Blackie...
Look what I received...I wrote and told them, they need to be careful who they take $$ from for promotion.
From: list@stockwatch.comAdd to Address Book
Subject: Stockwatch: KIK Tire Technology
To:irvinesully@yahoo.com
M3 Research: "Growth at the No Flat Tire Company"
KIK Tire Technologies Inc KIK
Shares issued 9,255,600
Feb 16 close $0.25
Tue 16 Feb 99
M3 Research INSTITUTIONAL RESEARCH
RATING: Buy
February 1, 1999
DJIA: 9,358.83
NASDAQ: 2,505.87
TSE 300: 6,729.10
KIK Tire Technologies Inc. (KIK.AL - C$0.45)
"Growth at the No Flat Tire Company"
52 Week range - Common C$0.93 - C$0.09
Common Outstanding (E) 10,418,000
Market Capitalization C$4,688,100
Estimated Float (shares) 7,478,000
Fully Diluted Shares (E) 10,418,000
Long Term Debt C$446,241
Debt / Equity Mkt Cap. 9.5%
Exchange Rate C$1.00 = US$0.66
Market Alberta Exchange
Auditors: Deloitte & Touche
Fiscal Year Ending
-----------------------------------
01/97 01/98 01/99 Est 01/00 Est
------- ------- --------- ---------
Revenue (C$000) $2,156 $2,422 $3,600 $5,077
Net Income (C$000) -$654.6 -$674.4 -$300.0 $121.7
Earnings per Share -$0.10 -$0.09 -$0.03 $0.01
6 Months Ending
-------------------
07/97 07/98
-------- --------
Revenue (C$000) $1,203.1 $1,702.3
Net Income (C$000) -$236.2 -$183.4
Earnings per Share -$0.03 -$0.02
(E) Estimate
Investment Conclusion
We are initiating coverage of KIK Tire Technologies Inc.
based in Calgary, Alberta (KIK.AL) with a Buy recommendation. KIK Tire sells no flat,polyurethane tires and tire assemblies for medical, lawn and garden, and industrial applications. Sales at KIK Tire have grown at a 49.7% compounded annual rate over the past three fiscal years including the current year ending January 1999 for which we project $US 2.4 million in revenue. This
growth is the result of careful management planning which
includes William Knooihuizen, Director and Executive VP who joined the Company in 1993. Mr. Knooihuizen is a chemical engineer who has over 25 years of experience in polyurethane processing technology and has developed strategic supplier and distribution arrangements for KIK Tire. KIK Tire operates a tire manufacturing plant based in
Oceanside, California and is headquartered in Calgary, Alberta. After meeting with management on December 17th, we are projecting sales revenue to increase 37.5% in 1999 over 1998's total to $US 3.3 million. Our twelve month price target is C$2.00 based on aggressive capital budget in 1999.
In summary:* To accelerate sales growth, the Company has developed
and is now marketing complete tire assemblies (hub included) to
broaden demand from customers. New assemblies being developed will
reduce prices closer to those of rubber tires.
* With a C$3 million capital budget in 1999, EPS could approach C$0.05
on over C$5 million in revenue in the fiscal year ending Jan. '00 and
in the fiscal year ending Jan. '01, EPS could approach
C$0.20 with revenue at C$12.4 million. M3 and Pickens Group, Inc.
are supporting the Company's plan to source funds to accelerate
profit growth.
*KIK Tire's microcellular polyurethane tires are
lightweight and last 4 to 10 times longer than rubber pneumatic tires
depending on molded density. Combined with the benefit of no flat tires, superior value is created for customers.
* KIK Tire's manufacturing plant is operating at 30% of capacity and has tremendous operating leverage to boost gross margins
from 22.7% recorded in the year ending January 1998. Operating
leverage allows KIK to be more price competitive with air-filled
pneumatic tires. Incremental unit production cost consists primarily of raw materials.
