SCM revenue remains stable at $1.1 million while Company advances product
development efforts
TORONTO, May 10 /CNW/ - Sirit Inc. (TSX: SI), a leading provider of radio
frequency identification (RFID) hardware technology, today reported its
financial results for the first quarter ended March 31, 2005. All amounts are
stated in Canadian Dollars unless otherwise noted.
Q1 2005 Financial Highlights
----------------------------
- Total revenue of $4.4 million in Q1 2005 compared to $4.9 million in
Q1 2004, with Q1 2005 Automatic Vehicle Identification (AVI) revenue
impacted by the timing of quarter end shipments
- Supply Chain Management (SCM) revenue up from prior quarter and
comparable to Q1 of prior year
- AVI revenue comprised 76% or approximately $3.3 million of total
revenue while SCM revenue comprised 24% or $1.1 million of total
revenue for Q1 2005
- SCM development expenditures were consistent with 2004 investment
levels. As a result, solid progress has been made in development
efforts where the market should expect SCM product introductions at
end of second quarter and into third quarter 2005
- The loss for Q1 2005 was $1.0 million approximately equal to the loss
for the prior quarter. This is compared to net income of $0.6 million
in Q1 2004 resulting primarily from the sale of non-core assets of
$0.5 million
- The Company continued to strengthen its IP portfolio with three new
patent filings
"Following on a successful year in 2004, Sirit continues to execute on
its operational and development plans. The Company generated solid performance
from its SCM vertical and maintains a strong financial position allowing us to
fund operations in anticipation of future revenues," noted Anastasia
Chodarcewicz, Chief Financial Officer, Sirit Inc.
Three Months Ended March 31, 2005
---------------------------------
Revenue for the three months ended March 31, 2005 totaled $4.4 million,
a 10% or $0.5 million decrease from $4.9 million in the first quarter of 2004.
The quarter to quarter fluctuation was principally due to the timing of two
shipments of AVI products totaling $0.4 million with terms FOB destination
shipped in March but not received by the customers until April 1; hence, this
revenue was recognized in Q2 rather than Q1.
Revenue from the SCM vertical was approximately $1.1 million which was
in-line with revenue reported in Q1 2004. This revenue was generated
notwithstanding the fact that the industry is experiencing slower then
anticipated conversion rates from pilot projects to full deployments as
companies take additional time to evaluate specific requirements in their RFID
implementation plans.
Gross margin for the quarter was 37.5% compared to $41.4% in Q1 2004. The
decline relates to the proportion of fixed overhead costs in relation to total
revenue, as well as the mix of AVI product sales.
Total operating expenses of $2.7 million were $0.7 million higher than
Q1 2004, related to higher development and compensation costs when compared to
the first quarter of 2004. Management views these increased expenditures in
advance of potential sales as essential to ensure the future growth of the
Company. The resulting net loss was $1.0 million for the quarter.
The Company utilized $0.6 million to fund ongoing operations and
development efforts ending the quarter with $9.4 million in cash compared to
$10.0 million at the beginning of the quarter. The working capital balance
remains solid at $10.8 million as at March 31, 2005 compared to $11.5 million
as at December 31, 2004. The Company remains financially secure and has
sufficient resources to fund ongoing and growth operations.
"Even with the decline in AVI revenue in the first quarter, for the
remainder of 2005, this sector is quite predictable since contracts with our
major customers are in place. We are pleased with the results of the SCM
business which totaled $1.1 million for the quarter. Our products continue
to gain traction with customers as the entire industry moves toward wider
adoption of RFID technology," said William Staudt, President and CEO,
Sirit Inc. "With our best of breed technology and new products to be
introduced in the coming months, we believe Sirit is well positioned to
capture an increasing market share."
Conference Call
Sirit will host a conference call to discuss the quarterly results on
Tuesday, May 10, 2005 at 10:00 am EDT. The conference call will be accessible
at www.sirit.com.
About Sirit Inc.
Founded in 1993, Sirit Inc. (TSX: SI) is a leading provider of Radio
Frequency Identification (RFID) solutions to customers worldwide. The Company
designs, manufactures, integrates and sells RFID solutions with an emphasis
in several vertical markets including Supply Chain Management, Product
Authentication, Asset Tracking, Security and Access Control and Automatic
Vehicle Identification. Building upon years of success deploying traditional
RFID products, Sirit continues to capitalize on the growing demand for next
generation RFID solutions. For more information on Sirit visit www.sirit.com
or call 1-800-498-8760.
