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SMS Announces Significant Balance Sheet Improvement

12 January 2000

SMS Announces Significant Balance Sheet Improvement

    AUSTIN, Texas, Jan. 12 -- SMS (OTC Bulletin Board: SCMS)
announced today that it has completed a series of transactions that have
resulted in a substantial improvement in the Company's Balance Sheet.  SMS
successfully negotiated certain debt relief provisions with various trade
creditors in return for the issuance of a total of 100,000 shares of common
stock; a release of claims on certain IP rights and equipment assets held by
General Electric; and the payment of various sums of cash.
    Funding was provided by cash inflows from Accounts Receivable in the
normal course of business and the proceeds from the sale of the Company's
operating assets related to the scanning service business to 3D Imaging &
Development, Inc.  SMS retains the rights to certain key domestic scanning
service business opportunities and the rights to all scanning services outside
of North America.   SMS will also receive a 15% royalty on certain domestic
scanning service sales for a period of ten years.
    In the unaudited financial statements as of December 31, 1999, these
initiatives show a reduction of $1,792,207 in the Company's Current -- and
contingent -- Liability.  Also in the unaudited financial statements as of
December 31, 1999, there is an improvement in Shareholders Equity from a
negative ($1,276,239) to a positive $313,659.
    All commercial bank lenders, formerly secured by substantially all of the
Company's assets including equipment and accounts receivable, have been
successfully paid off in full including all interest owed.  SMS has also paid
down or paid off its obligations to its largest trade creditors.
    "Among the largest creditors with whom the Company dealt was General
Electric to which the Company owed a significant amount of money resulting
from a joint research contract awarded initially in February 1996.  With the
formal and complete satisfaction of both the commercial lender(s) and GE
obligations, SMS finds itself in a much improved position to proceed forward,"
said Howard Burris, President & CEO of SMS.  "The Company has been in a
difficult position for some time, and the elimination of this much debt can
only be regarded as a highly favorable development for SMS."
    SMS is a publicly traded company traded on the OTC Bulletin Board under
the symbol SCMS.  The Company is a leader in the development of industrial
radiography and computed tomography, which is becoming widely used in the
auto, aircraft, tire and castings industries.