Sirit Reports Financial Results for the First Quarter Ended March 31, 2006
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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
o Total revenue in Q1 2006 reached $5.4 million, an increase of 22% from Q1 2005 and 27% from Q4 2005.
o 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.
o Radio Frequency Solutions ("RFS") applications revenue remained consistent with prior year first quarter at $1.0 million.
o Fluctuations in quarterly RFS results are expected to continue.
o Net loss for the quarter was $1.0 million, the same level as Q1 2005.
o 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.
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
------------ ------------
------------ ------------
For further information: Lorelei L. Luchkiw, Sirit Inc., (416) 367-1897
x249, lluchkiw@sirit.com
