TORONTO, May 13 /CNW/ - Sirit Inc. ("Sirit") (TSX: SI), a leading provider of radio frequency identification ("RFID") technology, reports its financial results for the first quarter ended March 31, 2008. All amounts are stated in Canadian Dollars unless otherwise noted.
As previously announced, the first quarter of 2008 reflects a decline in total revenue from the same period last year. Total revenue for the three months ended March 31, 2008 reached $4.3 million, (US$4.3 million) compared to $6.5 million (US$5.5 million) in the prior year. The decline is due primarily to lower toll transponder sales during the quarter as well as foreign exchange impacts when compared to the prior year first quarter. The total decline, in US Dollars, is 22% compared to the prior year. This trend is expected to continue through the second quarter of 2008.
Sirit's Automatic Vehicle Identification ("AVI") applications contributed $3.3 million (US$3.3 million) or 77% of the total revenue down from $5.2 million (US$4.4 million) or 79% in the first quarter of 2007. Radio Frequency Solutions ("RFS") applications revenue contributed $1.0 million (US$1.0 million) compared to $1.3 million (US$1.2 million) in the first quarter of 2007. RFS revenue was impacted by quarterly fluctuations due to the timing of specific deliveries and deployments by our customers.
"The first quarter results were within our expectations as our largest toll customer significantly scaled back on deliveries. We effectively maintained operating expenses at the same level compared to last year and as a result had to fund operations during the quarter," commented Anastasia Chodarcewicz, Chief Financial Officer, Sirit Inc. "From a business perspective, the first quarter was very successful with the announcement of our acquisition of RSI ID Technologies, Inc., which closed on April 1, 2008 and several product and partner announcements. We are working closely with our partners and customers to ensure we make the best investment decisions today to improve results for the latter part of the year."
Gross profit in the first quarter of 2008 reached 36.2% up from the 34.8% in the first quarter of 2007. This reflects a change in the mix of toll customers during the quarter.
Operating expenses during the quarter, excluding foreign exchange, were $3.2 million, the same level as the first quarter of 2007. Development expenses increased during the first quarter of 2008 as the Company invests in key developments and people in an effort to improve future product costs and enhance product performance and offerings.
Operating loss for the quarter was $1.4 million compared to a $1.0 million loss in the same period last year. Net loss for the quarter was $1.3 million compared to a net income of $0.5 million in the first quarter of 2007 which included a gain on sale of $1.4 million from the sale of its long-term investment in Applied Data Systems, Inc.
Sirit ended the quarter with $6.8 million in cash compared to $8.9 million at December 31, 2007. Cash was used to fund operations and working capital during the quarter due to the lower sales levels experienced.
Q1 2008 Corporate Highlights
The following highlights key activities during the quarter:
- Sirit announced the signing of a cooperative marketing agreement
("CMA") with 3M's Traffic Safety Systems Division. The CMA is a
global distribution agreement to offer RFID reader and tag technology
based on open architecture protocols to support comprehensive
solutions developed for the transportation market.
- The Company announced the acquisition of RSI ID Technologies, Inc.
("RSI"). RSI is an industry leading, vertically integrated
manufacturer of antennas, inlays and tags for specialized, passive
RFID applications. The deal has been structured in an all stock
transaction with an initial payment of 10 million Sirit Common Shares
plus additional shares to be issued over a 21 month period based on
achieving certain financial targets. The deal closed on April 1,
2008.
- The Company announced a comprehensive OEM partnership with TAGSYS, a
global leader in item-level RFID infrastructure, to supply Sirit's
UHF Infinity 510 platform within TAGSYS' RXU-400 UHF fixed reader.
- Sirit received its compliance certificate from the State Radio
Regulation Committee ("SRRC") in China which confirms the IN510 meets
the qualifications of compliance under the operational bandwidth,
interoperability and performance standards established in March 2007.
- Sirit announced its collaboration with Microsoft Corporation to bring
near field communication and contactless support to the Windows
Mobile(R) operating system. The companies aim to speed the adoption
of NFC and contactless technology in Windows Mobile(R) powered
smartphones and the development of Windows Mobile(R) powered NFC
applications.
"We have had a strong quarter in terms of new partnerships and a key acquisition with RSI. As anticipated we are experiencing some short-term revenue fluctuations due to timing of specific orders from our largest customer. We continue to work on an increasing number of opportunities and are investing in our operations. If realized, these prospects are expected to convert into major announcements throughout 2008 and provide a basis to achieve profitability in 2009," added Norbert Dawalibi, President and CEO, Sirit Inc.
