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Sirit Reports Solid Financial Results to Start Fiscal 2009

^{Published on 2009-05-12 05:26:35, Last Modified on 2009-05-12 05:29:58 - Market Wire}
 

 TORONTO, May 12 /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, 2009. All amounts are stated in Canadian Dollars unless otherwise noted. Q1 2009 Financial Results Fiscal 2009 started strongly for the Company achieving solid revenue growth of 29% compared to the prior year as well as continued effective cash management. Sirit reports total revenue for Q1 2009 of $5.6 million (US$4.5 million) compared to $4.3 million (US$4.3 million) reported for Q1 2008. The increase in quarterly revenue when compared with the prior year is attributed to automatic vehicle identification ("AVI") applications with higher volumes of toll transponder sales during the quarter with the Company's top three customers. During Q1 2009, the net cash utilization was just over $0.1 million in-line with the net cash utilized in Q4 2008 effectively maintaining cash resources at a long-term sustainable level assuming current operating levels. During the first quarter of 2009, revenue generated from AVI related applications was $4.0 million compared to $3.3 million reported in the first quarter of 2008, representing a 21% increase. The revenue split is comprised of 72% for AVI related applications and 28% Radio Frequency Solutions ("RFS") related applications in Q1 2009 compared to 77% and 23% respectively, a year ago. RFS applications revenue contributed $1.6 million compared to $1.0 million in the first quarter of 2008. RFS revenue increased due to larger orders from recurring customers; however, revenue will continue to fluctuate quarterly based on the timing of these orders. The comparable results for Q1 2008 do not include the operations of RSI ID Technologies, Inc. ("RSI"), as RSI was purchased on April 1, 2008. "Sirit's first quarter reflects a stabilized base business with steadily declining operating losses. We continue to focus on expense control and closely manage cash flows as we expect our traditional business to support ongoing operations while we pursue larger growth opportunities," commented Anastasia Chodarcewicz, Chief Financial Officer, Sirit Inc. Gross profit was 35.0% for the first quarter of 2009 compared to 36.2% in the first quarter of 2008 as Q1 2009 includes manufacturing costs associated with the operations of RSI. Cash operating expenses during Q1 2009 were $2.3 million compared to $2.9 million during Q1 2008. The decrease in expenses relates to lower salaries as well as lower material costs related to ongoing development projects when compared to the prior year. The Company intends to maintain lower operating expense levels throughout 2009. Operating loss for the first quarter of 2009 was $0.9 million compared with a $1.4 million operating loss in the same period of the prior year. Net loss for the quarter was $1.0 million compared to a net loss of $1.3 million in the first quarter of 2008. Sirit ended the quarter with $3.2 million in cash resources compared to $3.3 million at December 31, 2008. Minimal net cash resources were utilized during the quarter to fund ongoing operations. Q1 2009 Corporate Highlights The following highlights some key activities during Q1 2009: - Sirit confirmed the receipt of an order for RFID Title 21 ("T-21") toll readers and transponders along with installation services for the first T-21 installation in Canada at the Golden Ears Bridge Project which will link Maple Ridge and Pitt Meadows with Surrey and Langley in British Columbia. The initial contract is valued at approximately US$300,000 and includes T-21 lane equipment, lane level installation for six high speed open road tolling lanes and 5,000 T-21 transponders. The customer plans to deploy in excess of 20,000 transponders in the first 12 months of operation. - Sirit announced that its INfinity 510 ("IN510") reader and RSI-647 Corkscrew RFID tags have been selected for deployment at Pacific Gas & Electric's Diablo Canyon Nuclear Power Plant, Avila Beach, California. The Sirit IN510 readers and RFID tags solution, installed by Cal Poly Global Automated Identification Technology Center, have been deployed in a project to identify and locate critical spare parts inventory in its warehouse at Diablo Canyon. "We have achieved solid first quarter results especially in light of the many economic challenges being faced by our customers, particularly in California. We are seeing advancements in a number of opportunities we are pursuing both in our traditional markets as well as with new potential customers. If realized, these prospects are expected to convert into major announcements and when implementations begin, will enable Sirit to reach profitable operating levels," 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 15 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 and Canadian provincial securities legislation. These forward-looking statements relate to, among other things, Sirit's objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and can generally be identified by the use of words such as "may", "will", "could", "should", "would", "suspect", "outlook", "expect", "intend", "estimate", "anticipate", "believe", "plan", "forecast", "objective" and "continue" (or the negative thereof) and words and expressions of similar import, and may include statements concerning possible or assumed future results, financial outlook