NEW YORK, NY -- (MARKET WIRE) -- November 9, 2006 --Medis Technologies Ltd. (
NASDAQ:
MDTL) reported
financial results today for the third quarter and nine months ended
September 30, 2006. The net loss during both the quarter and nine months
ended September 30, 2006 was impacted by non-cash expenses of approximately
$1,150,000 related to stock options accounted for in accordance with SFAS
123(R), “Share Based Payment.” For the quarter ended September 30, 2006,
the net loss was $6,676,000 or $.21 per share based on 32,108,884 weighted
average shares, compared to a net loss of $4,595,000 or $.17 per share
based on 27,582,802 weighted average shares for the quarter ended September
30, 2005. For the nine months ended September 30, 2006, the net loss was
$26,294,000, or $.86 per share, based on 30,470,534 weighted average
shares, compared to a net loss of $13,308,000, or $.49 per share, based on
27,327,022 weighted average shares for the nine months ended September 30,
2005. Additionally, during the nine months ended September 30, 2006, the
Company incurred costs aggregating $8,491,000 (including $8,266,000 as the
value of shares issued in lieu of future interest payments) related to the
April and May 2006 exchanges of its common stock for all $49,000,000 of its
then outstanding senior convertible notes. During the periods, the Company
continued to move forward with its production and marketing programs of its
fuel cell Power Packs including operating its semi automated production
line, distributing its Power Pack to potential customers and making
progress in constructing its fully automated high volume production line.
“Consistent with our expectations, the net cash used in operating
activities during the quarter was about $5.1 million,” said Robert K.
Lifton, Chairman & CEO of Medis Technologies. "Furthermore, our capital
expenditures during the quarter of about $7.1 million reflect the
increasing payments to Ismeca and other contractors for construction of our
fully automated production line capable of producing up to 1.5 million
Power Packs a month together with the supporting lines such as the fuel
line and electrode framing which are capable of supporting another two
lines. Our schedule for constructing the automated line continues on
target. As we have previously reported, the line is expected to be
operational and ready for validation by our team and that of our contract
manufacturer, Celestica, by the end of December. Then it will be
disassembled and shipped to Celestica's facilities in Galway, Ireland where
it will be reassembled and, after testing, begin operations. Our schedule
calls for starting production on this line by the second quarter of 2007.
"Testing is continuing by the Underwriter Laboratories (UL) on hundreds of
Power Packs taken off our semi-automated line in Israel. These Power Packs
were shipped to different locations in Europe where they are undergoing the
very demanding test regime established by the UL for its certification
process. Our team has prepared long and hard for these tests -- carrying
out tests on our Power Packs to meet military specifications as well as
internally and in Celestica's facilities in Europe. The timing, of course,
rests in the hands of the UL testers, but we have as our goal to be
completed during the fourth quarter. As we have previously announced, once
UL listing is attained we plan to place Power Packs for sale in a limited
number of retail outlets to start generating a marketing and media 'buzz'
around the Power Pack.
"Our sales program continues to accelerate. There are different markets
where we believe the 24/7 Power Pack is an attractive product. One
important market for the Power Pack is the fast growing market for mobile
data used by the enterprise customer. The decision maker for the
installation by that customer of mobility software or hardware is typically
the IT (Information Technology) Manager or sometimes the CIO (Chief
Information Officer.) We believe that one important channel to this
customer is a business solution provider such as Quasar Business Solutions
which offers business intelligence applications, including the Microsoft
Windows Mobile Operating System. Receiving a purchase order from Quasar for
one million Power Packs was a valuable step forward in our sales approach
to that market. Our expectation, based on Quasar's business plan, is that a
broad base of its enterprise customers will purchase the Power Packs for
use by their employees and then will want to re-supply their employees at
multiple rates, so the sales could build up rapidly, Quasar is one of a
number of such business solution providers that we expect will offer our
Power Pack to their customer base.
"Another market that we are addressing is the retail consumer market. Our
primary channel to that market are our distributors -- ASE, Kensington and
Superior. There are also other channels we are also working with. Our
strategy is to attempt to create a continuing flow of orders so that
potential customers will want to act now to insure that there will be Power
Packs available to them.
"At the same time as our marketing is going forward in the United States
and Canada, there is activity in other markets where we have made Power
Packs available to companies in Europe, Japan and China and the Middle
East. Our previously announced transaction with the groups from Russia is
moving forward and Mr. Finkelshtain is visiting Russia at their request to
help identify the appropriate sites for them on which to build a Power Pack
fully automated line and fuel facility which our agreement with them
contemplates as a later stage in our milestone program.
"I would also note the important first step in the development of an 800
Watt fuel cell for UAV's (Unmanned Air Vehicles) together with our
shareholder Israel Aircraft Industries. This development program will be of
value as we move to develop larger fuel cells of one to two kilowatts.
"Finally, I would like to address the topic of stock options. After the
issuance of Glass Lewis' report regarding the late filing by certain of
our officers and directors of Form 4s, and the attendant press coverage,
an intensive review of every option issued by Medis since 1999 confirmed
both the accuracy of each option grant date and that each option grant was
properly accounted for. I am proud of our accounting team for the high
level of their professionalism in this process."
