The company, which is based in Vancouver, Canada and is traded on the Toronto Stock Exchange, also reported a net loss of $1.1 million, or ($0.06) per share, compared with net income of $1.1 million, or $0.07 per share, for the year ended September 30, 2003.
Operating income for the year decreased by $3.4 million resulting in an operating loss of $1.6 million for 2004. Among the major expenses incurred during the year were $425,800 relating to the move into the company's new 83,000 square foot integrated headquarters, R&D and manufacturing facility; and legal expenses of $388,000 relating to the lawsuit initiated by Color Kinetics against TIR for alleged patent infringement.
For the three months ended September 30, 2004, TIR reported a net loss of $1.6 million from revenue of $5.9 million. In the quarter, TIR's gross profit was reduced by $700,000 because of warranty claims relating to failures of a particular version of power supply units supplied by a third party and installed on the sites of its largest customer, BP. The company also accelerated its investment in research and development, spending $1.4 million prior to any government assistance, during the quarter.
TIR's management says that it expects 2005 to be a pivotal year for the company as it moves from a substantial reliance on one big customer, BP, to many customers. In the previous year, TIRdiversified its Corporate Identity customer base with 12 new customers for its LightMark(TM) and LightScript(TM) products, including leading corporations such as A&W, Couche-Tard, Federated Co-op, and Petro-Canada.
Also during fiscal 2004, TIR says that it developed 65 new solid-state lighting (SSL) inventions and tripled the size of its intellectual property portfolio, bringing its total to 34 patents filings in the USA and internationally.
The company launched eight new SSL products for the Corporate Identity and Architectural lighting markets at global industry trade shows, and formed its first key strategic partnership within the lighting industry (see TIR Systems' agreement with Canlyte raises profile of solid-state lighting).
"In 2004 we have seen the momentum for Solid State Lighting increase from within the conventional lighting industry and TIR is being viewed by key industry players as the leader, from both a product and technology perspective," said Leonard Hordyk, TIR's president & CEO.
"With technological advances within the industry and global forces driving implementation from outside, we at TIR not only believe that adoption of SSL into mainstream lighting will happen, but that we are at the hub of this fundamental change", said Leonard Hordyk. "We have to keep reminding ourselves that we are changing an industry that has seen little change in over 100 years. TIR's future success will be dependent on our ability to continue driving advancements in SSL technology; forming the right strategic partnerships across the lighting industry; launching innovative new products; diversifying our customer base and generating ongoing revenue growth."
Building Block strategy
As well as the global drivers for SSL adoption, the industry has recently begun to acknowledge that a technology gap exists. Current investment into the development of LEDs (the light source on which SSL is based) is huge and performance enhancements and cost reductions are exceeding expectations. However other enabling technologies such as power conversion, drive, thermal management, communications and optics are critical to ensuring that the light generated by the LED is delivered to the application, and in these areas the industry is not tracking to the same levels of progress and performance improvements being achieved with LEDs.
Consequently the existing gap between the advancements in LED technology and their incorporation into end user lighting systems, using these enabling technologies, is getting wider. TIR is intent on reducing this technology gap and is focusing its research efforts on these key technologies, which TIR calls its "Building Block Technology".
To ensure TIR fulfills this objective the company implemented a comprehensive three phase strategy in late 2004, consisting of Establishing Product Leadership, Driving Industry Adoption, and Technological Leadership. TIR expects that these strategic phases will drive growth in revenue, attract partners and improve TIR's "Building Block Technology" on the path to general illumination.