SmarTire Q3 Revenue Reaches $1.2 million

SmarTire Systems Inc has announced that revenue for the third quarter of fiscal year 2006 increased 262 per cent to $1,195,136 from $330,406 in the third quarter of fiscal year 2005. The company said FQ3 sales represented a 42 per cent gain over the second fiscal quarter of this year. For the nine months ended 30 April 2006, SmarTire’s sales increased 157 per cent to $2,627,617 from $1,022,484 for the nine months ended April 30, 2005.

SmarTire President and CEO Leif E. Pedersen said: “We continue to experience strong sales growth and achieved record sales in the recreational vehicle and bus markets. As evidenced by recent announcements, this momentum is definitely continuing. We are optimistic about our prospects for growth in the commercial, recreational and bus markets as well as the industrial vehicle market. In addition to the new vehicle or original equipment market (OEM), there are tremendous opportunities in the after-sales market which are substantially larger than the OEM market.”

Net loss for the quarter decreased to $4.3 million, or $0.01 per share, for the third quarter of fiscal year 2006, from $7.1 million, or $0.03 per share, for the third quarter of fiscal year 2005. The net loss for the nine months ended 30 April 2006 was $26.3 million, or a loss per share of $0.09, compared to a net loss of $13.6 million, or loss per share of $0.07, for the same period last year. The substantial increase in the loss in the nine months ended April 30, 2006 was primarily due to non-cash interest and finance charges of $20.8 million of which approximately $16.1 million related to expenses incurred in connection with SmarTire’s $100 million equity line of credit. The charge was taken as uncertainty exists as to when SmarTire will register its equity line of credit.

Chief Financial Officer Jeff Finkelstein commented: “Cash used to fund operating activities for the nine months ended April 30, 2006 was $6.5 million, compared to $5 million during the same period of the prior year. The increase in cash used was mainly due to a $1 million interest payment on SmarTire’s convertible debentures and $250,000 to settle litigation with a debt holder.”