SmarTire Systems Reports Year End Results
30 October 1998
SmarTire Systems Reports Year End Results
RICHMOND, BRITISH COLUMBIA--Oct. 30, 1998-- SmarTire(VSE:SES.) (OTC Bulletin Board:SMTR) SmarTire Systems, Inc. (OTC/BB:SMTR) today reported that gross revenues reached CAN$2.0 million in the fiscal year ended July 31, 1998 compared to CAN$0.9 million for fiscal year 1997.
The revenue increase was primarily attributable to an increase in the sale of aftermarket SmarTire(TM) monitoring systems which represented CAN$1.25 million. Fifty percent of these sales were recorded in the fourth quarter. An overall increase in expenses from CAN$3.9 million in fiscal year 1997, to CAN$6.6 million for fiscal year 1998, resulted in a net loss for the year ended July 31, 1998 of CAN$6.7 million, or CAN$(1.12) per share compared to CAN$4.1 million, or CAN$(1.17) per share, for the year ended July 31, 1997.
"As SmarTire Systems entered its 1998 fiscal year, the Company was receiving industry-wide recognition for its innovative tire monitoring products which were supporting the introduction of the new "run-flat" tires. By the end of fiscal 1998, the required corporate building blocks had been assembled to ensure SmarTire's long-term role as the leading developer and distributor of tire monitoring systems to the transportation industry", said Robert V. Rudman, President and Chief Executive Officer.
"A solid financial base was essential and a strategic alliance with a world class automotive supplier was also a requirement. To serve the needs of the international automotive industry, complete sales, marketing and distribution had to be established in both North America and Europe", Rudman said. The president reported that these major developments were successfully achieved by the end of fiscal 1998 and that 1999 is being seen as the Company's breakthrough year.
During 1998, a CAN$8.7 million private placement was arranged with international investors. In addition, an investment of CAN$5.2 million from a strategic alliance provided the funding necessary to redeem all long-term debt and to create a strong ending cash position. At July 31, 1998, SmarTire Systems had CAN$8.7 million in cash compared to CAN$69,761 at July 31, 1997. This cash position enables the Company to fulfill its strategic objectives during the current year.
SmarTire Systems announced in 1998 that an alliance was established with TRW, one of the world's largest independent automotive suppliers. In addition, TRW became a major shareholder in the Company with a 10 percent equity investment. Mr. Rudman reported, "TRW is a major key to our future, assuring us of engineering superiority. TRW's worldwide manufacturing capability will enable us to meet increased demand with low cost, reliable products".
Early in fiscal 1998, the Company began establishing a comprehensive sales, marketing and distribution organization throughout North America in support of Michelin's and Goodyear's new run-flat tires. Later in 1998, SmarTire (Europe) Limited was established and a similar marketing organization was created to support the European introduction of run-flat tires.
"During fiscal 1998, we created the platform required for substantial growth as SmarTire ramps up its marketing efforts in North America and Europe. Earlier this month, we announced our progress regarding second generation products which will provide complete market coverage in response to escalating demand for tire monitoring systems to be used with conventional and run-flat tires. As we enter 1999 with these exciting products, the Company is shifting its primary focus to the generation of revenue and shareholder value", reported Rudman.
SmarTire Systems Inc. is the developer and marketer of proprietary tire monitoring systems for the North American and European automotive markets. The Company is pursuing the passenger car market segment in response to the introduction of the new "run-flat" tires. Goodyear, Michelin and Bridgestone/Firestone have all approved the current SmarTire(TM) system for use with their run-flat tires. Through a strategic alliance, SmarTire and TRW Inc. are committed to providing superior tire monitoring systems for both aftermarket and original equipment applications. Additional information is available on the Internet at http://www.smartire.com
On behalf of the Board of Directors, Robert V. Rudman, C.A., President and CEO
Except for the historical information contained herein, this news release contains forward looking statements that involve risks and uncertainties, including the impact of competitive products and pricing and general economic conditions as they affect the Company's customers. Actual results and developments may therefore differ materially from those described in this release.
SMARTIRE SYSTEMS INC.
Financial Summary
(Expressed in Canadian Dollars)
Years Ended July 31 1998 1997
Revenue $ 2,057,251 $ 921,546
Cost of goods sold 1,636,262 658,943
Gross Profit 420,989 262,603
Expenses 6,619,016 3,938,230
Loss from operations (6,198,027) (3,675,627)
Other expense (income) 494,738 447,746
Net loss $ (6,692,765) $ (4,123,373)
Loss per share $ (1.12) $ (1.17)
SMARTIRE SYSTEMS INC.
Financial Summary
(Expressed in Canadian Dollars)
Three Months Ended July 31 1998 1997
Revenue $ 693,172 $ 449,693
Cost of goods sold 587,935 324,227
Gross Profit 105,237 125,466
Expenses 2,105,283 1,584,705
Loss from operations (2,000,046) (1,459,239)
Other expense (income) (749,132) 338,809
Net Loss $ (1,250,914) $ (1,798,048)
Loss per share $ (0.26) $ (0.53)
SMARTIRE SYSTEMS INC.
Balance Sheet Summary
(Expressed in Canadian Dollars)
July 31 1998 1997
Cash $ 8,718,258 $ 69,761
Other Current Assets 4,060,627 855,442
Total Assets $ 14,186,109 $ 2,649,577
Current Liabilities $ 801,832 $ 2,235,764
Long-term debt - 2,473,362
Shareholders' equity 13,384,277 (2,059,549)
(deficiency of assets over liabilities)
Total Liabilities and
Shareholders' Equity $ 14,186,109 $ 2,649,577
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