1. Nature of Operations:
Prior to December 11, 2008, the Company and its subsidiaries developed and marketed products incorporating wireless data transmission and processing technologies, primarily for the automotive and transportation industries. The Company's primary product was a wireless tire monitoring system which it marketed for use on trucks, buses, off the road vehicles, recreational vehicles, buses and other pneumatic tire applications.
On December 11, 2008, the Company completed the sale of its tire pressure monitoring system business (the "TPMS Business"), along with substantially all of its assets and certain of its liabilities (the "Asset Sale"), to Bendix Commercial Vehicle Systems LLC (the "Buyer"). The Company retains the right to receive future earn-out payments due pursuant to the Asset Sale, as well as to litigate certain of SmarTire's tire pressure monitoring related patents. The Company also retains certain operating liabilities and all of the convertible debt and convertible preferred stock that was outstanding prior to the Asset Sale (refer to note 4 for additional details).
2. Going Concern:
The Company has incurred recurring operating losses, and as of April 30, 2009 has an accumulated deficit of $158,220,409, and a working capital deficiency of $47,181,270, of which $47,887,041 is potentially convertible into shares of common stock of the Company, subject to certain restrictions as described in note 7(l). After the Asset Sale, the Company's business consists solely of attempting to license its patents, and collecting amounts due under the earn-out, and the Company has no full-time employees and three part-time consultants. The Company retained approximately $1.2 million of operating liabilities that were not transferred in the Asset Sale. The Company also retained all of its outstanding secured convertible debentures and convertible preferred stock, all of which were in default as of April 30, 2009, and which are more fully described in notes 7 and 8.
The ability of the Company to continue as a going concern is in substantial doubt, and subsequent to the Asset Sale is dependent on several factors, including (i) the amount of future sales achieved by the Buyer in the tire pressure monitoring business, which directly impacts amounts to be received by the Company pursuant to the terms of the Asset Sale, (ii) the amount of future revenues achieved by the Company from patent litigation, (iii) the ability of the Company to restructure its liabilities and debt obligations, and (iv) the ability of the Company to raise any additional funds required to remain as a going concern. The outcome of these matters cannot be predicted at this time. There can be no assurance that the Company will be successful in achieving any of these objectives.
The number of shares of our common stock outstanding at June 19, 2009 was 19,342,461,198.