Insider ownership (E) 2,740,000 (26.3%)
30 Day Avg. Daily Vol. 12,300
Fiscal Year January
EPS 1999(E) -$0.03
EPS 2000(E) $0.01
Summary
KIK Tire Technologies began trading publicly in September 1987 as a Toronto, Ontario based manufacturer of wheelchair tires. In 1989, the Company acquired international rights and technology
to manufacture microcellular polyurethane (MCP) tires from Urethane
Technology, Inc. (UTI) based in Santa Ana, California. At that time the Company relocated its manufacturing operations to Southern California. From 1989 to 1995, KIK Tire was primarily a research and development company. The Company greatly improved upon UTI technology to develop a fourth generation of chemical formulation and a third generation of manufacturing equipment. Perfecting
the chemical formulation to develop highly resilient materials was the most difficult hurdle to overcome. A total of C$7 million has been spent on development including engineering, tooling, testing, and manufacturing equipment. During the first six months of 1998, the
Oceanside plant began generating positive cash flow which will accelerate with production increases. In 1995, KIK Tire entered into a strategic alliance with ARNCO for the marketing of the Company's tires under ARNCO's private label "CarefreeTire". ARNCO's salesforce and network of tire dealers actively market Carefree tires. ARNCO is the world's largest international supplier of tire
flatproofing materials and sealants.To facilitate the transition to maintenance free polyurethane tires by major original equipment manufacturers (OEM) in key industrial and lawn and garden markets, KIK Tire is now manufacturing complete tire assemblies which reduces the entire cost to the OEM. The tire and rim combinations from one supplier simplify and improve quality for OEMs. KIK Tire will
introduce innovative assemblies with unbeatable quality and more
competitive pricing in its lawn and garden line in 1999. The Company's production process requires the dispensing of catalyzed liquid chemicals into a spinning mold. This centrifugal casting of activated polyurethane base stock raw materials results in a tough molded
polymer with a uniformly dense porous foam core. Production cycle time to produce an MCP tire is measured in seconds as opposed to
minutes for rubber pneumatic tires. KIK tires can be designed and molded to virtually any tread specification. The spin casting results in the tires being perfectly balanced.
Markets
The home medical equipment(HME) market provides 50% of the Company's
revenue. KIK Tire produces "no flat tires" for wheelchairs, scooters, and walkers. Everest & Jennings, the second largest HME company is one of KIK Tire's largest customers of no flat wheelchair tires. The market for no flat replacement tires is also more profitable.Industrial tires currently account for 35% of the Company's revenue and provides the greatest opportunity for growth. Industrial applications include hand carts, portable machines, and dollies for shippers and manufacturers. KIK Tire is selling its industrial tires in Europe through a facility in the Netherlands. Europe already accounts for a significant portion of KIK's sales and shipment volume should increase substantially. Lawn & Garden, including golf carts, currently contribute 15% of sales revenue. Tire assemblies are made for mowers and wheelbarrows. The Company has developed an entire assembly for the wheelbarrow market. It is currently negotiating with large equipment manufacturers to make KIK Tire's assembly an intergal component of the wheelbarrow.
Management
Officers and Directors of the Company including major
shareholders own or are beneficial owners of 26.3% of the shares
outstanding. Management has extensive experience in all aspects of polyurethane applications. The Company has no institutional debt. Debt is held by Directors or individuals who have been active shareholders in the Company. Don Dean has been President, CEO, and a Director of the Company since June 1987. Prior to joining the Company, Mr. Dean was an engineer and plant manager for the Toronto Marketing and Chemical Distribution Terminal for Shell Canada Limited. Between 1984 and 1987, Mr. Dean was President of a company that manufactured polyurethane foam insulated fiberglass buildings and shelters for the energy industry. William Knooihuizen has served as Executive VP, Manufacturing & Marketing and as a Director since May 1997. He joined KIK Tire as a plant manager in May 1993. As a Chemical engineer he has over 25 years of experience in urethane processing technology, where he has held the position of VP/General Manager for Dam Industries, Inc., United Foam Corp., and Evanite Permaglass.
New Developments
To accelerate sales growth and make KIK's tires more price competitive, the Company has developed and is now marketing complete tire assemblies (hub included) to price its tires closer to the price of cheaper rubber tires. An immediate developmental project to be undertaken is the design, engineering, tooling, and prototyping of a more advanced tire and wheel assembly incorporating a new hub designed specifically for KIK's tire technology. This product can be priced at levels competitive with cheaper pneumatic tires, which considering all of the additional physical and operating advantages of KIK tires, should significantly increase revenue and profitability of the Company. The full wheel assemblies KIK now produces utilize standard pneumatic hubs that require more urethane mass in the tire with added expense. The new assemblies that the Company will introduce will include a hub exclusively for KIK tires. The hub will mechanically grip the tire and extend upwards into the tire area. Urethane mass required for the tire will be reduced and thus reduce the cost of the tire and result in more competitive pricing
versus rubber pneumatic tires. Polyurethane feedstock is more expensive than an equivalent amount of rubber compound used to make
rubber tires, so a reduction in polyurethane mass offsets the higher feedstock cost of polyurethane.
Valuation
KIK Tire Technologies has collectively spent C$7 million on research and development to develop a broad line of MCP tires. Over 200 different tire sizes have been developed. Having perfected chemical
formulations, the Company's capital budget is now geared to expanding production to utilize existing plant capacity. KIK is producing complete tire assemblies to make it easier for a broad range of original equipment manufacturers to purchase its products.
