straight debt, convertible debt, convertible preferred and equity. One of the steps we've taken in preparation is to file a shelf registration statement of 1.5 million common shares to provide flexibility to take the most attractive approach. We have no obligation to sell those shares but depending on the circumstance, including the price of our shares at that time, we will have the ability to react more quickly.
While preparations for high volume production of the '24/7' Power Pack is occupying the bulk of our team's time and attention, they are also making progress on our program for developing larger fuel cells for applications that require greater power. These more powerful fuel cells are based on the platform we announced a few months ago when we developed a 15 watt, 12 volt fuel cell that ran for 12 hours on one fueling. At that time, we stated our intention to develop products using our greater power capabilities, including a universal charger capable of charging laptops and other devices. Ultimately, our program for this new platform technology involves building up to at least a one kilowatt product. We have begun a dialogue with various public utilities which we hope will eventuate in a joint development program for the use of a range of '24/7' Power Pack products to meet their needs for longer lasting power. There are a broad range of utility applications we would look to satisfy. These include powering handheld wireless devices and fixed wireless routers and communication units for measuring and billing customer power usage; demand side management by providing alternative power for peak periods, such as stand-by generators; and providing sufficient power to government and business during disaster recovery periods. Our scientists see this road map as approximately a two year development program.
The CellScan Program
Our Cell Kinetics team, led by its CEO Dr. Asaf Ben Arye, has been moving assiduously on securing a CE Mark and ISO certifications and moving the FDA 510K certification program. As soon as we can get FDA approval of our proposed testing protocol, we expect to start FDA testing. At the same time, we are upgrading and assembling CellScan units with new grids having the coating that allows the cells to live much longer and proliferate, for use by leading scientists at Memorial Sloan Kettering and other institutions that have shown a strong interest in working with the CellScan. One of the exciting areas they will be looking at, using the unique capability of the CellScan for detecting, stimulating and following rare cells, is seeking to identify cancer stem cells that are thought to be the cells that create the cancer and to develop drugs to kill those cells. As previously noted, our plan is to create value for the Medis shareholders by separating Cell Kinetics and towards that end our tax attorneys are seeking appropriate rulings from Israeli tax authorities."
Management will also conduct a conference call that morning on Tuesday, August 8, 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 #3708600. A recorded replay of the call will be available until 5:00 p.m. Eastern Time on Tuesday, August 15, 2006. Listeners may dial 800-642-1687 (Domestic) or 706-645-9291 (International) and use the code #3708600 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/305447. 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 June 30, 2006 (In thousands, except per share amounts) (See notes below)
Three Three Six Six Statements of Months Months Months Months Operations Data Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2005 2006 2005 2006
(Unaudited) ========== ========== ========== ==========
R&D costs, net $ 2,550 $ 4,113 $ 6,290 $ 8,082 SG&A expenses 1,192 1,456 2,441 2,881 Amortization of intangible assets 52 52 104 104 ---------- ---------- ---------- ---------- Operating loss (3,794) (5,621) (8,835) (11,067) Other income (expenses), net 49 (8,101) 122 (8,551)
Net loss $ (3,745) $ (13,722) $ (8,713) $ (19,618) ========== ========== ========== ==========
Net loss per share - basic and diluted $ (.14) $ (.44) $ (.32) $ (.66) ========== ========== ========== ==========
Weighted-average common shares used in computing basic and diluted net loss per share 27,305 31,031 27,197 29,638 ========== ========== ========== ==========
December 31, June 30, Selected Balance Sheet Data 2005 2006 (Unaudited) ------------ ------------
Cash and cash equivalents $ 35,295 $ 34,433 Short-term investments 13,500 5,915 Working capital 46,401 40,968 Property and equipment, net 7,475 10,582 Debt issuance costs, net 2,928 - Goodwill and intangible assets, net 58,669 58,565 Total assets 120,400 114,451 Convertible Senior Notes, net 48,760 - Other long-term liabilities 2,339 2,392 Stockholders’ equity 65,377 108,774
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 second quarter of 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.
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 June 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: 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
SOURCE: Medis Technologies Ltd