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Kronos Announces Third Quarter Financial Results And Business Update
BELMONT, Mass., May 16, 2008 -- Kronos Advanced Technologies, Inc. (OTC
BB: KNOS) -- President and Chief Executive Officer, Daniel R. Dwight,
reported a financial results and a business update and for the nine months
ended March 31, 2008 for Kronos Advanced Technologies, Inc.
Financial Results
Kronos recorded a net loss for each of the nine months ended March 31, 2008
and March 31, 2007 of $2,339,000 and $2,501,000, respectively. The decrease
in the net loss for the nine months ended March 31, 2008 compared with the
comparable period of 2007 was principally the result of $3,134,000 increase
in gross profit to $3,197,000, partially offset by a $1,696,000 in accretion
of note discount, a $1,039,000 increase in operating costs to $3,341,000,
and a $237,000 increase in interest expense to $499,000.
Revenues for the nine months ended March 31, 2008 were $3,598,000 compared
to $156,000 for the comparable period of 2007. Revenues for the quarter
ended March 31, 2008 consisted of revenues from our agreements with Tessera,
a national retailer, a global consumer products company and our Russian
medical products partner. Selling, General and Administrative expenses for
the quarter ended March 31, 2008 increased $1,039,000 from the corresponding
period of 2007 to $3,341,000. The increase was principally the result of a
$614,000 increase in compensation and benefits, primarily as a result of an
increase in the expense of amortizing stock options that vested during the
2008 period, and a $288,000 increase in professional services as a result of
a new consulting arrangement and legal expenses. Interest expense for the
quarter ended March 31, 2008 was $499,000 compared with $262,000 for the
corresponding period of the prior year. The increase in interest expense was
principally the interest on promissory notes payable to AirWorks, Hilltop,
Sands and Critical Capital.
Kronos’ total assets at March 31, 2008 were $5,060,000 compared with
$2,111,000 at June 30, 2007. Total assets at March 31, 2008 and June 30,
2007 were comprised primarily of $3,579,000 and $364,000, respectively, of
cash and $1,450,000 and $1,723,000, respectively, of patents/intellectual
property. The Company had a working capital surplus of $927,000 at March 31,
2008 and a working capital deficit of $1,208,000 at June 30, 2007.
Subsequent to the end of the quarter, the Company repaid $859,000 plus all
of the interest and fees ($59,487) owed on the Critical Capital and Sands
Brothers Note and made a partial principal payment of $628,000 on the
AirWorks and Hilltop Notes.
Net cash provided in operating activities for the period ending March 31,
2008 was $1,011,000 compared with $1,560,000 net cash used in operating
activities in the comparable period in 2007.
Business Update
Micro-Cooling License. During the quarter ended March 31, 2008, Kronos
executed the sale and licensing of certain intellectual property (IP) rights
related to Kronos proprietary technologies to Tessera Technologies, Inc., a
leading provider of miniaturization technologies for the electronics
industry. Kronos received a one-time $3.5 million payment from Tessera in
exchange for the transfer of select Kronos patents covering micro-cooling
applications and an exclusive license to the Kronos technology for ionic
micro-cooling of integrated circuit devices or discrete electrical
components. Kronos retains the rights to use these patents for applications
outside of the field of micro-cooling. Tessera has the further right to
acquire additional Kronos IP relating to micro-cooling applications, and the
two companies have the option to continue to jointly develop new
technologies in this field.
Consumer Standalone Air Purification Products. During the nine months of
fiscal 2008, Kronos executed a Letter of Intent for the development,
manufacture and sale of air purification devices, based upon Kronos’
proprietary air movement and purification technology, with a leading
national retailer. Under the terms of the Letter of Intent, the retailer has
paid Kronos a portion of the development cost toward the new products and
will contribute resources to assist in the product development process. The
intent of the parties is for Kronos to lead and manage all development,
production and manufacturing activities for the Kronos air purifier and for
the retailer to actively market the Kronos air purifier through their
distribution channels. In December 2007, Kronos completed the design and
developed an Alpha Prototype for the customer. In January 2008, the parties
initiated negotiations of a definitive Product Development and Purchase
Agreement. In February 2008, the retailer filed for bankruptcy, which could
negatively impact the Company’s ability to finalize a definitive agreement
and receive additional funds from the retailer. During the nine months ended
March 31, 2008, Kronos received $250,000 in product development fees.
Consumer Kitchen Range Hood Products. In addition, during the nine months of
2008, Kronos continued its development of a silent kitchen range hood
application based on its proprietary technology. In October 2007, under the
terms of a development agreement, Kronos shipped additional range hood
prototypes to a global consumer products customer for testing and
evaluation. During the nine months ended March 31, 2008, Kronos earned
$34,000 in product development fees.
Medical Air Purification Products. During the first nine months of 2008,
Kronos earned $45,000 in revenue from licensing fees from its license
agreement with EOL, Kronos’ medical partner for manufacturing and
distributing Kronos air purifiers in Russia and other Commonwealth of
Independent States.
Additional details of the Company's results can be found in its quarterly
report on Form 10-QSB filed with the SEC on May 15, 2008 at www.sec.gov or
at www.kronosati.com.
About Kronos Advanced Technologies, Inc.
Through its wholly-owned subsidiary, Kronos Air Technologies, Inc., Kronos
Advanced Technologies has developed a new, proprietary air movement and
purification system that utilizes state-of-the-art high voltage electronics
and electrodes to silently move and clean air without any moving parts.
Kronos is actively commercializing its technology for standalone and
embedded products across multiple residential, commercial, and industrial
markets. Kronos’ technology is versatile, energy- and cost-efficient and
exhibits multiple design attributes, creating a broad range of applications.
Kronos’ business strategy includes a combination of building internal
capabilities, establishing strategic alliances and structuring licensing
arrangements. Kronos Advanced Technologies is located in Belmont, MA. More
information about Kronos Advanced Technologies is available at
www.kronosati.com.
Safe Harbor Provision
This news release contains forward-looking statements made in reliance
upon the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Forward-looking statements include, but are not limited to,
Kronos’ views on future financial performance, market growth, capital
requirements, new product introductions and acquisitions, and are generally
identified by phrases such as ``thinks,'' ``anticipates,'' ``believes,''
``estimates,'' ``expects,'' ``intends,'' ``plans,'' and similar words.
Forward-looking statements are not guarantees of future performance and are
inherently subject to uncertainties and other factors which could cause
actual results to differ materially from the forward-looking statement.
These statements are based upon, among other things, assumptions made by,
and information currently available to, managements, including management's
own knowledge and assessment of Kronos’ industry, R&D initiatives,
competition and capital requirements. Other factors and uncertainties that
could affect Kronos’ forward-looking statements include, among other things,
the following: identification of feasible new product initiatives,
management of R&D efforts and the resulting successful development of new
products and product platforms; acceptance by customers of Kronos’ products;
substantial expansion of international sales; reliance on key suppliers; the
potential need for changes in long-term strategy in response to future
developments; competitive factors, including pricing pressures and the
introduction by others of new products with similar or better functionality
than our products, and ability to obtain additional financing necessary to
continue operations . These and other risks are more fully described in
Kronos’ filings with the Securities and Exchange Commission, including
Kronos’ Annual Report on Form 10-KSB for the year ended June 30, 2007.
Kronos undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
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