Surveying KIK's competition, we found two companies that make MCP tires but are not real competition for KIK. The largest indirect
competitor based in Southern California has sales of approximately US$ 5.0 million. A private company, it specializes in wheelchair tires and sells approximately 70% of its output to one large home medical equipment company. This competitor has experimented with bicycle tires but has not yet achieved success. American Tire Corp. (OTC: ATYR), based in Ohio has raised capital and is attempting to market a "flat free" MCP bicycle tire. While the tire has achieved
positive test results, American Tire faces the obstacle that all polyurethane bicycle tires face. Unless bicycle manufacturers are willing to dedicate special tire rims to polyurethane, the MCP
tires cannot be fit tight enough on a standard pneumatic tire rim. Bicycle manufacturers must purchase a polyurethane tire and rim assembly for these tires to gain acceptance. To date, bicycle manufacturers have been unwilling to commit to a polyurethane tire because these tires cannot also be used with rubber pneumatic tire rims. Another reason is that an MCP bicycle tire is more
expensive than a rubber tire increasing the final retail sticker price for the complete bicycle.
KIK Tire Technologies, Valuation Measures
KIK Tire Technologies American Tire
Symbol: KIK.AL Symbol: ATYR
Market: Alberta (ASE) Market: OTC
$US $(Canadian) $US
Price 1/29/98 $0.30 $0.45 $1.44
52wH $0.61 $0.93 $5.50
52wL $0.06 $0.09 $0.75
Shares out.(mil) 10.42 3.40
Market cap($mil) $3.09 $4.69 $4.89
Float sh.(mil.) 7.48 1.70
Book value/sh. - $0.54
Premium to BV/sh - 166.2%
Trailing 12mo
EPS diluted $(0.05) $(0.08) $(0.57)
PE ratio T12 - -
T12=Trailing 12 months
Sales ($000)
6mo. 1998 $1,702.3 $314.8*
Incr. (%) '98/'97 41.5%
Net Income ($000)
6mo. 1998 -$183.4 -$1,639.8*
Cash Flow ($000)
6mo. 1998 -$141.8 -$903.2*
Gross Margin(%)
6mo. 1998 15.4% 29.6%*
Gross Margin(%)
12mo. 1/98 22.8%
* 9 months ending March 1998
Exchange Rate C$1.00 = US$0.66
Because KIK Tire is diversified in its product lines and
is much futher
along in building and marketing product lines such as
lawn and garden and
industrial applications, KIK Tire Technologies is better
positioned to grow
its business beyond the home medical equipment
market. Most of the
Company's plant operating expenses are fixed costs
giving the Company
tremendous operating leverage as sales increase. This
will reduce the per
unit cost of production and provide more gross margin to
KIK to improve
profitability and also price MCP tires more competitively
with conventional
air-filled pneumatic rubber tires.
Summary
The ratio of unit price to tire tread life is
already superior for
polyurethane tires versus rubber pneumatic tires. This
value achieved by
consumers is in addition to time saved with a maintenance
free tire and
reduced downtime by industrial users. Operating leverage
combined with new
tire assemblies marketed to customers will allow KIK Tire
to price product
that will make this ratio even more compelling as sales
volume increases.
Sales at KIK Tire have grown at a 49.7% compounded annual
rate over the
past three fiscal years. With capital spending on new
production equipment
in 1999, EPS could approach C$0.05 on over C$5 million in
revenue in the
fiscal year ending January 2000 and in the fiscal year
ending January 2001,
EPS could approach C$0.20 with revenue at C$12.4 million.
Our twelve month
price target is C$2.00 based on an aggressive capital
spending program in
1999.
KIK Tire Technologies, Inc.
Balance Sheet ($Canadian) July 31, 1998
July 31, Jan. 31,
1998 1998
----------- -----------
ASSETS
CURRENT
Cash $94,592 $144,554
Accounts Receivable $595,638 $455,187
Inventories $206,251 $199,279
Prepaid Expenses $15,685 $12,172
Capital Assets $279,727 $298,597
Deposits $14,791 $13,470
TOTAL ASSETS $1,206,684 $1,123,259
LIABILITIES
CURRENT
Accounts Payable
Trade $697,839 $637,743
Other $551,121 $471,960
Current Portion
of notes payable $58,273 $55,460
Current portion
of loan payable $3,761 $6,460
TOTAL CURRENT LIABILITIES $1,310,994 $1,171,623
Deposit received for shares - $5,250
Due to Captive
Air Manufacturing Inc. $269,795 $269,795
Notes payable
and accrued interest $176,446 $71,153
TOTAL LIABILITIES $1,757,235 $1,517,821
CAPITAL DEFICIENCY
Share Capital $8,108,198 $8,099,448
Deficit ($8,650,919) ($8,467,491)
Foreign currency
translation adjustment ($7,830) ($26,519)
TOTAL DEFICIENCY ($550,551) ($394,562)
TOTAL LIABILITIES &
CAPITAL DEFICIENCY $1,206,684 $1,123,259
Disclaimer and Disclosure
This analysis has been prepared from original sources and
data believed to
be reliable but no representation is made as to
its accuracy or
completeness. This is not intended to be an offer to buy
or sell or a
solicitation of an offer to buy the securities
referred to herein. M3
Research ("M3") and/or its officers, employees, agents and
or one of its
affiliated entities may from time to time have a position
in one or more of
the securities referred to herein. M3, Inc. has purchased
common stock in
KIK Tire Technologies Inc. during the past 90 days. This
security may not
be suitable for all investors.
