approximately $43,000 and $43,000 respectively. This loan is secured by
substantially all of the assets of the Company. In the event of default on this
loan, the Company's Chief Operating Officer may foreclose on the collateral
provided he receives written consent of the Company's Board of Directors.

In August 2001, the Company borrowed $250,000 from the Chief Executive Officer.
The loan bears interest at 5.5% per annum and was due December 31, 2002. In
April of 2004 the Company and the Chief Executive Officer agreed to extend the
term of the loan to December 31, 2004. The Company and the Chief Executive
Officer also agreed to convert $600,000 in accrued salaries to a note payable
with the same terms as the original $250,000 loan. Interest expense for the
years ended December 31, 2005 and 2004 was approximately $46,000 and $46,000
respectively. This loan is secured by substantially all of the assets of the
Company. In the event of default on this loan, the Company's Chief Executive
Officer may foreclose on the collateral provided he receives written consent of
the Company's Board of Directors.

In December 2005, the Company repaid $275,000 and $250,000 which was borrowed
from the Chief Operating Officer and Chief Executive Officer, respectively. In
addition, the Company paid accrued interest of $97,000 to the Chief Operating
Officer in December and $60,000 to the Chief Executive Officer in January 2006.

                                      F-31
<PAGE>
MANHATTAN SCIENTIFICS, INC.
NOTES TO FINANCIAL STATEMENTS
(A Development Stage Enterprise)


NOTE G - NOTES PAYABLE - OTHER

In March 2004, the Company paid in full, a $300,000 loan from a third party
financial institution.

During 2004 the Company issued a number of convertible promissory notes totaling
$91,000 for services performed. The notes have a one year maturity date, are non
interest bearing and upon maturity will convert into shares of the Company's
common stock at the then current per share price, unless the Company prepays the
outstanding amount. In December 2004, the Company issued 641,274 shares of its
common stock on the conversion of one of the notes. The remaining balance of
these notes was $43,000 as of December 31, 2004. During 2005, the Company issued
$19,000 of additional convertible notes to the same third party under the same
terms. As of December 31, 2005 the Company owed $62,000 under these notes.

In November 2004, the Company obtained a loan from a third party in the amount
of $200,000. The loan bears interest at a rate of 8% per annum and matures in
November of 2006. The Company prepaid the two years of interest using its shares
of Novint Technologies. The loan is collateralized by 500,000 shares of the
Company's common stock of Novint Technologies, Inc. In addition, the Company
issued a warrant to purchase 4,000,000 shares of its common stock on a cashless
basis with a $0.05 strike price expiring November 8, 2008. The warrant was
valued at $224,000 using the Black Scholes model, with volatility of 108% and a
risk free interest rate of 4.5%. The market price of the common stock on the
date of the grant was $0.071. The value of the warrant is being amortized over
the life of the note. Amortization of the value of the warrants amounted to
$112,000 for the year ended December 31, 2005.

NOTE H - CAPITAL TRANSACTIONS

[1]  Common Stock

In January 2005, the Company issued 600,000 shares for services rendered valued
at $.062 per share or $37,000, and in March issued 250,000 shares for services
rendered valued at $.067 per share or $17,000.

In June 2005, the Company issued 3,180,552 shares in satisfaction of accrued
expenses of $159,000.

In November, the Company issued 1,277,685 shares in satisfaction of accrued
expenses of $83,000.

In December, the Company issued 173,000 shares for services rendered valued at
$.063 per share or $11,000.

In March 2004,the Company issued 1,668,000 shares for services rendered valued
at $0.155 per share or $259,000, and in May issued 400,000 shares for services
rendered valued at $.145 per share or $58,000, and in August 2004 issued 500,000
shares for services rendered valued at $.08 per share or $40,000 which has been
included in the statement of operations. In May 2004, one board member exercised
1,000,000 options on a cashless basis in exchange for 866,000 shares of common
stock, this resulted in a charge of $126,000, which has been included in the
statement of operations. In November of 2004, the Company issued 350,000 shares
for services rendered valued at $20,000. In November 2004, the Company issued
641,274 shares valued at $48,000 for satisfaction of a note payable. In December
2004, the Company issued 1,915,000 shares for services rendered value at
$119,000.

[2]  Stock Options

The Company has several stock incentive plans in effect that allows management
to issued stock, options and warrants to employees and consultants for services
performed or to be performed.

