IRVINE, Calif., April 30, 2003 (PRIMEZONE) -- HiEnergy Technologies, Inc. (OTCBB:HIET) today announced that it has obtained approximately one-half of the financing it needs in order to qualify with the Department of Defense Financing Agency to receive a pending contract. This contract would be to build HiEnergy's SuperSenzor for the detection of weapons materials, including biological weapons, within sealed containers.
The financing HiEnergy completed this week was comprised of two separate fixed-price sales of common stock to two institutional buyers. We sold a total of 1,400,000 shares of previously unissued common stock for total net proceeds of $459,500. With respect to the company's business activity, Dr. Bogdan C. Maglich, the company's Chairman, CEO and Chief Scientific Officer, today said, "The development of HiEnergy's technology is proceeding at a vigorous pace. In addition to the potential new contract, we expect to be able to field test our Anti-Tank landmine SuperSenzor nearly six months ahead of schedule under our current Army contract."
In response to a steep decline in HiEnergy's share price in morning trading today, the company received numerous inquiries from its shareholders. While it is not the Company's policy to respond to activity in its stock price, HiEnergy today stated that it knows of no material adverse change in its operations that should be a reason for a price decline.
The Company's most recent disclosures include an 8-K filed on April 25, 2003, which stated that many additional shares had recently become available for public sale under HiEnergy's Registration Statement on Form SB-2, effective on April 23, 2003, as well as under Rule 144 by shareholders who received HiEnergy common stock in the company's share exchange transaction on April 25, 2002. Prior to that, the most recent Company news had been on March 26, 2003, when the Company announced new appointments to its Board of Directors.
Dr. Maglich, who is also the company's largest shareholder holding approximately 41% of the total shares of common stock issued and outstanding, said "I have not sold any HiEnergy shares this year and do not intend to until June at the earliest. I did register 1,000,000 of my own shares for sale on Form SB-2 with the intention of loaning the proceeds to HiEnergy. Given the current share price level, however, I have decided not to sell the shares at this time."
ABOUT HIENERGY TECHNOLOGIES, INC.
HiEnergy Technologies, Inc. has developed patent pending stoichiometric explosive detection technology that remotely determines the chemical formula of concealed substances, including explosives, biological weapons, and illegal drugs. "Stoichiometric" means detection that deciphers the chemical formula of unknown substances through barriers in a short period of time. The systems HiEnergy is developing have applications in several markets, including airport security screening, bio-weapons detection, landmine detection, and contraband detection, in addition to chemical and petrochemical industry applications. HiEnergy's technology has been developed through several years of research and under grants from the Department of Defense and the US Customs agency. The shares of the company are publicly traded under the symbol HIET.
Please read the following factors that can materially affect HiEnergy's future results:
FORWARD-LOOKING STATEMENT
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Any statements set forth in the news release that are not entirely historical and factual in nature are forward-looking statements. For instance, all statements of belief and expectations are forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified.
RISK FACTORS:
The Company may continue to suffer effects of bad publicity about an SEC investigation that concerns questions about sales of our stock to certain individuals in connection with a reverse acquisition of our company in April 2002, which may continue to lead to unknown and unexpected adverse publicity. One of our former directors has requested that we advance him his legal expenses of dealing with the SEC's investigation. Some of the shareholders or former shareholders of the Company allegedly acquired their shares at very low cost, and if they have not previously sold the shares, could sell at a profit even at low prices. A low stock price could impair our ability to raise financing at reasonable prices. The Company's recent financings have been dilutive of other shareholders in the sense that the price per share has been less than most of the other shareholders had paid on the market. In addition, the holders of the company's Series A Convertible Preferred Stock have rights that will result in additional shares of common stock being offered to them in exchange for their shares if we sell more than $250,000 in any offering. Series A holders have expressed the belief that they will receive additional shares based on the recent financings. The Board of the Company will consider that issue at its next meeting. The Company estimates that additional shares that could be issued on account of that provision will dilute the issued and outstanding stock by almost 11% as a potential result, at the election of holders, in issuing about 1,900,000 additional shares of common stock. The lower the price at which we sell shares, the more shares the holders of Series A may receive, unless and until the holders elect to accept an exchange of this kind. A former director failed to disclose outside legal proceedings. Previous purchasers of our securities and stockholders could attempt to assert claims against us for inadequate disclosure of those outside proceedings. We may be adversely affected by weaknesses in our internal controls. Lack of business and financial experience of management could affect our operations. We must predict the amount of physical shielding in our product to satisfy present and future national, state and local environmental and safety regulations. If our losses and accumulated deficit continue in the future, our business and our stockholders will be adversely affected. We may face competition and since we are a development stage company that has not commenced commercial operations, we also do not have thoroughly developed sales and marketing plans to achieve positive cash flows. Competition may arise before we complete the development and testing of our stoichiometric technology and our detection systems. We have enacted cost saving measures. If we are unable to secure anticipated governmental funding, we may be forced to curtail spending further than anticipated. If we are unable to retain key technical and scientific personnel, it may prevent us from implementing our business plan, limit our future prospects and decrease the value of HiEnergy common stock. We may have increasing difficulty to attract and hold outside members of our board of directors. Potential risks and uncertainties also include, but are not limited to, such factors as the difficulties regarding the making of estimates and projections, the hiring and retention of qualified scientific personnel in a competitive labor market, rapidly changing technology and product obsolescence, the potential inability to realize cost savings, potential cost increases, uncertain demand for and acceptance of the company's products, results of in-process or planned development or marketing and promotional campaigns, changes in demand for products, difficulties foreseeing future demand, effects of limited visibility of future sales, potential non-realization of expected orders, unexpected business and economic conditions or adverse changes in current or expected industry conditions, business disruptions, future effects of the tragic events of Sept. 11, variations in customer preferences, fluctuations in market prices of the company's common stock and potential unavailability of additional capital on favorable terms, difficulties in implementing company strategies, dealing with litigation, difficulties in determining and maintaining adequate insurance coverage, difficulties protecting patents and other proprietary rights. In addition to these factors and any other factors mentioned elsewhere in this news release, the reader should refer as well to the factors, uncertainties or risks identified in the company's most recent Form 10-QSB filed on April 22, 2003, and the Form 8-K filed on April 25, 2003, filed by HiEnergy with the Securities and Exchange Commission. Additional risk factors may be identified from time to time in HiEnergy's future filings. HiEnergy does not undertake to supplement or correct any information in this release that is or becomes incorrect.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the company's securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State.
The company's stock may be sold under its registration statement only pursuant to a prospectus. For more complete information about HiEnergy Technologies, Inc., including perhaps to obtain a prospectus, please contact the person identified below. Read the prospectus carefully before you invest or send money.