Company achieves strong revenue growth across all application areas
TORONTO, Nov. 15 /CNW/ - Sirit Inc. (TSX: SI), a leading provider of
radio frequency identification (RFID) technology, today reported its financial
results for the third quarter ended September 30, 2006. All amounts are stated
in Canadian Dollars unless otherwise noted.
Revenue continues to show strong growth over prior year across all
applications. For the third quarter of fiscal 2006, total revenue reached $5.1
million, a 64% increase from the $3.1 million reported in the same quarter of
2005. Automatic Vehicle Identification (AVI) related products comprised 73% or
$3.7 million of total revenue, an increase of 42% over the third quarter of
2005. Radio Frequency Solutions (RFS) related revenue represents 27% or $1.4
million of total revenue, a 180% increase over prior year reported revenue of
$0.5 million.
"Sirit remains one of the few companies with significant, real world RFID
experience with over 330,000 RFID readers deployed around the world. As supply
chain adoption hovers on the horizon, our solid and profitable AVI business
becomes an important differentiator among our peers," noted Anastasia
Chodarcewicz, Chief Financial Officer, Sirit Inc. "With continued focus on top
line growth and bottom line cost controls, we believe that we should achieve a
cash flow neutral position by the end of next year."
Gross margin for the third quarter of 2006 remained consistent with both
the second quarter of 2006 as well as the third quarter of 2005.
Total operating expenses of $4.4 million are down $0.8 million when
compared to the prior quarter and up $1.5 million in relation to the third
quarter of 2005. The decrease from the prior quarter relates primarily to
severance costs incurred in the second quarter as well as resulting lower
salary costs incurred during the third quarter. The resultant net loss was
$2.6 million in the third quarter compared to $3.3 million in the second
quarter.
Year-to-date total revenue of $16.0 million represents a 32% or $3.8
million increase when compared to the same period in 2005. AVI revenue was
$12.5 million and RFS revenue was $3.5 million compared to $9.3 million and
$2.9 million respectively in the first nine months of 2005.
Revenue year-to-date from the AVI vertical has increased 34% compared to
the first nine months of 2005. In the previous year, Sirit reported that there
were one-time unusual items including the consolidation of three toll agencies
into one that significantly impacted AVI revenue.
The Company utilized $2.7 million to fund ongoing operations and
development efforts. Sirit ended the quarter with $9.0 million in cash
compared to $11.7 million at the beginning of the quarter. The Company's
working capital balance was $10.0 million at September 30, 2006 (June 30, 2006
- $12.3 million). On November 10, 2006, the Company received US$1.8 million
from the sale of its investment in Medsite, Inc. These funds represent 90% of
the anticipated gross proceeds with the remaining 10% in escrow for a period
of up to 12 months. The Company remains financially secure and has sufficient
resources to fund ongoing operations.
"As we promised earlier in this year, Sirit continues to grow revenue
across all application areas while making the necessary investments to deliver
best of breed technology such as our INfinity 510 and IDentity MaX solutions,"
said Norbert Dawalibi, President and CEO, Sirit Inc. "With our completed
portfolio of products, the outlook for the Company is brighter than it has
ever been and we have now taken the next steps to readjust our team to set the
company on a path to profitability."
Q3 Corporate Highlights and Announcements
Sirit continues to make strategic corporate advancements to address its
key target markets:
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- Sirit announced that EPCglobal Inc. awarded its hardware
certification and interoperability marks to the Company for its
INfinity 510 UHF RFID reader. Sirit began shipping the INfininty 510
in volume during the quarter.
- Two of Sirit's OEM partners, Datamax and Paxar, received
interoperability marks for their products powered by Sirit's
INfinity 9311 UHF reader module.
- Sirit entered into an OEM agreement with Dallas-based EFKON USA,
Inc., a provider of intelligent transportation systems (ITS) and
advanced vehicle communications.
- Subsequent to quarter end, Sirit completed the rationalization of
its combined organizational structure to reduce its operational
expenses with the intent to be cash flow neutral by the fourth
quarter of 2007.
- Also subsequent to quarter end, Sirit announced a $1 million
contract for a closed-loop application utilizing its IDentity MaX
product for automatic vehicle identification (AVI).