In May 2005, the Company issued options to purchase 1,200,000 shares of its
common stock on a cashless basis with a $0.055 cent strike price expiring May
25, 2009. The options were valued at $46,000 using the Black Scholes model, with
volatility of 93% and a risk free interest rate of 4.5%

                                      F-32
<PAGE>
MANHATTAN SCIENTIFICS, INC.
NOTES TO FINANCIAL STATEMENTS
(A Development Stage Enterprise)

NOTE H - CAPITAL TRANSACTIONS (Continued)

A summary of the Company's stock option activity and related information is as
follows:
<TABLE>
<CAPTION>
                                                  Number of        Exercise Price    Weighted     Number of Common
                                                 Common Shares        Per Share      Average       Shares Exercisable
                                                                                     Exercise
                                                                                       Price
<S>                        <C>                          <C>                <C>         <C>           <C>
Outstanding as of December 31, 1997                            0                                                    0
Granted                                               20,825,000       $0.05-$0.20        $0.17            20,825,000
Canceled                                             (15,000,000)             0.20          0.2           (15,000,000)
                                                ---------------- ----------------- ------------ ---------------------

Outstanding as of December 31, 1998                    5,825,000                                            5,825,000
Granted                                               16,750,000       0.05 - 0.20         0.05            16,750,000
Exercised                                               (100,000)                                            (100,000)
                                                ---------------- ----------------- ------------ ---------------------

Outstanding as of December 31, 1999                   22,475,000                                           22,475,000
Granted                                                  610,000         2.25-2.40         2.37               110,000
                                                ---------------- ----------------- ------------ ---------------------

Outstanding as of December 31, 2000                   23,085,000                                           22,585,000
Granted                                                  450,000         0.39-1.25         0.77               450,000
Exercised                                                (90,000)                                             (90,000)
Options vested pursuant to deferred
compensation agreement                                         0              2.40         2.40               100,000
                                                ---------------- ----------------- ------------ ---------------------

Outstanding as of December 31, 2001                   23,445,000                                           23,445,000
Granted                                                        0                                                    0
Exercised                                                      0                                                    0
Options vested pursuant to deferred
compensation agreement                                         0              2.40         2.40               100,000
                                                ---------------- ----------------- ------------ ---------------------

Outstanding as of December 31, 2002                   23,445,000                                           23,145,000
Granted                                                5,000,000            .02.05          .04             3,000,000
Canceled                                              (6,610,000)                                          (6,310,000)
                                                ---------------- ----------------- ------------ ---------------------

Outstanding as of December 31, 2003                   21,835,000                                           19,835,000
Granted                                                        0                                                    0
Exercised                                             (1,000,000)             0.86         0.86            (1,000,000)
Options vested pursuant to deferred
compensation agreement                                         0                                            2,000,000
                                                ---------------- ----------------- ------------ ---------------------

Outstanding as of December 31, 2004                   20,835,000                                           20,835,000
Granted                                                1,200,000              .055                          1,200,000
Canceled                                                (200,000)                                            (200,000)
                                                ---------------- ----------------- ------------ ---------------------
Outstanding as of December 31, 2005                   21,835,000                                           21,835,000

</TABLE>
         All options issued through December 31, 2005 vested within ninety days
         from the date of grant and expire at various dates during 2008 through
         2013. Of the 5,000,000 options issued in April 2003, 3,000,000 vested
         in 30 days and 2,000,000 vested one year from date of issuance. These
         options will expire through June 2013.



                                      F-33
<PAGE>
MANHATTAN SCIENTIFICS, INC.
NOTES TO FINANCIAL STATEMENTS
(A Development Stage Enterprise)



NOTE H - CAPITAL TRANSACTIONS (Continued)




Exercise prices and weighted-average contractual lives of stock options
outstanding as of December 31, 2005 are as follows:
<TABLE>
<CAPTION>

                                         Options Outstanding                       Options Exercisable
                                           Weighted Average    Weighted Average                        Weighted Average
                                           Remaining           Exercise Price                          Exercise Price
                                           Contractual Life                        Number Exercisable
Exercise Price       Number Outstanding
<S>    <C>              <C>                     <C>              <C>                 <C>                   <C>
       $0.02            2,000,000               8.58             0.02                2,000,000             0.02
        0.05           16,155,000               4.65             0.05               16,155,000             0.05
        0.20            2,230,000               3.71             0.20                2,230,000             0.20
        0.39              250,000               6.98             0.39                  250,000             0.39
        .055            1,200,000               4.33             .055                1,200,000              .05
</TABLE>

                                      F-34
<PAGE>
MANHATTAN SCIENTIFICS, INC.
NOTES TO FINANCIAL STATEMENTS
(A Development Stage Enterprise)



NOTE H - CAPITAL TRANSACTIONS (Continued)

