Year-to-Date Revenue Increases 21 Percent
TORONTO, Aug. 10 /CNW/ - Sirit Inc. (TSX: SI), a leading provider of
radio frequency identification (RFID) technology, today reported its financial
results for the second quarter ended June 30, 2006. All amounts are stated in
Canadian Dollars unless otherwise noted.
Revenue for the second quarter of fiscal 2006 was $5.5 million, up 3%
from $5.4 million in the first quarter of 2006 and up 20% from $4.6 million in
the same quarter of last year. The revenue breakdown for the quarter was
approximately 79% or $4.4 million for Automatic Vehicle Identification (AVI)
related products and 21% or $1.1 million for Radio Frequency Solutions (RFS)
related revenue.
"We are very pleased with the progress achieved by Sirit over the past
quarter and we are encouraged by our prospects for the second half of the
fiscal year," said Norbert Dawalibi, President and CEO, Sirit Inc. "We are
entering the second half of the year with solid market positioning and an
impressive line-up of new products."
Gross margin for the second quarter of 2006 was 33.4% a decline from
gross margin of 36.9% from the first quarter attributable to customer and
product mix changes plus increased overhead costs to support Sirit's larger
product portfolio.
Total operating expenses during the second quarter were $5.2 million
compared to $3.0 million in the first quarter. The increase is primarily
attributable to higher staff levels, development, sales and marketing
expenditures plus non-recurring severance costs associated with the
integration of two acquisitions early in the quarter. The resultant net loss
was $3.3 million in the second quarter compared to $1.0 million in the first
quarter.
Revenue for the six months ended June 30, 2006 totaled $10.9 million, a
21% or $1.8 million increase from $9.1 million in the first half of 2005.
Year-to-date, RFS revenue totaled $2.1 million compared to $2.4 million in the
first half of 2005. In the previous year, Sirit reported a non-recurring sale
of over 1,000 UHF reader modules which represented approximately $0.8 million
in revenue.
Revenue year-to-date from the AVI vertical was $8.8 million compared to
$6.7 million for the first six months in 2005. The increase is due to a 39%
growth in sales of tolling solutions compared to the first six months of 2005
and reflects return-to-normal sales volumes within this RFID vertical.
The Company raised net cash of $11.6 million in a successful fund raising
effort and utilized $2.2 million to fund ongoing operations and development
efforts and $3.9 million in non-recurring acquisition and financing related
costs. Sirit ended the quarter with $11.7 million in cash compared to
$5.2 million at the beginning of the quarter and had a working capital balance
of $12.3 million (March 31, 2006 - $5.8 million). The Company remains
financially secure and has sufficient resources to fund operations.
Q2 Corporate Highlights
Sirit continues to make strategic corporate advancements to address its
key target markets:
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- Sirit completed two acquisitions, TradeWind Technologies LLC and
SAMSys Technologies Inc., for aggregate consideration of
$1.9 million and $1.8 million respectively.
- Sirit concluded a public offering for total net proceeds of
$11.6 million including the exercise of the over-allotment option.
- Towards the end of the quarter, Sirit began the rationalization of
its combined organizational structure to reduce its operational
expenses on a go forward basis.
- Subsequent to quarter end, Sirit announced that it expects to
receive cash proceeds within the next 30 days from the sale of one
of its long-term investments, Medsite, Inc. of approximately
US$1.9 million.
Q2 Announcements
Sirit also made the following product and customer announcements during
the quarter:
- Leveraging the technology developments of its recent acquisition,
Sirit announced the introduction of the INfinity 510, the industry's
first worldwide Gen 2 RFID reader. The INfinity 510 was built for
use in a variety of applications including supply chain deployments.
- Sirit also launched the IDentity MaX - a UHF RFID reader for use in
parking and vehicle access control deployments. The new integrated
reader and antenna design delivers solid Automatic Vehicle
Identification performance in single-lane read applications.
- Sirit received a one year toll transponder order for $5.9 million
from Bay Area Toll Authority in California.
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"The integration of our two acquisitions is well underway and we are
seeing the positive impact of additional talent and products to the Sirit
portfolio," said Anastasia Chodarcewicz, Chief Financial Officer, Sirit Inc.
"Sirit is now strongly positioned to take advantage of the opportunities
ahead. Customers, partners and competitors alike have seen that Sirit is a
true leader in the RFID market - in terms of vision and our ability to turn
that vision into action."
