TIR Systems Ltd.

TIR Systems Ltd.

August 15, 2005 16:20 ET

TIR Systems to Raise $10 Million in a Proposed Issuance of Convertible Debentures

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 15, 2005) -


TIR Systems Ltd. (TSX:TIR), a world leader in light enabling technology, announced today that it has entered into a binding term sheet to sell, on a private placement basis, $10 million aggregate principal amount of secured convertible debentures.

The debentures will be secured against the assets of the Company, but subordinated to all current senior debt holders, and mature five years and three months from the date of issuance. The debentures bear interest at a rate of 7% per annum, but the rate is subject to reduction depending on the trading price of the Company's common shares. If the Company's common shares trade at $4.50 per share or above the rate will be nil. This interest rate reduction will be calculated on a quarter to quarter basis. The debentures are convertible into common shares of TIR at the option of the holder at a conversion price of $2.00 per share. The purchasers of the debentures will also receive 65 common share purchase warrants of the Company for each $1,000 principal amount of debentures purchased. Each warrant will entitle the holder thereof to acquire one common share of TIR at a price of $2.18 per share for a period of seven years. The Company intends to use the net proceeds from the sale of the debentures for working capital and general corporate purposes.

It is anticipated that the closing of the offering will occur in one or more closings, with the initial closing scheduled for September.

The completion of the financing is subject to various conditions, including execution of definitive agreements, a satisfactory due diligence review and receipt of all applicable regulatory approvals.

About TIR Systems Ltd.

TIR Systems Ltd., a world leader in delivering specialty lighting systems, is building the foundations for tomorrow's lighting. Through sound innovation and proven technical capability, TIR is developing, designing and marketing the core technologies that will allow Solid State Lighting (SSL) to move to the forefront of mainstream lighting.

This News Release does not constitute an offer to sell or a solicitation of an offer to buy any of the debentures or warrants for sale in the United States or to U.S. Persons. The debentures, warrants and common shares issuable upon conversion of the debentures or exercise of the warrants have not been and will not be registered under the United States Securities Act of 1933, as amended (the U.S. Securities Act) or any other US State securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws, or an exemption from such registration is available.

This News Release is published as a matter of record only and does not constitute an offer to sell or a solicitation of an offer to buy any of the common shares, nor shall there be any sale of these shares in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.

This News Release contains forward-looking statements concerning the anticipated financing and its expected impact on the Company's business. Forward-looking statements are statements about the future and include, but are not limited to, our expectations that the offering will be successful, the gross proceeds of the offering and our expectations as to the use of proceeds from the offering. Such statements are inherently uncertain, and the actual events or results could be materially different than those anticipated in those forward-looking statements as a result of numerous factors, including without limitation, our ability to negotiate commercially acceptable financial terms for the offering; the completion of any negotiated financing will be subject to customary closing conditions, and the concomitant risk that the offering may not be successfully completed consistent with the terms outlined above, or at all; the Company's need for additional future capital, which may not be available in a timely manner, or at all; as well the other risks and uncertainties affecting the Company and its business, as contained in the Company's most recent Annual Information Form and other subsequent news releases and filings with the Canadian Securities Regulatory Authorities, any of which could cause actual events or results to vary materially from the Company's expectations. Forward-looking statements are based on the beliefs, opinions and expectations of the Company's management at the time they are made, and the Company does not assume any obligation to update its forward-looking statements if those beliefs, opinions or expectations, or other circumstances should change.

The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this News Release.

Contact Information