[3] Warrants:

The Company issued the following warrants at the corresponding weighted average
exercise price as of December 31, 2005.
<TABLE>
<CAPTION>
                                                          Warrants           Weighted average Exercise Price
<S>                                                          <C>                               <C>
Outstanding as of December 31, 1997                                 0                                 $0.16
Issued                                                     17,750,000

Outstanding as of December 31, 1998                        17,750,000
Converted into stock options                               (2,500,000)                                 0.05

Outstanding as of December 31, 1999                        15,250,000
Converted into common stock                                (2,000,000)                                 0.75

Outstanding as of December 31, 2000                        13,250,000
Issued                                                        942,281                                  0.01
Converted into common stock                                  (942,281)                                 0.01

Outstanding as of December 31, 2001,2002                   13,250,000
and 2003
Issued                                                      4,000,000                                   .05

Outstanding as of December 31, 2004                        17,250,000
Issued                                                              0
                                                         ------------
Outstanding as of December 31, 2005                        17,250,000
                                                           ==========



Date                            Number of          Exercise Price    Contractual Life       Number of Shares
                                Warrants                                                    Exercisable

January 8, 1998                              750,000         $.10    10 years                                 750,000
July 28, 1998                              12,500,000         .05    10 years                               12,500,000
November 9, 2004                            4,000,000         .05    4 years                                 4,000,000
                                            ---------                                                        ---------
                                           17,250,000                                                       17,250,000
                                =====================                                                       ==========

</TABLE>

                                      F-35
<PAGE>
MANHATTAN SCIENTIFICS, INC.
NOTES TO FINANCIAL STATEMENTS
(A Development Stage Enterprise)


NOTE I -INCOME TAXES

There is no provision for federal, state or local income taxes for the periods
ended December 31, 2005 and 2004 since the Company has incurred net operating
losses.

The Company's deferred tax asset as of December 31, 2005 represents benefits
from equity related compensation charges and net operating loss carryforwards of
approximately $4,362,000 and $7,142,000, respectively, which is reduced by a
valuation allowance of approximately $11,504,000 since the future realization of
such tax benefit is not presently determinable. During 2005, the Company
recorded a decrease to the valuation allowance of approximately $160,000.

As of December 31, 2005, the Company has a net operating loss carryforward of
approximately $28,775,000, expiring in 2006 through 2025 for federal income tax
purposes and 2005 for state income tax purposes. As a result of ownership
changes, Internal Revenue Code Section 382 limits the amount of such net
operation gloss carryforward available to offset future taxable income to
approximately $17,964,000 in the aggregate.

The difference between the statutory federal income tax (rate) benefit applied
to the Company's net loss and the Company's effective income tax rate for the
years ended December 31, 2005 and 2004 is summarized as follows:

                                                 For the Year Ended December 31,
                                                 2005            2004
     Statutory federal income tax rate           (35) %          (35) %
                                                 ------
     Increase in valuation allowance             35%             35%
                                                 ---             ---

                                                 0.00 %          0.00 %
                                                 ====            ====
NOTE J - RELATED PARTY TANSACTIONS

The accounting firm of one of the Company's directors received approximately
$40,000 and $70,000 of compensation for accounting services rendered to the
Company during the years ended December 31, 2005 and 2004, respectively. In
addition, the accounting firm received 100,000 shares of Novint Technologies,
Inc. common stock valued at $66,000 as payment for services previously rendered
during 2004.

The legal firm of one of the Company's former directors received approximately
$49,000 and $37,000 of compensation for legal services rendered to the Company
during the years ended December 31, 2005 and 2004, respectively.

As of December 31, 2005 and 2004 the Company owed its officers and other related
parties $74,000 and $198,000, respectively for services performed and expenses
and $181,000 and $89,000, respectively for interest on notes payable.

NOTE K - SUBSEQUENT EVENTS

In 2004, the Company commenced an action against NMXS.Com, Inc. and its CEO
based on their failure to honor exercise of certain warrants.  In
January 2006, the Company settled the litigation with with NMXS.Com, Inc.
and  will receive $50,000

Subsequent to December 31, 2005 the Company issued 200,000 shares of common
stock to for consulting services performed.

Subsequent to December 31, 2005 the Company issued 150,000 shares to a former
director for legal services performed.

Subsequent to December 31, 2005 the Company issued 795,324 shares of common
stock in lieu of cash payment of 2004 outstanding convertible notes.

Subsequent to December 31, 2005 the Company issued 155,000 shares of common
stock to two individuals for secretarial and administrative services.

In March 2006 the Company issued 150,000 shares of common stock to an unrelated
party for consulting services.

