SmarTire Announces $15 Million Standby Equity Distribution Agreement

Agreement enables the Company to pursue business opportunities on a global basis

www.smartire.com OTCBB: SMTR

RICHMOND, BC, May 25 -- SmarTire Systems Inc. (OTCBB: SMTR) today announced that the Company has signed a $15 Million Standby Equity Distribution Agreement with Cornell Capital Partners LP. This financial instrument replaces the $15 Equity Line of Credit arranged by HPC Capital Management in 2003. SmarTire also announces that it has arranged a second $750,000 unsecured, promissory note with Cornell Capital.

Under the terms of the Standby Equity Distribution Agreement, SmarTire may, at its discretion, issue shares to Cornell Capital at any time over the next two years. The maximum aggregate amount of the equity placements is $15 million. Subject to this limitation, SmarTire may draw $500,000 every seven business days. The facility may be used in whole or in part entirely at SmarTire's discretion, subject to an effective registration. The $750,000 promissory note bears interest at the rate of 8% per annum and is repayable within 120 days of issuance.

Walter Bukowski, Vice President of Cornell Capital, said "We are eager to assist SmarTire Systems in meeting its ongoing financing needs and we look forward to a long-term relationship with the company."

"We are very pleased with this innovative financing transaction and with the high level of professionalism and commitment demonstrated by Cornell Capital," says Robert Rudman, President and CEO of SmarTire. "This agreement allows SmarTire to access the capital necessary to aggressively pursue targeted markets for tire pressure monitoring technology."

Managed by US-based Yorkville Advisors LLC, Cornell Capital has structured equity participation agreements in the US, UK and Australian financial markets. To date, the Cornell group has made available in excess of over $600 million for over 50 publicly quoted corporations.

SmarTire Systems Inc. develops and markets proprietary tire monitoring systems for the transportation industry worldwide. Incorporated in 1987, SmarTire is a public company with offices in North America and Europe. Additional information can be found at www.smartire.com.

  (signed)

  Jeff Finkelstein
  Chief Financial Officer

  Legal Note on Forward Looking Statements

This news release may include statements about expected future events that are forward-looking in nature and subject to risks and uncertainties. Forward-looking statements in this release include, but are not limited to SmarTire access the capital necessary to aggressively pursue targeted markets for tire pressure monitoring technology and that SmarTire is positioned to capitalize on global opportunities for tire monitoring systems in the transportation industry. Readers should also refer to the risk disclosures outlined in the Company's annual report of Form 10-KSB for the last completed fiscal year filed with the SEC.

  Email: investor_relations@smartire.com
  Contact: Randy Halischuk
  1.800.982.2001