Tirex to Start Rubber Floor Mat Molding Operations
17 December 1998
Tirex to Start Rubber Floor Mat Molding Operations
MONTREAL, Dec. 16 -- The Tirex Corporation
(OTC Bulletin Board: TXMC) announced today that it has entered into a
five-year term contract with IM2 Merchandising and Manufacturing, Inc. of
Quebec, Canada, to be IM2's exclusive supplier of rubber welcome mats and
related products, which will be molded from rubber crumb recycled from scarp
tires at Tirex's TCS-1 Plant in Montreal.
Tirex's president, Terence C. Byrne stated that, "this is a very important
contract for Tirex. We expect it to provide us with a steady stream of
revenue and earnings in the current fiscal year and, since we will be
producing the rubber crumb from which the mats will be made, we will benefit
from the economic advantages of vertical integration. We consider this to be
an especially promising opportunity for Tirex because IM2 is the exclusive
supplier of certain rubber crumb molded products for a major national
distributor of consumer and commercial floor matting products, which has over
forty years of market presence, national trade show exposure, and well
established channels of retail distribution, including large national retail
outlets such as Walmart."
Tirex expects to be recycling sufficient amounts of rubber to meet all of
its molding requirements by February, 1999 and to begin active molding
operations at its TCS-1 Plant in Montreal by March 1, 1999.
IM2's sales goals, in US dollars, by calendar year, beginning January 1,
1999, are as follows:
Calendar Year Sales Goal
1999 $1,625,000
2000 $3,000,000
2001 $5,000,000
2002 $7,500,000
2003 $7,500,000
Total $24,625,000
Discussions between IM2 and its customer indicate that actual sales may be
substantially higher than those shown above. Tirex stressed that such sales
goals reflect estimates, solely for planning purposes, as they appear in IM2's
contract with its customer and that the dollar amounts shown are the prices at
which IM2 has contracted to resell the mats. Tirex's contract with IM2 calls
for Tirex to receive 45% of the profits which IM2 will realize from such
re-sales, net of all overhead, manufacturing and shipping costs.
Tirex's contract with IM2 calls for Tirex to pay a one-time exclusive
license fee, in the amount of thirty thousand Canadian dollars (CDN $30,000),
for the right to use the proprietary molds to be supplied by IM2 and to
utilize the services of Sean Khodaded, an engineer previously employed by
Royal Floor Mats, with six years of rubber mat manufacturing experience, at a
cost of $10,000 per month for four months, commencing January 1999. Mr.
Khodaded will assist Tirex in setting up and initiating operations at the
molding facility to be established at Tirex's Montreal Plant. The term of the
IM2 / Tirex Agreement is five years, with IM2 having the option to extend such
term for two additional three-year periods.
Today's announcement follows last Thursday's news that Tirex has been
successfully operating the first fully integrated TCS-1 Plant on a continuous-
running basis for scheduled periods of up to four hours. The TCS-1 Plant is a
"turn-key", automated, cryogenic scrap tire recycling system designed and
manufactured by Tirex, which breaks down used tires into cleanly separated and
re-saleable rubber crumb, steel wire, and fiber. That announcement marked the
completion of certain modifications to the Plant, which Tirex had identified
in earlier tests, and the successful continuous operation of a fully
integrated TCS-1 Plant utilizing a single freezing tower and a single
fracturing mill. Final assembly of the Plant will integrate a second freezing
tower and fracturing mill. Mr. Byrne, has stated that results of these
initial operations indicated that the TCS-1 Plant produces "the cleanest
ground rubber we've seen being offered in the market today."
Tirex has taken orders for fourteen TCS-1 Plants, based upon which it has
a present backlog of $41,750,000. Although such backlog may be used as a
guideline in determining the value of orders received, it is subject to change
by reason of several factors including possible cancellation of orders, change
in the terms of the contracts, and other factors beyond Tirex's control and
should not be relied upon as being necessarily indicative of the revenues or
profits which Tirex might ultimately realize from such orders. The ultimate
consummation of a sale pursuant to any order included in the backlog will be
entirely depended upon the TCS-1 Plant's continuing to meet all performance
expectations, each customer's obtaining lease or other financing as well as
all required permits and licenses, and Tirex's obtaining sufficient production
financing and capacity to meet delivery requirements.