                                      F-36
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

Not Applicable

ITEM 8A. CONTROLS AND PROCEDURES

     (a) Evaluation of Disclosure Controls and Procedures. Regulations under the
Securities Exchange Act of 1934 require public companies to maintain "disclosure
controls and procedures," which are defined to mean a company's controls and
other procedures that are designed to ensure that information required to be
disclosed in the reports that it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported, within the time
periods specified in the Commission's rules and forms. Our Chief Executive
Officer ("CEO"), President and our Chief Financial Officer or the person
performing similar functions ("CFO") carried out an evaluation of the
effectiveness of our disclosure controls and procedures as of the end of the
period covered by this report. Based on those evaluations, as of the Evaluation
Date, our CEO, President and CFO believe:

               (i) that our disclosure controls and procedures are designed to
          ensure that information required to be disclosed by us in the reports
          we file under the Securities Exchange Act of 1934 is recorded,
          processed, summarized and reported within the time periods specified
          in the SEC's rules and forms and that such information is accumulated
          and communicated to our management, including the CEO and CFO, as
          appropriate to allow timely decisions regarding required disclosure;
          and

               (ii) that our disclosure controls and procedures are effective.

     (b) Changes in Internal Controls. There were no significant changes in our
internal controls or, to our knowledge, in other factors that could
significantly affect our internal controls subsequent to the evaluation date.

                                       28
<PAGE>
ITEM 8B. OTHER INFORMATION

         None.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT

         The names, ages and biographical information of each of our directors
and executive officers as of December 31, 2005 are set forth below. There are no
existing family relationships between or among any of our executive officers or
directors.

    Name               Age           Position
    ----               ---           --------
Marvin Maslow          68        Chairman of the Board, President, and Chief
                                 Executive Officer and Principal Financial
                                 Officer since January 1998
Jack Harrod            63        Chief Operating Officer since August 1998
David A. Teich         49        Director since May 1999 and Treasurer since
                                  December 2000
Ralph A. Anderson      47        Director since June, 2003
Larry H. Schatz        59        Director since June, 2003


     There are no family relationships among any of our directors or officers.

     As of December 31, 2005, the size of our Board of Directors is currently
fixed at four members. Members of the Board serve until the next annual meeting
of stockholders and until their successors are elected and qualified. Officers
are appointed by and serve at the discretion of the Board.

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


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

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

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


     MARVIN MASLOW has served as our chief executive officer and chairman of the
Board since January 1998. From June 1990 through September 1996, Mr. Maslow
served as chief executive officer of Projectavision, Inc., a company he
co-founded to develop and market video projection technology. Since November
1996, Mr. Maslow has served as chief executive officer and chairman of the board
of Tamarack Storage Devices, Inc., our wholly-owned subsidiary. From 1999
through 2002, Mr. Maslow also served as a director of NMXS.Com, Inc., a company
in which we originally owned approximately 23% of the outstanding common stock.
Since June 2000, Mr. Maslow has also served as a director of Novint
Technologies, Inc., a company in which we own approximately 15% as of December
31, 2005. For more than 20 years, Mr. Maslow has been President of Normandie
Capital Corp., a private investment and consulting company. Mr. Maslow is
credited with the starting up and financing of more than 20 enterprises during
his career. Mr. Maslow received an A.A.S. degree from the Rochester Institute of
Technology in 1957 and an honorable discharge from the U.S. Army Signal Corps in
1963.

     JACK HARROD has served as our chief operating officer since August 1998.
From November 1966 to March 1998, Mr. Harrod held a variety of executive
positions at Texas Instruments, including executive vice president. Mr. Harrod
received a B.S. in Electrical Engineering from the College of Engineering,
University of Arkansas in 1964.

                                       29

<PAGE>
     DAVID A. TEICH has served as our director since May 1999 and Treasurer
since December 2000. Mr. Teich is the managing partner of Teich, Beim & Moro,
P.C. Since January 1999, Mr. Teich's accounting firm has acted as our internal
controller. Mr. Teich graduated with a B.B.A. degree from Pace University in
1979, became a certified public accountant in 1982, and has been employed by his
firm in various capacities, including accountant, manager, partner and managing
partner since 1989.

