Medis Technologies Ltd. (NASDAQ:MDTL) reported lower losses for the fourth quarter and year-ended December 31, 2005.
For the 4th quarter, the net loss $5,242,000, or $.19 per share, compared to $6,296,000, or $.24 per share, for Q4 2004.
For 2005, the net loss $18,550,000, or $.68 per share compared to $17,728,000, or $.68 per share for 2004.
Interest expenses increased for the quarter and the year because MDTL issued convertible notes, and because of increased capital expenditures. The company moved its Israel-based operations to larger quarters and continued to advance on its program for production of its fuel cell Power Packs, including building semi automated production capability at its facilities in Israel and starting to construct its fully automated high volume production line to be located in Ireland. “In reviewing the last quarter and year end results,” said Robert K. Lifton, Chairman and CEO of Medis Technologies, “there are two areas of particular note. The first is that cash used in operating activities for the fourth quarter, even after interest payments, amounted to $4.3 million, on the low side of our expectations. Even while we are gearing up our production capabilities, we are trying to keep a tight lid on expenditures.
The second area of note is our financial position. As of December 31, 2005, even after the capital expenditures already paid out, cash and cash equivalents and short-term investments equaled about $48.8 million. Assuming the exercise of in-the-money options and warrants expiring during 2006 and 2007, the total comes to approximately $66 million. We consider this amount adequate to carry out the program for building the high volume fully automated line and related lines for fuel, electrode framing and other materials (which are usable for a number of additional high volume lines) as well as operating costs and interest payments on our convertible notes to well into 2007, by which time we anticipate income from sales off our high volume line.
An important focus of our present work is on building market demand for the Power Packs planned to come off the high volume line. We have already discussed our program for testing Power Packs produced on our semi automated line and for delivering Power Packs to potential customers for trial programs, scheduled to start at the end of this June and delivery of products to our distributors for selected retail stores, scheduled to start in September of this year.
Let me mention some other activities geared to building market demand: We have begun a program aimed at connecting with large companies using mobile devices in the enterprise market so that we can provide a complimentary sample of our Power Pack to the CTO or CIO office of that company. It is a real eye-opener to see how extensive the lists are of companies in the enterprise market already using Smart Phones and related devices with Windows 5.0 or Symbian software. This is not surprising in view of the intense efforts announced by Microsoft and others to expand use of Smart Phones both in the enterprise market and with general consumers, as well. Steve Ballmer, CEO of Microsoft, recently predicted that within a few years the price of Smart Phones will drop to $100, which should result in very broad use of Smart Phones with Mobile 5.0. This reflects the strong desire expressed by consumers for cell phone access to high-speed data shown in a recent survey. It is gratifying that another expressed desire in that survey is for longer battery life.
In this connection, our team will be at the CTIA Show in Las Vegas starting on April 4th, where, in addition to having our own Power Pack booth, we will be hosting two events at the Smart Phone Summit to be held at the Smart Phone Mobility Pavilion, which is dedicated to Smart Phone Enterprise Solutions and sponsored by Symbian. At the Smart Phone Summit we will have a program for providing qualified representatives of major OEM Smart Phone device manufacturers, operating system (O/S) providers as well as IT professionals in the enterprise and user market with the opportunity to get a Power Pack for their own use, by filling out a form that provides us with key information about the devices they use, the connectors required and like information that will help us understand those companies’ power requirements.
In parallel to the Smart Phone program, at the CTIA we are also joining with Billboard, a key player in the entertainment business, in a program aimed at connecting us to over 1,000 leaders from the mobile, entertainment, technology and digital content industries expected to be at MECCA 2006 (the Mobile Entertainment, Content, Commerce & Applications Conference.) We plan to present a Power Pack program which will feature a Power Pack carrying case bearing the logo of both Medis and Billboard MECCA which carries inside a certificate in the shape of a Power Pack entitling a qualified holder to receive a complimentary Power Pack when they are available.
Further extending our outreach, we have become members in the Mobile Enterprise Alliance (MEA), a global advocacy group that promotes the business benefits of workforce mobility to enterprise IT managers and decision makers. Founded by leading mobility companies including Inmarsat, Intel, Telefonica and Vodafone, the MEA reports that it currently represents more than 1,400 enterprise IT managers in 37 countries with purchasing responsibility for over 10 million mobile workers. For more information about the MEA, one can visit www.mobileenterprise.org.
This month we constructed a new web site of our own – MyPowerToday.com, dedicated to the subject of mobile device power, including up to date news on topics of mobile devices, convergence, power issues and other related matters. Our aim is to make it the premier website dedicated to current news generally concerning convergent devices and aggregating up to date material from all over the world that relates to the topic. We expect it to help connect the Medis Power Pack with mobile operators, OEMs, enterprise market customers and general consumers. We think interested parties will find it a very rewarding site to learn what is happening in the fast changing mobile device world.
Finally, I’d like to provide updated information on the status of our plans for the CellScan System and Cell Kinetics, Ltd., the company that will carry on the CellScan business. As related in our release on January 12, 2006 about the CellScan, we are moving forward on a number of fronts. First, on the advice from one of the senior medical figures in the world of cancer research, we are adding new capabilities to our CellScan system that are expected to make it a highly desired system for research centers across the globe dealing, among other subjects, with cancer stem cells and with drug development. With these additions, we believe it will compare favorably with the cytometer systems now widely used by large numbers of research centers. Second, working with our FDA attorneys, we are getting ready to present to the FDA our proposed program for 510K instrumentation certification. At the same time, we have begun interviewing potential CEO’s for Cell Kinetics Ltd. and have had discussions with investment banking institutions about potential financing programs for Cell Kinetics, separate from Medis. As we have indicated, our target is to have these elements come together by the end of this year so that we can find ways to create value for Medis shareholders. In that connection, at last week’s meeting, our Board of Directors decided to explore, among other alternatives, the possibility of establishing a “Shareholder Loyalty Program” along the lines that were so attractive to our shareholders previously in our Company’s history. We will continue to keep you updated.”
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