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Conference Call
Sirit will host a conference call to discuss the quarterly results on
Wednesday, November 15, 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
September 30 December 31
2006 2005
------------ -----------
Assets
Current Assets
Cash and cash equivalents $ 8,961 $ 6,079
Accounts receivable 3,614 2,941
Inventory 3,264 2,020
Prepaids and deposits 398 108
----------- -----------
16,237 11,148
Long-term investments 3,182 3,182
Property and equipment 1,221 838
Intangible assets 1,875 370
Deferred development costs 11 59
Goodwill 3,905 2,829
----------- -----------
$ 26,431 $ 18,426
----------- -----------
----------- -----------
Liabilities
Current Liabilities
Accounts payable and accrued liabilities $ 5,045 $ 3,526
Deferred revenue 859 815
Warranty obligations 369 290
----------- -----------
6,273 4,631
----------- -----------
Shareholders' Equity
Share capital 47,847 35,195
Contributed surplus 1,912 1,316
Deficit (29,601) (22,716)
----------- -----------
20,158 13,795
----------- -----------
$ 26,431 $ 18,426
----------- -----------
----------- -----------
Sirit Inc.
Interim Consolidated Statements of Operations
(expressed in thousands of Canadian dollars except per share amounts)
Unaudited
Three Months Ended Nine Months Ended
September 30 September 30
2006 2005 2006 2005
--------- --------- --------- ---------
Revenue $ 5,086 $ 3,107 $ 16,006 $ 12,165
Cost of Sales 3,399 2,070 10,480 7,949
--------- --------- --------- ---------
Gross profit 1,687 1,037 5,526 4,216
--------- --------- --------- ---------
Expenses
Selling, general and
administrative 2,387 1,515 7,197 6,049
Stock-based compensation 168 203 596 786
Development 1,551 899 4,044 2,481
Amortization 262 157 621 457
Foreign exchange loss 14 149 119 65
--------- --------- --------- ---------
4,382 2,923 12,577 9,838
--------- --------- --------- ---------
Operating (loss) (2,695) (1,886) (7,051) (5,622)
Write-down of investment - (900) - (900)
Interest income, net 81 27 166 103
--------- --------- --------- ---------
Net (loss) for the period $ (2,614) $ (2,759) $ (6,885) $ (6,419)
Deficit, beginning of period (26,987) (17,678) (22,716) (14,018)
--------- --------- --------- ---------
Deficit, end of period $(29,601) $(20,437) $(29,601) $(20,437)
--------- --------- --------- ---------
--------- --------- --------- ---------
Basic and diluted (loss)
per share $ (0.02) $ (0.03) $ (0.06) $ (0.07)
--------- --------- --------- ---------
--------- --------- --------- ---------
Basic and diluted weighted
average number of common
shares ('000s) 145,527 92,864 117,893 92,525
Sirit Inc.
Interim Consolidated Statements of Cash Flows
(expressed in thousands of Canadian dollars)
Unaudited
Three Months Ended Nine Months Ended
September 30 September 30
2006 2005 2006 2005
--------- --------- --------- ---------
Cash provided by/(used in):
Operating Activities
(Loss) from operations $ (2,614) $ (2,759) $ (6,885) $ (6,419)
Items not involving cash
and cash equivalents 430 1,260 1,217 2,143
--------- --------- --------- ---------
(2,184) (1,499) (5,668) (4,276)
Net change in non-cash
working capital items (423) 626 (141) 1,176
--------- --------- --------- ---------
(2,607) (873) (5,809) (3,100)
--------- --------- --------- ---------
Investing Activities
Additions to property
and equipment (120) (73) (274) (238)
Acquisitions, net of
cash acquired - - (2,667) -
--------- --------- --------- ---------
(120) (73) (2,941) (238)
--------- --------- --------- ---------
Financing Activities
Public offering of common
shares, net of
associated expenses (38) - 11,523 -
Issuance of common shares
upon exercise of
stock options 1 29 109 310
--------- --------- --------- ---------
(37) 29 11,632 310
--------- --------- --------- ---------
Exchange rate impact on cash
and cash equivalents - 7 - 21
--------- --------- --------- ---------
Increase/(Decrease) in cash
and cash equivalents (2,764) (910) 2,882 (3,007)
Cash and cash equivalents,
beginning of period 11,725 7,924 6,079 10,021
--------- --------- --------- ---------
Cash and cash equivalents,
end of period $ 8,961 $ 7,014 $ 8,961 $ 7,014
--------- --------- --------- ---------
--------- --------- --------- ---------
Cash and cash equivalents
consist of:
Cash and deposit accounts
with banks $ 1,392 $ 692 $ 1,392 $ 692
Short-term commercial paper 7,569 6,322 7,569 6,322
--------- --------- --------- ---------
$ 8,961 $ 7,014 $ 8,961 $ 7,014
--------- --------- --------- ---------
--------- --------- --------- ---------
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