     RALPH ANDERSON has served as our director since June 2003. Currently, Mr.
Anderson is in charge of Tax and Wealth Management at Weiser LLP. Previously,
Mr. Anderson served as Senior Vice President at Executive Monetary Management (a
division of Neuberger Berman), where he was in charge of the tax department and
the servicing of high net worth individuals. From 1997-2001, Mr. Anderson was
co-chair of the tax department and a member of the Executive Committee at
Richard A. Eisner & Company, LLP. From 1990-1997, Mr. Anderson was in charge of
the New Jersey tax department and a member of the Executive Committee at M.R.
Weiser & Company, LLP where he merged his practice. Mr. Anderson received a
Bachelor of Science degree in Accounting from Rider University and a Master of
Science degree in Taxation from Seton Hall University. Mr. Anderson is a
Certified Public Accountant licensed in New Jersey, New York and Massachusetts
and has NASD Securities License, Series 7, 63 and 66. Ralph Anderson also sits
on the board of Rider University,Progress Realty Advisors, Selective University
Technology, Inc. and Cogent Technologies.

     LARRY SCHATZ served as our director from June 2003 through January, 2006.
He is a graduate of The City University of New York at Brooklyn College (B.A.,
1967) and of Brooklyn Law School (J.D. 1969). Mr. Schatz is a practicing
attorney in New York City and a member of both the New York and Florida Bars
since 1970. He served as a Director and Vice-Chairman of the Board of
International Fast Food Corporation from 1998-2000 and was a Director of Noise
Cancellation Technologies, Inc. n/k/a NCT Group, Inc. from 1984 to 1987. Mr.
Schatz was a founding Director of the Association of Public Companies of Florida
and served as its Chairman from 1984-1986.

     Mr. Schatz resigned as our director effective January 31, 2006.

AUDIT COMMITTEE

     Mr. Anderson and Mr. Teich comprise our audit committee and Mr. Anderson is
considered to be an "audit committee financial expert" as that term is defined
by the SEC.


SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934 requires our executive
officers and directors, and persons who own more than ten percent of our common
stock to file reports of ownership and change in ownership with the Securities
and Exchange Commission and the exchange on which the common stock is listed for
trading. Executive officers, directors and more than ten percent stockholders
are required by regulations promulgated under the Exchange Act to furnish us
with copies of all Section 16(a) reports filed. Based solely on our review of
copies of the Section 16(a) reports filed for the fiscal year ended December,
2005, we believe that our executive officers, directors and ten percent
stockholders complied with all reporting requirements applicable to them.

                                       30
<PAGE>
CODE OF ETHICS

On March 31, 2005, we adopted a code of ethics that applies to our principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions.

ITEM 10. EXECUTIVE COMPENSATION

     The following tables set forth all compensation awarded by us to our
executive officers for the fiscal years ended December 31, 2003, 2004 and 2005.

<TABLE>
<CAPTION>

                                               SUMMARY COMPENSATION TABLE
=================================================================================================================
                                           ANNUAL COMPENSATION                   LONG-TERM COMPENSATION
                                  ----------------------------------- -------------------------------------------
                                                                               AWARDS               PAYOUTS
                                                                      ------------------------- -----------------
                                                                                   SECURITIES              ALL
                                                           OTHER      RESTRICTED   UNDER-LYING    LTIP    OTHER
                                                           ANNUAL       STOCK       OPTIONS/    PAYOUTS   COMP-
     NAME AND                        SALARY    BONUS    COMPENSATION   AWARD(s)       SARS        (S)    ENSATION
PRINCIPAL POSITION         YEAR       ($)       ($)         ($)           ($)         (#)         ($)      ($)
----------------------- --------- ---------- --------- -------------- ---------- -------------- -------- --------
<S>                        <C>      <C>          <C>      <C>          <C>       <C>            <C>       <C>
Marvin Maslow,             2003   $300,000(1)      0    $ 48,000(2)   $405,000(3)     --            --       --
CEO/Chairman            --------- ---------- --------- -------------- ---------- -------------- -------- --------
                           2004   $300,000(4)     $0    $ 22,500(5)       --          --            --       --
                        --------- ---------- --------- -------------- ---------- -------------- -------- --------
                           2005   $300,000(4)     $0    $ 71,500(5)       --          --            --       --
                        -------- ---------- --------- -------------- ----------  -------------- -------- --------

=================================================================================================================
Jack Harrod,               2003   $250,000(1)     $0    $ 48,000(5)   $157,500(6)     --            --       --
COO                     --------- ---------- --------- -------------- ---------- -------------- -------- --------
                           2004   $250,000(4)     $0    $22,500(5)        --          --            --       --
                        --------- ---------- --------- -------------- ---------- -------------- -------- --------
                           2005   $250,000(4)     $0    $71,500(5)        --          --            --       --
                        --------- ---------- --------- -------------- ---------- -------------- -------- --------

=================================================================================================================

David Teich,               2003   $      0        $0    $      0      $ 67,500(8) 1,000,000(7)         --       --
Treasurer/Director      --------- ---------- --------- -------------- ---------- -------------- -------- --------
                           2004   $      0        $0    $      0          --          --            --       --
                        --------- ---------- --------- -------------- ---------- -------------- -------- --------
                           2005   $      0        $0    $      0                  200,000(9)        --       --
                        --------- ---------- --------- -------------- ---------- -------------- -------- --------

=================================================================================================================
</TABLE>

     (1) Salary has been deferred and converted to notes payable as of December
          31, 2003.