and/or future-oriented financial information. Although Sirit believes that the expectations reflected in such forward-looking statements are reasonable, 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. Important factors that could cause actual results to differ materially from expectations include but are not limited to: Sirit's ability to achieve commercialization and/or commercial acceptance of its RFID technology; the evolution of, and adoption rate in, the RFID market; Sirit's inability to expand sales both within and outside its traditional markets; changes in Sirit's strategic relationships; Sirit's dependence on resellers, distributors and significant customers; the utility of research and development expenditures undertaken by Sirit; product defects; increased levels of competition; changes in laws and regulations; foreign exchange fluctuations; and Sirit's overall liquidity and capital resources. These and other important risks are discussed in further detail in the section entitled "Risks Factors" in Sirit's Annual Information Form dated March 13, 2009 and in Sirit's management's discussion and analysis found in its 2008 annual report 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. Unless otherwise required by law, Sirit does not undertake any obligation to update any forward-looking statements contained in this news release as a result of new information, further events or otherwise. This cautionary statement expressly qualifies the forward-looking information in this news release. "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 2009 2008 ------------- ------------- Assets Current Assets Cash and cash equivalents $ 3,182 $ 3,325 Accounts receivable 3,636 4,303 Inventory 3,488 3,470 Prepaids and deposits 495 287 ------------- ------------- 10,801 11,385 Property and equipment 2,375 2,599 Intangible assets 7,084 7,514 Goodwill 3,905 3,905 ------------- ------------- $ 24,165 $ 25,403 ------------- ------------- ------------- ------------- Liabilities Current Liabilities Bank indebtedness $ 1,309 $ 1,321 Accounts payable and accrued liabilities 4,495 4,716 Deferred revenue 214 339 Warranty obligations 121 108 Capital lease obligations 478 454 ------------- ------------- 6,617 6,938 Long-term deferred revenue 474 442 Long-term warranty obligations 139 150 Long-term capital lease obligations 843 934 Related party debt 1,136 1,100 ------------- ------------- 9,209 9,564 ------------- ------------- ------------- ------------- Shareholders' Equity Share capital 51,252 51,252 Contributed surplus 3,212 3,109 Deficit (39,508) (38,522) ------------- ------------- 14,956 15,839 ------------- ------------- $ 24,165 $ 25,403 ------------- ------------- ------------- ------------- Sirit Inc. Interim Consolidated Statements of Operations, Comprehensive Loss and Deficit (expressed in thousands of Canadian dollars except per share amounts) Three Months Ended March 31 Unaudited 2009 2008 ------------- ------------- Revenue $ 5,558 $ 4,306 Cost of sales 3,615 2,749 ------------- ------------- ------------- ------------- Gross profit 1,943 1,557 ------------- ------------- Expenses Selling, general and administrative 1,815 1,952 Stock-based compensation 103 117 Development 531 923 Amortization 547 172 Foreign exchange gain (127) (249) ------------- ------------- 2,869 2,915 ------------- ------------- ------------- ------------- Operating loss (926) (1,358) Interest (expense)/income, net (60) 72 ------------- ------------- Net loss and comprehensive loss for the period (986) (1,286) Deficit, beginning of period (38,522) (35,193) ------------- ------------- Deficit, end of period $ (39,508) $ (36,479) ------------- ------------- ------------- ------------- Basic and diluted loss per share $ (0.01) $ (0.01) ------------- ------------- ------------- ------------- Basic and diluted weighted average number of common shares ('000s) 161,137 154,623 Sirit Inc. Interim Consolidated Statements of Cash Flows (expressed in thousands of Canadian dollars) Three Months Ended March 31 Unaudited 2009 2008 ------------- ------------- Cash provided by/(used in): Operating Activities Net loss for the period $ (986) $ (1,286) Items not involving cash and cash equivalents 770 289 Foreign exchange gain (127) (249) ------------- ------------- (343) (1,246) Net change in non-cash working capital items 7 (1,088) ------------- ------------- ------------- ------------- (336) (2,334) ------------- ------------- Investing Activities Additions to property and equipment (13) (28) ------------- ------------- ------------- ------------- (13) (28) ------------- ------------- Financing Activities Decrease in bank indebtedness (12) - Increase in related party debt 36 - Decrease in capital lease obligations, net (67) - ------------- ------------- (43) - ------------- ------------- Exchange rate impact on cash and cash equivalents 249 332 ------------- ------------- Decrease in cash and cash equivalents (143) (2,030) Cash and cash equivalents, beginning of period 3,325 8,855 ------------- ------------- Cash and cash equivalents, end of period $ 3,182 $ 6,825 ------------- ------------- ------------- ------------- Cash and cash equivalents consist of: Cash $ 488 $ 550 Short-term commercial paper 2,694 6,275 ------------- ------------- ------------- ------------- $ 3,182 $ 6,825 ------------- ------------- ------------- ------------- 

For further information: Anastasia Chodarcewicz, Sirit Inc., (416) 367-1897 x227, [ achodarcewicz@sirit.com ]