TIR Systems reports "disappointing" sales results

TIR is finding new customers to overcome the loss of revenue from the end of its corporate branding project with BP.

TIR Systems Ltd. has reported a loss of CDN $13.0 million with revenue of $17.0 million for its fiscal year ended September 30, 2005.

Sales were down by almost half compared with a restated revenue of $30.1 million for the year ended September 30, 2004. In 2004, BP represented $20.7 million or 69% of total revenue compared to $4.3 million or 25% of revenue in 2005.

However, TIR was successful in establishing a more diversified Corporate Identity customer base in 2005, which yielded increased non-BP revenues for the Corporate Identity market of $2.3 million compared to $774,700 in 2004, with overall non-BP revenues growing by 35% to $12.7 million in 2005.

The net loss for fiscal 2005 was $13.0 million, or ($0.58) per share, as compared to a restated net loss of $1.6 million, or ($0.08) per share for fiscal 2004. Gross profit amounted to $2.5 million in 2005 compared to $12.1 million in 2004, reflecting a gross margin of 14%.

The significant decrease in gross margin was due to the effect of a number of items including a shift in product mix towards Destiny® Series products; underutilization of the manufacturing facility and a significant increase in the inventory obsolescence expense in Q4 2005. Operating expenses for the year were $14.3 million, consistent with the $14.0 million incurred in fiscal 2004.

The net loss in the fourth quarter of 2005 was $4.5 million, with revenue of $4.5 million. During the quarter, TIR successfully raised over $23 million under a convertible debenture financing, and entered two collaborative agreements with Genlyte Group and Lighting Services Incorporated.

The company also increased the number of patents filed to 62, with five patents issued, and established a second agreement in Europe for the distribution of Corporate Identity products.

TIR's president & CEO, Leonard Hordyk said: "Last year was very challenging and I am disappointed with the financial results. However, we remained steadfast in pursuing our vision to establish TIR as a market leader in the provision of Solid State Lighting solutions. The introduction of the LEXEL™ and the establishment of collaborative agreements with some of the world's top lighting manufacturers provide the solid foundation from which we can accelerate the realization of this strategy."

In striving to establish the LEXEL as a new light source standard, TIR says that it is concentrating on establishing OEM partners from among the world's top lighting manufacturers to incorporate LEXEL technology into their lighting product lines. The timeline to commercialization is dependent on a variety of commercial and technological factors, is expected to yield nominal revenues in fiscal 2006, and will require several years to achieve wider adoption.

Hordyk added, "The next few years will be tremendously exciting as we develop SSL-based, general lighting products with the world's leading lighting manufacturers."

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