     (2) Includes non-accountable expenses paid in 2003.


     (3)  Includes 13,500,000 shares of common stock.

     (4)  Salary has been deferred and accrued as of December 31, 2005.

     (5)  Includes $4,000 in monthly non-accountable expenses paid by us in
          2003, $1,875 monthly paid by us in 2004 and $6,000 monthly paid by us
          in 2005.

     (6)  Includes 5,250,000 shares of common stock.

     (7)  Includes stock options to purchase 1,000,000 shares of common stock at
          an exercise price of $0.02 as compensation for his services as an
          officer.

     (8)  Includes 2,250,000 shares of common stock.

     (9)  Includes stock options to purchase 200,000 shares of common stock at
          an an exercise price of $0.055 for accounting services.

                                       31
<PAGE>
COMPENSATION OF DIRECTORS AND OFFICERS

     Our officers and directors do not presently receive any cash compensation
from us for their service as officers and/or directors, except for equity in the
form of stock options in lieu of cash, at the discretion of our Board of
Directors. Our officers and/or directors who are uncompensated full time
employees of ours, Messrs. Maslow and Harrod, have previously received a $2,000
to $4,000 per month non-accountable expense allowance from time to time. Mr.
Maslow and Mr. Harrod have agreed to accrue their annual salaries.

EMPLOYMENT AGREEMENTS

     We currently have no employment agreements with our officers or directors,
though we intend to enter into such agreements with our CEO and COO.

BOARD  OF  DIRECTORS  INTERLOCKS  AND  INSIDER   PARTICIPATION  IN  COMPENSATION
DECISIONS

     Mr. Maslow, our director and chief executive officer, participated in
deliberations of the Board of Directors concerning officer compensation.

                                       32

<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth, as of March 23, 2006, the names, addresses
and number of shares of common stock beneficially owned by (i) all persons known
to us to be the beneficial owners of more than 5% of the outstanding shares of
common stock, (ii) each of our directors, (iii) each of our executive officers,
and (iv) all of our directors and executive officers as a group. Except as
indicated, each beneficial owner listed exercises sole voting power and sole
dispositive power over the shares beneficially owned. Share ownership in each
case includes shares issuable upon exercise of options exercisable within 60
days of the date of this Annual Report that would be required to be reported
pursuant to Rule 13d-3 of the Securities Exchange Act of 1934 for purposes of
computing the percentage of common stock owned by such person but not for
purposes of computing the percentage owned by any other person.


                                                                   Percentage of
                                                  Number of        Outstanding
                                                    Shares            Shares
                                                  Beneficially  Beneficially and
                                                     Owned          Name Owned
                                                  ------------      ------------
Address

Michael Lauer (1)................................. 55,000,000             27.3%
375 Park Avenue, Suite 2006
New York, New York    10152

Marvin Maslow (2) ................................ 24,942,500             12.5%
c/o Manhattan Scientifics, Inc.
405 Lexington Avenue, 32nd Floor
New York, New York 10174

Jack Harrod (3)................................... 11,000,000              5.9%
c/o Manhattan Scientifics, Inc.
405 Lexington Avenue, 32nd Floor
New York, New York 10174

David A. Teich (4)................................  3,875,000              2.1%
Teich, Beim & Moro, P.C.
Two Executive Boulevard, Suite 103
Suffern, New York 10901


Ralph Anderson (5)................................  2,000,000              1.1%
c/o Manhattan Scientifics, Inc.
405 Lexington Avenue, 32nd Floor
New York, New York 10174

All executive officers and directors as a group 41,817,500(2)(3)(4)(5) (4
persons). 20.7%

*      Represents Less than 1%.