Cautionary Note Regarding Forward Looking Statements
Safe Harbor Statement under the United States Private Securities
Litigation Reform Act of 1995: Except for the statements of historical fact
contained herein, the information presented constitutes "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievement of Sirit to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Readers are cautioned not to place undue reliance
on these forward looking statements. Actual results may differ materially from
those indicated by these forward-looking statements as a result of risks and
uncertainties impacting Sirit's business which are discussed in the section
entitled "Description of the Business - Risks Factors" in Sirit's Initial
Annual Information Form dated March 22, 2005 as filed with the securities
regulatory authorities in Canada via SEDAR. Although Sirit has attempted to
identify important factors that could cause actual results to differ
materially, there may be other factors that cause results not to be as
anticipated, estimated or intended.
<<
Sirit Inc.
Interim Consolidated Balance Sheets
(expressed in thousands of Canadian dollars)
Unaudited
As at As at
March 31 December 31
2005 2004
--------- ---------
Assets
Current Assets
Cash and cash equivalents $ 9,419 $ 10,021
Accounts receivable 2,788 3,319
Inventory 1,919 1,296
Prepaids and deposits 690 716
--------- ---------
14,816 15,352
Long-term investments 5,191 5,191
Property, plant and equipment, net 880 896
Intangible asset, net 522 573
Deferred development costs, net 107 123
Goodwill 2,829 2,829
--------- ---------
$ 24,345 $ 24,964
--------- ---------
--------- ---------
Liabilities
Current Liabilities
Accounts payable and accrued liabilities $ 3,058 $ 2,596
Deferred revenue 736 913
Warranty obligations 195 310
--------- ---------
3,989 3,819
Shareholders' equity
Share capital 34,856 34,763
Contributed surplus 559 400
Deficit (15,059) (14,018)
--------- ---------
20,356 21,145
--------- ---------
$ 24,345 $ 24,964
--------- ---------
--------- ---------
Sirit Inc.
Interim Consolidated Statements of Operations
(expressed in thousands of Canadian dollars except per share amounts)
Unaudited
Three Months Ended
March 31
2005 2004
----------------------
Revenue $ 4,426 $ 4,937
Cost of Sales 2,766 2,893
----------------------
Gross margin 1,660 2,044
Expenses
Selling, general and administrative 1,983 1,683
Development 645 201
Amortization 148 131
Foreign exchange (38) (6)
----------------------
2,738 2,009
----------------------
Operating income/(loss) (1,078) 35
Gain on disposal of long-term investment - 230
Other income - 294
Interest income, net 37 31
----------------------
Net income/(loss) for the period $ (1,041) $ 590
----------------------
----------------------
Deficit, beginning of period (14,018) (14,942)
----------------------
Deficit, end of period $(15,059) $(14,352)
----------------------
----------------------
Basic and diluted income/(loss) per share $ (0.01) $ 0.01
----------------------
----------------------
Sirit Inc.
Interim Consolidated Statements of Cash Flows
(expressed in thousands of Canadian dollars)
Unaudited
Three Months Ended
March 31
2005 2004
----------------------
Cash provided by/(used in):
Operating Activities
Income/(loss) from continuing operations $ (1,041) $ 590
Items not involving cash and cash equivalents 307 (55)
----------------------
(734) 535
Net change in non-cash working capital items 104 181
----------------------
(630) 716
----------------------
Investing Activities
Additions to property, plant and equipment (65) (23)
Proceeds on sale of long-term investment - 335
----------------------
(65) 312
----------------------
Financing Activities
Issuance of common shares, net of associated
expenses 93 5,012
----------------------
93 5,012
----------------------
Exchange rate impact on cash and cash equivalents - (7)
----------------------
Increase/(decrease) in cash and cash equivalents (602) 6,033
Cash and cash equivalents, beginning of period 10,021 2,604
----------------------
Cash and cash equivalents, end of period $ 9,419 $ 8,637
----------------------
----------------------
Cash and cash equivalents consist of:
Cash and deposit accounts with banks $ 2,316 $ 2,137
Short-term commercial paper 7,103 6,500
----------------------
$ 9,419 $ 8,637
----------------------
----------------------
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