About Sirit Inc.
Sirit Inc. (TSX: SI) is a leading provider of Radio Frequency Identification (RFID) technology 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 14 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 can be customized to address new and traditional RFID market applications including Supply Chain & Logistics, Cashless Payment (including Electronic Tolling), Access Control, Automatic Vehicle Identification, Near Field Communications, Inventory Control & Management, Asset Tracking and Product Authentication. For more information, 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 Annual Information Form dated March 14, 2008 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 does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, further events or otherwise.
"Sirit", the Sirit Design and "vision beyond sight" are all trademarks of Sirit Inc. All other names of actual companies and products mentioned herein may be the trademarks of their respective owners.
Sirit Inc.
Interim Consolidated Balance Sheets
(expressed in thousands of Canadian dollars)
Unaudited
As at As at
March 31 December 31
2008 2007
---------- ----------
Assets
Current Assets
Cash and cash equivalents $ 6,825 $ 8,855
Accounts receivable 3,528 2,951
Inventory 2,525 2,450
Prepaids, deposits and other 453 233
---------- ----------
13,331 14,489
Property and equipment 1,017 1,070
Intangible assets 1,115 1,205
Goodwill 3,905 3,905
---------- ----------
$ 19,368 $ 20,669
---------- ----------
---------- ----------
Liabilities
Current Liabilities
Accounts payable and accrued liabilities $ 4,104 $ 4,178
Deferred revenue 282 306
Warranty obligations 139 134
---------- ----------
4,525 4,618
Long-term deferred revenue 535 569
Long-term warranty obligations 119 124
---------- ----------
5,179 5,311
---------- ----------
Shareholders' Equity
Share capital 47,852 47,852
Contributed surplus 2,816 2,699
Deficit (36,479) (35,193)
---------- ----------
14,189 15,358
---------- ----------
$ 19,368 $ 20,669
---------- ----------
---------- ----------
Sirit Inc.
Interim Consolidated Statements of Operations, Comprehensive Income/
(Loss) and Deficit
(expressed in thousands of Canadian dollars except per share amounts)
Three Months Ended March 31
Unaudited
2008 2007
---------- ----------
Revenue $ 4,306 $ 6,499
Cost of sales 2,749 4,236
---------- ----------
Gross profit 1,557 2,263
---------- ----------
Expenses
Selling, general and administrative 1,952 2,189
Stock-based compensation 117 172
Development 923 604
Amortization 172 223
Foreign exchange (gain)/loss (249) 109
---------- ----------
2,915 3,297
---------- ----------
Operating loss (1,358) (1,034)
Gain on sale of long-term investment - 1,401
Interest income, net 72 96
---------- ----------
Net (loss)/income and comprehensive
(loss)/income for the period $ (1,286) $ 463
Deficit, beginning of period (35,193) (31,675)
---------- ----------
Deficit, end of period $(36,479) $(31,212)
---------- ----------
---------- ----------
Basic and diluted (loss)/income per share $ ( 0.01) $ 0.00
---------- ----------
---------- ----------
Sirit Inc.
Interim Consolidated Statements of Cash Flows
(expressed in thousands of Canadian dollars)
Three Months Ended March 31
Unaudited
2008 2007
---------- ----------
Cash provided by/(used in):
Operating Activities
Net (loss)/income for the period $ (1,286) $ 463
Items not involving cash and cash equivalents 289 395
Gain on sale of long term investments - (1,401)
Foreign exchange (gain)/loss (249) 109
---------- ----------
(1,246) (434)
Net change in non-cash working capital items (1,088) (780)
---------- ----------
(2,334) (1,214)
---------- ----------
Investing Activities
Additions to property and equipment (28) (193)
Proceeds on sale of long-term investment - 2,010
---------- ----------
(28) 1,817
---------- ----------
Financing Activities
Issuance of common shares upon
exercise of stock options - 14
---------- ----------
- 14
---------- ----------
Exchange rate impact on cash and cash equivalents 332 (142)
---------- ----------
Increase/(decrease) in cash and cash equivalents (2,030) 475
Cash and cash equivalents, beginning of period 8,855 9,397
---------- ----------
Cash and cash equivalents, end of period $ 6,825 $ 9,872
---------- ----------
---------- ----------
Cash and cash equivalents consist of:
Cash $ 550 $ 2,162
Short-term commercial paper 6,275 7,710
---------- ----------
$ 6,825 $ 9,872
---------- ----------
---------- ----------