     (1)  Michael Lauer has voting and dispositive powers over various entities,
          collectively known as the Lancer Funds, that are the beneficial
          holders of our securities. Includes 45,000,0000 shares of Common Stock
          and option that are immediately exercisable to purchase 10,000,000
          shares of Common Stock at a price of $.05 per share. A bankruptcy
          trustee now retains control over such shares in light of Lancer
          Partners, LLP filing for bankruptcy in April 2003. In a Schedule 13(d)
          filed with the SEC on February 12, 2004, the trustee stated that
          Manhattan Scientifics also issued one of the Lancer funds warrants to
          purchase 16,000,000 shares of Manhattan Scientifics common stock.
          Manhattan Scientifics has informed the trustee that it has no record
          of issuing such a certificate and believes that the claim is not
          valid, and the trustee noted this in the Schedule 13(d).

     (2)  Includes 11,072,500 shares of Common Stock, options to purchase
          12,400,000 shares of Common Stock at a price of $0.05 per share, a
          warrant to purchase 750,000 shares of Common Stock at a price of $0.10
          per share and 720,000 shares of Common Stock owned by Mr. Maslow's
          wife and son.

     (3)  Includes options to purchase 1,000,000 shares of Common Stock at a
          price of $0.055 per share and 10,000,000 shares of Common Stock.

     (4)  Includes of 2,250,000 shares of Common Stock; options that are
          immediately exercisable to purchase 1,000,000 shares of Common Stock
          at an exercise price of $0.02 per share; options that are immediately
          exercisable to purchase 425,000 shares of Common Stock at a price of
          $0.05 per share; options that are immediately exercisable to purchase
          200,000 shares of Common Stock at a price of $0.055 per share.

                                       33

<PAGE>
     (5)  Includes 1,000,000 shares of Common Stock and options that are
          immediately exercisable to purchase 1,000,000 shares of Common Stock
          at an exercise price of $0.05 per share.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In August 1999, we borrowed $275,000 from Mr. Harrod. The loan bears
interest at 5.5% per annum and was due on December 31, 2002. In April of 2004,
Mr. Harrod agreed to extend the term of the loan to December 31, 2004. This loan
was repaid by the Company in December 2005. We also agreed with Mr. Harrod to
convert $500,000 in accrued salaries to a note payable with the same terms as
the original $275,000 loan. Interest expense on the loan for the years ended
December 31, 2005 and 2004 was approximatly $43,000 and $43,000 respectively.
This loan is secured by substantially all of our assets. In the event of default
on this loan, Mr. Harrod may foreclose on the collateral provided he receives
the written consent of our Board of Directors.

     In August 2001, we borrowed $250,000 from Mr. Maslow. The loan bears
interest at 5.5% per annum and was due on December 31, 2002. In April of 2004,
Mr. Maslow agreed to extend the term of the loan to December 31, 2004. This loan
was repaid by the Company in December 2005. We also agreed with Mr. Maslow to
convert $600,000 in accrued salaries to a note payable with the same terms as
the original $250,000 loan. Interest expense on the loans for the years ended
December 31, 2005 and 2004 was approximatly $46,000 and $46,000 respectively.
This loan is secured by substantially all of our assets. In the event of default
on this loan, Mr. Maslow may foreclose on the collateral provided he receives
the written consent of our Board of Directors.

     Beginning in April 2004, Mr. Maslow was paid a salary of $6,250 per month
by Novint Technologies, Inc. as a retainer for part time employment services in
connection with (i) assisting Novint in the preparation of its becoming a public
company, (ii) seeking private financing, (iii) management of Novint's corporate
news letter, (iv) participation as a member of its board of directors and (v)
general assistance to management with the business affairs and strategic
direction.

     In 2004, Mr. Harrod was independently retained as a contractor for Novint
Technologies, Inc. to be responsible for the design and manufacturing of new
hardware technologies for the company. Mr. Harrod received 250,000 shares of
restricted common stock from Novint in exchange for his services as an
independent contractor.

     Bach & Associates, a law firm of which Mr. Bach, our former secretary and
our former director, is the sole proprietor, received $105,319 in 2002, $20,000
in 2003, $37,000 in 2004 and $49,000 in 2005 as compensation for legal services
rendered to us. In 2003, Mr. Bach also received 1,000,000 shares of our stock
valued at $0.04 per share, pursuant to an S-8 registration, in lieu of payment
in funds, for additional legal fees owed.

     Teich, Beim & Moro, P.C., an accounting firm in which Mr. Teich, our
treasurer and a director, is a principal, received $76,660, $35,000, $70,000 and
$40,000 in 2002, 2003,2004 and 2005, respectively, as compensation for
accounting services rendered to us.

     Grubman, Indursky and Schindler, P.C., a law firm in which Mr. Schatz, a
former director, is a partner, received $10,000 for legal services rendered in
2003. Grubman, Indursky and Schnidler, P.C. did not receive any compensation
from the Company in 2004.