Management will also conduct a conference call on the morning of Thursday,
November 9, 2006 at 11:00 a.m. Eastern Time to discuss these results and
the current status of its business operations. Interested parties may
participate in the call by dialing 866-820-1713 (Domestic) or 706-643-3137
(International) approximately 10 minutes before the call is scheduled to
begin and ask to be connected to the Medis conference call or conference
code #9180114. A recorded replay of the call will be available until 12:00
a.m. Eastern Time on November 15, 2006. Listeners may dial 800-642-1687
(Domestic) or 706-645-9291 (International) and use the code #9180114 for
the replay. The call will also be simultaneously broadcast over the
Internet. To listen to the live webcast, please go to
www.medistechnologies.com and click on the conference call link, or go
directly to
http://audioevent.mshow.com/311490/. The conference call will
be archived and accessible for approximately 30 days if you are unable to
listen to the live call.
Medis Technologies' primary focus is on direct liquid fuel cell technology.
Its business strategy is to sell its products to end users through retail
outlets, service providers and to the military and other markets. Medis has
also developed the CellScan with many potential applications relating to
disease diagnostics and chemo sensitivity. Additionally, Medis' product
pipeline includes other technologies, in varying stages of development.
This press release may contain forward-looking statements, which are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. In some cases you can identify those so-called
"forward-looking statements" by words such as "may," "will," "should,"
"expects," plans," "targets," "believes," "anticipates," "estimates,"
"predicts," "potential," or "continue" or the negative of those words and
other comparable words. These forward-looking statements are subject to
risks and uncertainties, product tests, commercialization risks,
availability of financing and results of financing efforts that could cause
actual results to differ materially from historical results or those
anticipated. Further information regarding these and other risks is
described from time to time in the Company's filings with the SEC. We
assume no obligation to update or alter our forward-looking statements made
in this release or in any periodic report filed by us under the Securities
Exchange Act of 1934 or any other document, whether as a result of new
information, future events or otherwise, except as otherwise required by
applicable federal securities laws.
This press release is available on Medis' web site at
www.medistechnologies.com.
MEDIS TECHNOLOGIES LTD.
SUMMARY OF RESULTS
September 30, 2006
(In thousands, except per share amounts)
(See notes below)
Three Three Nine Nine
Statements of Months Months Months Months
---------- ---------- ---------- ----------
Operations Data Ended Ended Ended Ended
---------- ---------- ---------- ----------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
---------- ---------- ---------- ----------
2005 2006 2005 2006
---------- ---------- ---------- ----------
(Unaudited)
==============================================
Revenues $ - $ 150 $ - $ 150
Cost of Revenues - 98 - 98
---------- ---------- ---------- ----------
Gross Profit - 52 - 52
R&D costs, net $ 2,686 $ 4,763 $ 8,976 12,845
SG&A expenses 1,554 2,302 3,995 5,183
Amortization of intangible
assets 52 52 156 156
---------- ---------- ---------- ----------
Operating loss (4,292) (7,065) (13,127) (18,132)
Other income (expenses),
net (303) 389 (181) (8,162)
---------- ---------- ---------- ----------
Net loss $ (4,595) $ (6,676) $ (13,308) $ (26,294)
========== ========== ========== ==========
Net loss per share -
basic and diluted $ (.17) $ (.21) $ (.49) $ (.86)
========== ========== ========== ==========
Weighted-average common
shares used in computing
basic and diluted net loss
per share 27,583 32,109 27,327 30,471
========== ========== ========== ==========
December 31, September 30,
------------ ---------------
Selected Balance Sheet Data 2005 2006
------------ ---------------
(Unaudited)
------------ ---------------
Cash and cash equivalents $ 35,295 $ 26,994
Short-term investments 13,500 2,250
Working capital 46,401 29,422
Property and equipment, net 7,475 17,901
Debt issuance costs, net 2,928 -
Goodwill and intangible assets, net 58,669 58,513
Total assets 120,400 110,992
Convertible Senior Notes, net 48,760 -
Other long-term liabilities 2,339 2,423
Stockholders’ equity 65,377 104,556
NOTES
On April 26 and May 8, 2006, the Company completed transactions to exchange
its commons stock for the entire $49,000,000 principal amount of its
outstanding 6% Senior Convertible Notes whereby holders of the Company's
notes exchanged their notes for an aggregate of 3,101,874 of the Company's
common shares. This number includes 269,500 common shares, valued at $30
per share, in lieu of future interest payments had such notes remained
outstanding until their maturity, after giving effect to an eighteen month
waiver of such payments. During the nine months ended September 30, 2006,
the Company recorded financing charges related to the exchange transactions
of approximately $8,491,000, which consists of the value of the shares
issued in lieu of future interest payments of $8,266,000, amortization of
the remaining balance of beneficial conversion features of $220,000 and out
of pocket costs incurred in connection with the exchange transactions. The
Company recorded the remaining unamortized balance of the debt issuance
costs as of the dates of the exchanges of approximately $2,747,000 as a
reduction to additional paid-in capital.
The net loss during both the quarter and nine months ended September 30,
2006 included non-cash expenses of approximately $1,150,000 related to
stock options accounted for in accordance with SFAS 123(R), "Share Based
Payment."
Financial information included in the Summary of Results has been derived
from the Company's unaudited condensed interim consolidated financial
statements ("interim statements") as of and for the three months ended
September 30, 2006. The interim statements should be read in conjunction
with the Company's annual financial statements as of December 31, 2005 and
the year then ended, together with the accompanying notes.
Contact Information: CONTACT:
Medis Technologies Ltd.
Robert K. Lifton
Chairman & CEO
(212) 935-8484
OR
INVESTOR RELATIONS COUNSEL:
The Equity Group Inc.
Adam Prior
(212) 836-9606
Devin Sullivan
(212) 836-9608