For several years Tirex Corp. has aggressively publicized its patented cryogenic tire grinding equipment and joint sales and product manufacturing ventures with companies around the world.
Tirex's latest Securities and Exchange Commission filing, however, states flatly that the company is in dire straits, though the company president insists they're not nearly so dire as they appear.
``The lawyers made me say that,'' John L. Threshie Jr. said of the following statement in Tirex's 10-QSB form filed with the SEC Feb. 15: ``The company's uncertainty as to its productivity and its ability to raise sufficient capital raise substantial doubt about the entity's ability to continue as a going concern.''
As soon as Tirex gains some capital, Mr. Threshie said, it can proceed with plans to build a commercial plant for its TCS-2 tire grinding system.
According to the 10-QSB, Tirex began its developmental stage with a new business plan in March 1993.
``As of March 2000, the company had developed a production quality prototype of its patented system for the disintegration of scrap tires, but nonetheless continued its research and development efforts to improve the machine's performance and to permit greater flexibility in design for specific customer applications,'' the document stated.
Montreal-based Tirex had numerous potential clients for the TCS-2 system, successor to the earlier TCS-1 system, from the fiscal year starting July 1, 2000, the SEC filing said.
But as of Dec. 31, 2001, no sale had been completed.
The company had a net loss of $3.1 million for the fiscal year ending June 30, 2001, according to the filing. For the six months ended Dec. 31, 2001, the loss was $925,000.
Time and again when trying to complete a sale, Tirex was faced with potential customers which demanded a guarantee that the TCS-2 system would produce a specified amount of crumb rubber and a refund if the equipment didn't perform as promised, Mr. Threshie said in a letter to shareholders March 8.
``The recycling industry is relatively young, unstable and not clearly defined,'' he said.
Most potential customers are new to tire recycling and don't appreciate the difficulty in obtaining financing, he added.
Each complete TCS-2 system costs $3 million to $5 million to set up, and this is ``a lot of money to put up for new technology without technical or financial guarantees,'' Mr. Threshie said.
``A full-scale commercial (TCS) system has never been in use and proven in the market over an extended period of time,'' he said, adding that the quality of the process and the crumb rubber it produces have been proven high in prototype operations.
The company suffered a setback last September when Canada Economic Development for Quebec Regions, a Canadian government agency, seized a $36,600 tax credit Tirex received from the Canada Customs and Revenue Agency.
Tirex had planned to use the tax money toward its commercialization effort, when CEDQR declared the company in default of an earlier loan, according to an SEC 8-K form filed Dec. 12, 2001.