     Weisner LLP, an accounting, professional services firm in which Mr.
Anderson, a director, is a partner, received 500,000 shares of our common stock
in December 2004 as payment for services rendered and $30,000 in 2005 for
services rendered.

                                       34

<PAGE>
ITEM 13. EXHIBITS

(a) EXHIBITS

Exhibit
Number                Description of Exhibit
------                ----------------------

2.1     Agreement and Plan of Reorganization (1)

2.2     Agreement and Plan of Merger (1)

3.1     Certificate of Incorporation (1)

3.2     Amendment to Certificate of Incorporation (1)

3.3     Bylaws (1)

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

10.1    License/Assignment Agreement with Robert Glenn Hockaday, and DKY,
        Inc. (1)

10.2    Research and Development Agreement with Energy Related Devices, Inc. (1)

10.3    Letter Agreement with Energy Related Devices, Inc. and Robert Glenn
        Hockaday (1)

10.4    Intellectual Property Assignment and Research and Development Agreement
        with Novars Gesellschaft fur neue Technologien GmbH (1)

10.5    License Option Agreement with The Regents of the University of
        California (1)

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

10.7    Employment Agreement with Robert Hermes (1)

10.8    Agreement with Stanton Crenshaw Communications (1)


                                       35
<PAGE>
10.9    Agreement with Equilink (1)

10.10   Stock Purchase Agreement between Manhattan Scientifics, Inc.,
        Projectavision, Inc., and Lancer Partners, L.P. (3)

10.11   License Option Agreement with Mr. Edward Vanzo (4)

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

10.13   2004 Consultant Stock Plan (6)

10.14   Loan Agreement with Oro Valley Associates, LLC (7)

10.16   Manhattan Scientifics 2005 Equity Incentive Plan  (8)

10.15   Warrant Agreement with Oro Valley Associates, LLC (7)

14      Code of Ethics (7)

21.1    List of Subsidiaries (3)

23.1    Consent of AJ Robbins, PC(9)

31      Certification of Chief Executive Officer and Chief Financial Officer
        Pursuant to Rule 13a-14(a) and 15d- 14(a)(9)

32      Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
        to Section 906 of the Sarbanes-Oxley Act of 2002(9)

---------------

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

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

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

     (4) Incorporated by reference to Amendment No. 3 to the registrant's Form
10-SB filed with the Securities and Exchange Commission on March 29, 2000.

     (5) Incorporated by reference to the registrant's registration statement
filed on Form S-8 filed with the Securities and Exchange Commission on September
14, 2001.

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

     (7) Incorporated by reference to the registrant's Form 10-KSB filed with
the Securities and Exchange Commission on April 15, 2005.

     (8) Incorporated by reference to the registrant's registration statement
filed on Form S-8 filed with the Securities and Exchange Commission on June 8,
2005.


     (9) Filed herewith.

                                       36
<PAGE>
ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The following table sets forth fees billed to us by our auditors during the
fiscal years ended December 31, 2004 and December 31, 2005 for: (i) services
rendered for the audit of our annual financial statements and the review of our
quarterly financial statements, (ii) services by our auditor that are reasonably
related to the performance of the audit or review of our financial statements
and that are not reported as Audit Fees, (iii) services rendered in connection
with tax compliance, tax advice and tax planning, and (iv) all other fees for
services rendered. "Audit Related Fees" consisted of consulting regarding
accounting issues. "All Other Fees" consisted of fees related to the issuance of
consents for our S-8 Registration Statements and this Annual Report.



                                       December 31, 2005    December 31, 2004
                                       -----------------    -----------------
(i)             Audit Fees              $51,000              $65,000
(ii)            Audit Related Fees           $0                   $0
(iii)           Tax Fees                     $0                   $0
(iv)            All Other Fees               $0                   $0



                                       37

<PAGE>
                                   SIGNATURES

In accordance with the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.


                                     MANHATTAN SCIENTIFICS, INC.


Dated:       April 4, 2006           By:  /S/ Marvin Maslow
                                          -----------------
                                          Marvin Maslow
                                          President, Chief Executive Officer,
                                          Chairman of the Board


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



    Signature                   Title of Capacities                Date
    ---------                   -------------------                ----

/S/ Marvin Maslow               President, Chief Executive         April 4, 2006
-----------------               Officer, Chairman of the Board
Marvin Maslow                   (principal executive officer and
                                principal financial officer)


/S/ David A. Teich              Director, Treasurer                April 4, 2006
------------------
David A. Teich


/S/ Ralph Anderson              Director                           April 4, 2006
------------------
Ralph Anderson



                                       38