Perth, Feb 27, 2009 AEST (ABN Newswire) - The principal activity of Automotive Technology Group Limited (ASX:ATJ) and the entities it controlled for the six months ended 31 December 2008 remained the same as last year, being the manufacture and distribution of the patented range of Sprintex(R) Superchargers and Vee Two aftermarket and performance motorcycle accessories.
During the six months ended 31 December 2008, ATG expanded its distribution network into China and United Arab Emirates (UAE) regions. On 28 December 2008, ATG appointed Huachuang Zhenxin Automotive Technology Development Co Ltd as the exclusive distributor of ATG's Sprintex(R) Superchargers products in Greater China Region. In the same month, ATG also signed a prototype evaluation agreement with Al Futtaim Motors with a view to securing exclusive distribution agreements for Sprintex(R) Supercharger Systems in the UAE.
ATG entered into initial feasibility studies with a party in China in respect of setting up volume production facilities and also entered into its first significant agreement with a Chinese Original Equipment Manufacturer (OEM).
ATG has built and commissioned a Society of Australian Engineers (SAE) compliant testing facility for automotive and industrial compressor applications.
ATG has received certification to ISO 9001/2008 and also achieved TUV certification ("Technischer Uberwachungsverein" German safety and standards institution).
The Company continues to receive high levels of enquiry for its patented green Sprintex(R) Supercharging technology.
The financial results for the first half of 2009 financial year reflect tremendous research and development activities in the commercialisation and product testing of the new range of patented Sprintex(R) Superchargers.
The Consolidated Entity recorded a loss of A$2,944,391 for the six months ended 31 December 2008 (2007:A$2,459,915).
Sales for the half year was A$208,478 (2007:A$311,518) representing a decrease of 33%. This was largely a result of continuous significant market testing and development of new product range during the second half of 2008 which continued to impact on sales revenues.
Gross loss for the six months ended 31 December 2008 was A$80,753, compared to A$154,709 for the same period in 2007.
The gross loss was contributed by an inventory write down of A$140,031 during the current six months in anticipation of launch of new product range in the second half of financial year ending 30 June 2009.
Results for the six months ended 31 December 2008 were also affected by:
- Foreign exchange loss of A$14,577 during the period when compared to foreign exchange gain of A$129,450 in 2007
- Research and development expenses increased by A$171,312 during the period
- Recognition of share based payment of A$27,500
- Increased marketing costs incurred by marketing consultants in Europe, quality control costs relating to ISO 9001/2008 compliance and audit costs and product quality assurance costs incurred in Europe
- Increased cost in trade mark and patent management
The directors are currently investigating and undertaking discussions with various parties to secure funding to support the Company's working capital requirements and to fund the implementation of its business plan for 2009/2010. Please refer to the post balance sheet events below.
Events after Balance Sheet Date
On 20 January 2009, the Company entered into a convertible note deed and a convertible note in the principal amount of A$150,000 was issued to the noteholder maturing on 30 June 2010. The convertible note carries a coupon interest rate of 8.25% per annum, payable monthly in arrears, and has a conversion price of A$0.20 per share.
On 11 February 2009, the Company announced its intention to issue up to 8,500,000 shares at an offer price of A$0.12 per share to related parties and other sophisticated investors for working capital. The proposed structure of the placement will be a subscription of one ordinary share of the Company for A$0.12 per share ("Placement Shares") and purchase of one ordinary share from CMIH Enterprises Pty Limited, a controlled entity of Mr Anthony Hamilton for A$0.05 per share. As of the date of this Report, A$775,200 has been received by the Company in respect of the subscription of 6,460,000 Placement Shares.
About Sprintex Limited
We go to great lengths to ensure the quality, durability, and ease of installation and maintenance of our patented twin-screw superchargers and systems. All of our supercharger units are run on a SAE J1723 test bench. No supercharger leaves our multi-million dollar facility unless it has met all the stringent tolerances required by the test bench and delivered excellent results. Our superchargers and systems are all built within ISO quality standards.
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