TORONTO, May 11 /CNW/ - Sirit Inc. (TSX: SI), a leading provider of radio
frequency identification (RFID) technology, today reported its financial
results for the first quarter ended March 31, 2006. All amounts are stated in
Canadian Dollars unless otherwise noted.
First Quarter 2006 Financial Highlights
---------------------------------------
- Total revenue in Q1 2006 reached $5.4 million, an increase of 22%
from Q1 2005 and 27% from Q4 2005.
- Automatic Vehicle Identification ("AVI") revenue grew by 33% in the
first quarter reaching $4.4 million when compared to $3.3 million in
the first quarter of 2005.
- Radio Frequency Solutions ("RFS") applications revenue remained
consistent with prior year first quarter at $1.0 million.
Fluctuations in quarterly RFS results are expected to continue.
- Net loss for the quarter was $1.0 million, the same level as
Q1 2005.
- Cash utilization of $0.9 million during the quarter is consistent
with prior two quarters.
Three Months Ended March 31, 2006
---------------------------------
Revenue for the three months ended March 31, 2006 totaled $5.4 million, a
22% or $1.0 million increase from $4.4 million in the first three months of
2005. The increase in total revenue is attributable to growth in toll tag
sales during the quarter as sales volumes return to historical levels.
Revenue from sales of RFS related products was $1.0 million during the
quarter compared to $1.1 million in the 2005 first quarter. Sales of RFS
products are expected to vary on a quarterly basis as customers continue to
focus on testing with timing of large volume rollouts unpredictable.
Gross margin for the first quarter of 2006 was similar to the first
quarter of 2005 at 36.9% compared to 37.5%. The increase in margin compared to
the fourth quarter of 2005 (35.8%) is attributable primarily to absorption of
fixed overhead costs associated with the increased sales volume.
Total operating expenses during the first quarter were $3.0 million
compared to $2.7 million in the same period in 2005. The increase relates
primarily to increased development costs, salary increases, stock-based
compensation and foreign exchange.
The Company utilized $0.9 million of cash to fund operations during the
quarter resulting in a cash balance of $5.2 million at March 31, 2006. Working
capital at March 31, 2006 is $5.8 million compared to $6.5 million at
December 31, 2005. At March 31, 2006 there were approximately 93.3 million
shares outstanding.
"Sirit is focused on executing its growth strategy. The strong first
quarter results represent the second consecutive quarter of increased revenue
generation and demonstrate the first steps toward achieving sustained growth.
While the Company has been able to maintain its cash spending levels,
increased expenditures are expected for the next several quarters as the
Company integrates operations from its two recent acquisitions," commented
Anastasia Chodarcewicz, Vice President Finance and CFO, Sirit Inc.
"I am delighted that the AVI related revenue is returning to historical
levels of growth. This application area provides us with a recurring revenue
base from which to leverage cash generated in support of growth into new and
exciting application areas," said Norbert Dawalibi, President and CEO, Sirit
Inc. "We remain confident that our business is solid and will look to ensure
we continue this growth trend throughout 2006."
Conference Call
Sirit will host a conference call to discuss the quarterly results on
Thursday, May 11, 2006 at 11:00 am EST. The conference call will be accessible
at www.sirit.com.
About Sirit Inc.
Sirit Inc. (TSX: SI) is a leading provider of Radio Frequency
Identification (RFID) reader technology to OEMs and solution providers
worldwide. Harnessing the power of Sirit's enabling-RFID technology, customers
are able to more rapidly bring high quality RFID solutions to the market with
reduced initial engineering costs. Sirit's products are built on more than
12 years of RF domain expertise addressing multiple frequencies (LF/HF/UHF),
multiple protocols and are compliant with global standards. Sirit's broad
portfolio of products and capabilities are easily customized to address new
and traditional RFID market applications including Supply Chain & Logistics,
Cashless Payment, Access Control, Automatic Vehicle Identification, Inventory
Control & Management, Asset Tracking and Product Authentication. For more
information on Sirit, visit www.sirit.com.
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 16, 2006 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.
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Sirit Inc.
Interim Consolidated Balance Sheets
(expressed in thousands of Canadian dollars)
Unaudited
As at As at
March 31 December 31
2006 2005
------------ ------------
Assets
Current Assets
Cash and cash equivalents $ 5,191 $ 6,079
Accounts receivable 3,198 2,941
Inventory 2,421 2,020
Prepaids and deposits 258 108
------------ ------------
11,068 11,148
Long-term investments 3,182 3,182
Property and equipment 844 838
Intangible asset 320 370
Deferred development costs 43 59
Goodwill 2,829 2,829
------------ ------------
$ 18,286 $ 18,426
------------ ------------
------------ ------------
Liabilities
Current Liabilities
Accounts payable and accrued liabilities $ 4,214 $ 3,526
Deferred revenue 778 815
Warranty obligations 290 290
------------ ------------
5,282 4,631
------------ ------------
Shareholders' Equity
Share capital 35,195 35,195
Contributed surplus 1,518 1,316
Deficit (23,709) (22,716)
------------ ------------
13,004 13,795
------------ ------------
$ 18,286 $ 18,426
------------ ------------
------------ ------------
Sirit Inc.
Interim Consolidated Statements of Operations
(expressed in thousands of Canadian dollars except per share amounts)
Unaudited
Three Months Ended
March 31
2006 2005
------------ ------------
Revenue $ 5,384 $ 4,426
Cost of Sales 3,396 2,766
------------ ------------
Gross profit 1,988 1,660
------------ ------------
Expenses
Selling, general and administrative 1,838 1,824
Stock-based compensation 202 159
Development 794 645
Amortization 140 148
Foreign exchange loss/(gain) 43 (38)
------------ ------------
3,017 2,738
------------ ------------
Operating (loss) (1,029) (1,078)
Interest income, net 36 37
------------ ------------
Net (loss) for the period $ (993) $ (1,041)
Deficit, beginning of period (22,716) (14,018)
------------ ------------
Deficit, end of period $ (23,709) $ (15,059)
------------ ------------
------------ ------------
Basic and diluted (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
2006 2005
------------ ------------
Cash provided by/(used in):
Operating Activities
(Loss) from operations $ (993) $ (1,041)
Items not involving cash and
cash equivalents 342 307
------------ ------------
(651) (734)
Net change in non-cash working
capital items (157) 104
------------ ------------
(808) (630)
------------ ------------
Investing Activities
Additions to property and equipment (80) (65)
------------ ------------
Financing Activities
Issuance of common shares upon
exercise of stock options - 93
------------ ------------
(Decrease) in cash and cash equivalents (888) (602)
Cash and cash equivalents,
beginning of period 6,079 10,021
------------ ------------
Cash and cash equivalents, end of period $ 5,191 $ 9,419
------------ ------------
------------ ------------
Cash and cash equivalents consist of:
Cash and deposit accounts with banks $ 1,478 $ 2,316
Short-term commercial paper 3,713 7,103
------------ ------------
$ 5,191 $ 9,419
------------ ------------
------------ ------------
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