Newspaper article The Journal (Newcastle, England)

Van Maker Casts Doubt on Future

Newspaper article The Journal (Newcastle, England)

Van Maker Casts Doubt on Future

Article excerpt

Byline: Iain Laing

ALOSS-MAKING electric van maker has cast doubt over its financial viability and radically cut its manufacturing target for 2012.

US firm Smith Electric Vehicles, which was founded 94 years ago in Gateshead and is an associate business of Wearside ches rry-picker maker Tanfield, has said it expects to make 380 trucks this year instead of the 620 in forecast earlier this year.

Smith, which is now based in Kansas City, but still has an assembly base in the North East employing 200 people, received a pounds 2.2m bridging loan from Tanfield in July.

The company, which is 24% owned by Tanfield, needed the cash ahead of a planned float on the New York Stock Exchange. It had previously won pounds 20m in US government grants for product development.

Since the end of 2009, the company has made pounds 81m in losses and was pounds 17m in the red during the first half of this year, widening the pounds 13.4m loss for the same period in 2011. It said it has an accumulated deficit of more than pounds 84m.

The company has issued a report to US regulatory authorities which said: "We have received a report from our independent registered public accounting firm on our 2011 financial statements that contains an explanatory paragraph stating that our recurring losses from operations, negative working capital, and stockholders' capital deficiency, and the uncertainty around our ability to raise sufficient capital, raise substantial doubt about our ability to continue as a going concern."

The report carries a long list of risks, including "we have had a history of losses and expect to incur net losses for the remainder of 2012, and we may be unable to achieve or sustain profitability" and says some funding may be at risk because of its lack of profit.

But it said that while it expects to continue making a loss this year, it hopes to make a profit next year and is looking to cut manufacturing costs which will enable it to increase profit margins and sales. …

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