------------
NEWS RELEASE
------------
M3 Initiates Coverage of KIK Tire Technologies Inc.
CALGARY, Jan. 25 /CNW/ - KIK Tire Technologies Inc.
(ASE: ''KIK'')
announced today that Dallas, Texas - based
venture capital and
institutional research firm M3, Inc., has initiated
research coverage on
KIK Tire. M3 will also assist the Company in its future
corporate financing
activities.
KIK operates a manufacturing and international marketing
operation for its
proprietary flat-proof, off-highway tire product line
from its base in
Oceanside, California.
"We have great confidence in KIK's management and their
ability to identify
new and expanding markets for its unique tire
system," says Michael
Pickens, President of M3. "We have taken a substantial
equity position in
KIK as an expression of our commitment, and we look
forward to working
closely with their management in carrying out the
Company's growth
strategies."
According to Don Dean, chairman and CEO of KIK, "Michael
Pickens and M3
have an excellent industry and institutional following,
particularly in the
U.S., and we are fortunate to have developed this
affiliation. With M3, KIK
will receive the skilled support and recognition it
deserves from a
significant force in the U.S. financial community."
Both Pickens and his associates have served several Wall
Street firms which
have directly provided their services for major
industry investors
including Carl Icahn, Gordon Getty, and T. Boone Pickens.
KIK Tire has been developing its technology and
polyurethane tire
applications for over 12 years, and now markets over 200
tire and caster
products through strategic partners and distributors
world wide. KIK's
markets include industrial applications such as
materials handling
equipment; lawn, garden and turf equipment
applications such as
wheelbarrows, mowers and golf carts; home medical
equipment such as
wheelchairs and power scooters; and sports equipment
including bicycles.
The Company wishes to advise its customers, shareholders
and interested
parties that the KIK "Home Page" is on the World Wide Web
and available for
review and business updates at its
Internet address:
kiktire.com.
THE ALBERTA STOCK EXCHANGE HAS NEITHER APPROVED NOR
DISAPPROVED OF THE
CONTENTS OF THIS PRESS RELEASE.
------------
NEWS RELEASE
------------
KIK Tire Technologies Inc. Posts Significant Revenue
Increase
February 15, 1999 - KIK Tire Technologies Inc. of
Calgary, Alberta is
pleased to announce that sales revenues for the
1998 operating year
increased by 46% over the previous year.
Sales to January 31, 1999 were $3.5 million compared with
$2.4 million for
the same period last year. There was considerable
strength in fourth
quarter sales of KIK's private labelled tire brands to the
U.S. industrial
and lawn and garden equipment markets. Sales are
particularly strong to the
growing network of hub and wheal manufacturers who
in turn mount
KIK-manufactured tires on their hubs and sell complete
wheel "assemblies"
into a wide variety of markets.
Wheelbarrow tire/wheel combinations assembled at the
KIK factory in
Oceanside, CA and sold to a major distributor are
expected to increase
significantly through 1999 as agreements are concluded
with large mass
retailers. More information on this activity will be
announced shortly.
As announced in KIK's news release dated January 25,
1999, a Dallas,
Texas-based venture capital and institutional research
firm M3, Inc. has
completed a favourable research report on KIK's current
and long term
growth prospects. Their report is available upon request.
As also reported,
M3 will assist the Company in its future corporate
financing activities.
KIK manufactures a broad line of off-highway polyurethane
tire products at
its California plant using its proprietary technology.
Markets include
materials handling equipment; recreational products such
as bicycles and
golf equipment; wheelchairs and power scooters, and
lawn and garden
equipment such as wheelbarrows and mowers.
For more information please visit the Company's
website at:
kiktire.com; contact via e-mail at
mailto:kbaid@panda.com ; or
contact Vic Schafer, Investor Relations at (403) 615-2559;
or Don Dean,
President at (403) 233-0468.
THE ALBERTA STOCK EXCHANGE HAS NEITHER APPROVED NOR
DISAPPROVED OF THE
CONTENTS OF THIS PRESS RELEASE.
KIK Tire Technologies Inc.
ASE Stock Symbol: KIK
Website: kiktire.com
E-mail: mailto:kbaid@panda.com
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