Conference Call
Sirit will host a conference call to discuss the quarterly results on
Thursday, August 10, 2006 at 10:00 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
June 30 December 31
2006 2005
---------- ----------
Assets
Current Assets
Cash and cash equivalents $ 11,725 $ 6,079
Accounts receivable 3,395 2,941
Inventory 3,165 2,020
Prepaids and deposits 345 108
---------- ----------
18,630 11,148
Long-term investments 3,182 3,182
Property and equipment 1,206 838
Intangible asset 2,016 370
Deferred development costs 27 59
Goodwill 3,905 2,829
---------- ----------
$ 28,966 $ 18,426
---------- ----------
---------- ----------
Liabilities
Current Liabilities
Accounts payable and accrued liabilities $ 5,175 $ 3,526
Deferred revenue 743 815
Warranty obligations 407 290
---------- ----------
6,325 4,631
---------- ----------
Shareholders' Equity
Share capital 47,884 35,195
Contributed surplus 1,744 1,316
Deficit (26,987) (22,716)
---------- ----------
22,641 13,795
---------- ----------
$ 28,966 $ 18,426
---------- ----------
---------- ----------
Sirit Inc.
Interim Consolidated Statements of Operations
(expressed in thousands of Canadian dollars except per share amounts)
Unaudited
Three Months Ended Six Months Ended
June 30 June 30
2006 2005 2006 2005
---------- ---------- ---------- ----------
Revenue $ 5,536 $ 4,632 $ 10,920 $ 9,058
Cost of Sales 3,685 3,113 7,081 5,879
---------- ---------- ---------- ----------
Gross profit 1,851 1,519 3,839 3,179
---------- ---------- ---------- ----------
Expenses
Selling, general and
administrative 2,972 2,710 4,810 4,534
Stock-based compensation 226 424 428 583
Development 1,699 937 2,493 1,582
Amortization 219 152 359 300
Foreign exchange
loss/(gain) 62 (46) 105 (84)
---------- ---------- ---------- ----------
5,178 4,177 8,195 6,915
---------- ---------- ---------- ----------
Operating (loss) (3,327) (2,658) (4,356) (3,736)
Interest income, net 49 39 85 76
---------- ---------- ---------- ----------
Net (loss) for the period $ (3,278) $ (2,619) $ (4,271) $ (3,660)
Deficit, beginning
of period (23,709) (15,059) (22,716) (14,018)
---------- ---------- ---------- ----------
Deficit, end of period $ (26,987) $ (17,678) $ (26,987) $ (17,678)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic and diluted (loss)
per share $ (0.03) $ (0.03) $ (0.04) $ (0.04)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic and diluted weighted
average number of common
shares ('000s) 114,305 92,514 103,847 92,353
Sirit Inc.
Interim Consolidated Statements of Cash Flows
(expressed in thousands of Canadian dollars)
Unaudited
Three Months Ended Six Months Ended
June 30 June 30
2006 2005 2006 2005
---------- ---------- ---------- ----------
Cash provided by/(used in):
Operating Activities
(Loss) from operations $ (3,278) $ (2,619) $ (4,271) $ (3,660)
Items not involving cash
and cash equivalents 445 576 787 883
---------- ---------- ---------- ----------
(2,833) (2,043) (3,484) (2,777)
Net change in non-cash
working capital items 439 446 282 550
---------- ---------- ---------- ----------
(2,394) (1,597) (3,202) (2,227)
---------- ---------- ---------- ----------
Investing Activities
Additions to property
and equipment (74) (100) (154) (165)
Acquisitions, net of
cash acquired (2,667) - (2,667) -
---------- ---------- ---------- ----------
(2,741) (100) (2,821) (165)
---------- ---------- ---------- ----------
Financing Activities
Public offering of
common shares, net of
associated expenses 11,561 - 11,561 -
Issuance of common shares
upon exercise of stock
options 108 188 108 281
---------- ---------- ---------- ----------
11,669 188 11,669 281
---------- ---------- ---------- ----------
Exchange rate impact on
cash and cash equivalents - 14 - 14
---------- ---------- ---------- ----------
Increase/(Decrease) in cash
and cash equivalents 6,534 (1,495) 5,646 (2,097)
Cash and cash equivalents,
beginning of period 5,191 9,419 6,079 10,021
---------- ---------- ---------- ----------
Cash and cash equivalents,
end of period $ 11,725 $ 7,924 $ 11,725 $ 7,924
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Cash and cash equivalents
consist of:
Cash and deposit
accounts with banks $ 10,204 $ 1,238 $ 10,204 $ 1,238
Short-term commercial
paper 1,521 6,686 1,521 6,686
---------- ---------- ---------- ----------
$ 11,725 $ 7,924 $ 11,725 $ 7,924
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
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