MII Microislet

SAN DIEGO, Sept. 28 /PRNewswire-FirstCall/ -- MicroIslet, Inc. (AMEX:MII) announced today that it has filed with the Securities and Exchange Commission its amended annual report on Form 10-KSB for the 2004 fiscal year, its amended quarterly report on Form 10-QSB for the first quarter of fiscal 2005, and its quarterly report on Form 10-QSB for the period ended June 30, 2005. MicroIslet believes that its filing today of the Form 10-QSB for the period ended June 30, 2005 constitutes full compliance with the American Stock Exchange (Amex) continuing listing standards and completion of the plan of compliance submitted to the Amex on September 6, 2005. MicroIslet had been out of compliance with the Amex requirements of Sections 134, 1003(d) and 1101 of the Amex Company Guide for the company's failure to file its Form 10-QSB for the period ended June 30, 2005 with the Securities and Exchange Commission. MicroIslet anticipates notification of regained compliance from Amex shortly. For the quarter ended June 30, 2005, the company reported a net loss of $1,934,061 or $0.05 per share compared with a net loss of $1,721,776 or $0.04 per share, for the same period in 2004. Net loss was $3,934,304 or $0.10 per share for the six months ended June 30, 2005 compared with a net loss of $3,372,905 or $0.10 per share, for the same period in 2004. Weighted-average common shares outstanding for the quarters ended June 30, 2005 and 2004 were 39.9 million and 39.0 million, respectively. The results for the 2004 period were restated to correct errors in the accounting treatment for certain non-cash expenses relating to warrants issued to service providers in 2004. General and administrative expenses decreased to $645,766 for the three months ended June 30, 2005 compared to $1,283,016 for the same period in 2004, and decreased to $1,278,373 for the six months ended June 30, 2005 compared to $2,293,576 for the same period in 2004. The decrease was primarily due to lower investor relations expenses offset by an increase in legal expenses. Research and development expenses increased to $1,326,902 for the three months ended June 30, 2005 from $464,553 in the same period in 2004, and increased to $2,730,699 for the six months ended June 30, 2005 from $1,111,650 in the same period in 2004. These increases were due mainly to an increase in headcount for lab personnel, the company's partnership with the Mayo Foundation, and materials and services relating to testing of the company's technology in animals. The company reported $5.1 million in cash at June 30, 2005. The report of the company's independent registered public accounting firm contained in the Form 10-KSB/A for the 2004 fiscal year contains a going concern qualification resulting from the company's need to raise additional capital to continue operations at present levels beyond March 2006. MicroIslet is taking appropriate measures to secure additional working capital for sustaining operations beyond March 2006. More information on these measures is contained in each of the periodic reports recently filed with the SEC. About MicroIslet MicroIslet is a biotechnology company engaged in the research, development, and commercialization of patented technologies in the field of transplantation therapy for people with insulin-dependent diabetes. MicroIslet's patented islet transplantation technology includes methods for isolating, culturing, cryopreservation, and immuno-protection (microencapsulation) of islet cells. MicroIslet is working to develop and commercialize a first product, called MicroIslet-P(TM), a microencapsulated porcine islet cell suspension that will be used for transplantation in patients with insulin-dependent diabetes. Additional information about MicroIslet can be found at http://www.microislet.com/. Except for the historical information contained herein, the matters set forth in this press release, including the expectation of securing additional working capital, are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including that capital may not be available on terms and conditions acceptable to MicroIslet, or at all, the substantial dilution that may occur to existing stockholders if MicroIslet raises capital through the sale of equity securities, and other risks detailed in MicroIslet's most recent filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof. MicroIslet disclaims any intent or obligation to update these forward-looking statements. For further information, please contact: William G. Kachioff, Vice President, Finance and Chief Financial Officer of MicroIslet Inc., +1 858-657-0287, . MicroIslet, Inc. (A Development Stage Company) Consolidated Balance Sheets (unaudited) June 30, December 31, 2005 2004 Assets Current Assets: Cash and cash equivalents $5,130,691 $8,777,364 Prepaid expenses 241,970 223,284 Total current assets 5,372,661 9,000,648 Equipment, net 297,078 203,018 Patents, net 10,811 11,048 Deposits and other assets 56,814 57,602 Total assets $5,737,364 $9,272,316 Liabilities and Stockholders' Equity Liabilities: Accounts payable and accrued expenses $546,051 $393,270 Total current liabilities 546,051 393,270 Stockholders' Equity: Common stock - $.001 par value: 100,000,000 shares authorized; 39,943,912 and 39,646,846 shares issued and outstanding at June 30, 2005 and December 31, 2004 respectively 39,944 39,647 Additional paid-in capital 30,682,191 30,435,917 Deficit accumulated during the development stage (25,530,822) (21,596,518) Total stockholders' equity 5,191,313 8,879,046 Total liabilities and stockholders' equity $5,737,364 $9,272,316 MicroIslet, Inc. (A Development Stage Company) Consolidated Statements of Operations (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 (as restated) (as restated) Grant revenue $-- $-- $-- $-- Expenses: Research and development expenses 1,326,902 464,553 2,730,699 1,111,650 General and administrative expenses 645,766 1,283,016 1,278,373 2,293,576 Operating expenses 1,972,668 1,747,569 4,009,072 3,405,226 Loss from operations (1,972,668) (1,747,569) (4,009,072) (3,405,226) Other income (expense): Interest income 40,652 25,848 83,693 35,093 Interest expense (4) (55) (10) (121) Other (2,041) -- (8,915) (2,651) Total other income (expense) 38,607 25,793 74,768 32,321 Net loss $(1,934,061) $(1,721,776) $(3,934,304) $(3,372,905) Basic and diluted net loss per share $(.05) $(.04) $(.10) $(.10) Weighted average number of shares outstanding used in calculation 39,943,912 39,045,388 39,834,401 35,310,054 August 21, 1998 (Inception) to June 30, 2005 Grant revenue $409,790 Expenses: Research and development expenses 13,006,926 General and administrative expenses 12,990,660 Operating expenses 25,997,586 Loss from operations (25,587,796) Other income (expense): Interest income 248,242 Interest expense (172,905) Other (18,363) Total other income (expense) (56,974) Net loss $(25,530,822) Basic and diluted net loss per share $(1.12) Weighted average number of shares outstanding used in calculation 22,867,799 DATASOURCE: MicroIslet, Inc. CONTACT: William G. Kachioff, Vice President, Finance and Chief Financial Officer of MicroIslet Inc., +1-858-657-0287, Web site: http://www.microislet.com/

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