Sirit Reports 2006 Results Achieving Highest Revenue in its History



    TORONTO, March 15 /CNW/ - Sirit Inc. ("Sirit") (TSX: SI), a leading
provider of radio frequency identification ("RFID") technology, today reported
its financial results for the fourth quarter and year ended December 31, 2006.
All amounts are stated in Canadian Dollars unless otherwise noted.
    Total revenue for 2006 reached $21.7 million representing Sirit's highest
reported revenue in the Company's thirteen year history. Overall, revenue grew
by over 30% compared to 2005 with increases experienced across all
applications. Revenue from Automatic Vehicle Identification (AVI) applications
grew by 33% reaching $16.8 million and Radio Frequency Solutions (RFS) revenue
experienced a 29% growth rate reaching $4.9 million in 2006. Comparative
results for 2005 were $12.6 million for AVI and $3.8 million for RFS.
    "Sirit has successfully managed a very active 2006 with the completion of
two acquisitions, a $12.6 million public offering and new product releases
while focusing on revenue growth. These efforts have enabled the Company to
attain its highest sales levels in its history," commented Anastasia
Chodarcewicz, Chief Financial Officer, Sirit Inc. "Sirit is evolving into a
position of strength within the RFID market. A solid financial position and
strong portfolio of products will allow Sirit to focus on execution and
continued growth in 2007."

    Fourth Quarter Ended December 31, 2006

    Sirit reported total revenue of $5.7 million for the fourth quarter ended
December 31, 2006, its best quarter to date. AVI revenue was $4.3 million or
75% of total sales and RFS revenue reached $1.4 million or 25% of total sales.
This reflects a 12% increase over the third quarter 2006 revenue of
$5.1 million and a 34% increase over the $4.3 million reported in the fourth
quarter of 2005. Increased demand for toll tags during the quarter, increased
volumes from RFS customers as well as new Parking and Access Control (PACS)
customers all contributed to the fourth quarter results.
    Gross profit in the fourth quarter was impacted by a $0.4 million
inventory write-down from a product rationalization effort. This involved
eliminating duplicate product offerings resulting from the acquisitions,
mandated changes to the metal composition of components (RoHS Directives) and
market assessments culminating in certain products reaching end of life.
Without this item, gross profit would have been 34.7% compared to 35.8%
reported in the last quarter of 2005.
    Total expenses for the fourth quarter were $3.8 million, including
$0.4 million of termination costs. Operating expenses have decreased from the
reported $5.2 million in the second quarter and $4.4 million in the third
quarter of 2006 as integration of the acquisitions was completed in the fourth
quarter. The full benefit of the integration efforts is anticipated to be
realized in the first quarter of 2007.
    Operating loss for the quarter was $2.2 million compared to a
$1.2 million loss in the same period last year.
    The Company spent $1.9 million in cash during the fourth quarter;
however, this was offset by the receipt of $2.3 million (US$1.8 million) of
proceeds from the sale of its investment in Medsite, Inc. As a result, Sirit
closed the year with $9.4 million in cash.

    Twelve Months Ended December 31, 2006

    Total revenue for 2006 reached a record high of $21.7 million
(US$19.1 million) compared to $16.4 million (US$13.6 million) in 2005. While
2005 was impacted by some one-time items, the growth achieved in 2006 exceeded
the Company's historical best results. This was also significant in light of
continued downward pressure on the US Dollar which lost another 6%, relative
to the Canadian Dollar, in 2006, being the third consecutive year of negative
foreign exchange impacts.
    AVI revenue reached $16.8 million for 2006 compared to $12.6 million in
2005. This included $14.0 million from tolling related sales and $2.8 million
from PACS sales. The overall growth was supported by a return to normal
utilization rates of toll transponders, development revenue from the DSRC
project and new PACS customers. As in 2005, Sirit has not lost a single toll
transponder customer and has been the hardware provider of choice to several
new toll road integration projects during the year.
    RFS revenue reached $4.9 million compared to $3.8 million in 2005,
representing a 29% annual growth rate. Revenue generated from products
acquired from the acquisitions in April 2006, contributed to the growth.
    The total gross profit for fiscal 2006 was 34.6%, excluding the
previously discussed inventory impact, compared to 35.0% in 2005. Overall
margins have been slightly impacted by price reductions in toll transponders
during 2006.
    Total operating expenses reached $16.3 million in 2006 compared to
$12.6 million in 2005. Increased staff levels for over half the year,
acquisition related integration costs and increased development efforts
contributed to the increased expenditures in 2006 when compared to 2005.
    The net operating loss for the year is $9.3 million compared to
$6.8 million for fiscal 2005. This excludes the activities associated with the
long-term investments both in 2005 and 2006. Net loss for the year is
$9.0 million or $0.07 per share compared to $8.7 million or $0.09 per share in
2005. Total shares outstanding at December 31, 2006 are 145.5 million compared
to 93.3 million at December 31, 2005.
    Cash utilized in 2006 included $7.7 million from operating activities
plus $2.7 million associated with the acquisitions. This was offset by a net
$11.5 million received from the public offering plus $2.3 million received
from the sale of Medsite, Inc. The Company started the year with $6.1 million
in cash and ended the year with $9.4 million. Based on anticipated operating
costs, the Company believes it has sufficient cash to fund operations into the
foreseeable future.
    "We are confident we have put in place very solid building blocks to be a
key participant during the next stages in the evolution of the RFID market. We
have the right people, a strong product portfolio and solid financial position
from which to achieve growth across all applications in 2007 as well as
increase shareholder value," stated Norbert Dawalibi, President and CEO, Sirit
Inc.

    Subsequent Event
    On January 10, 2007 the Company announced the sale of its second
long-term investment. Cash received from the sale was US$1.7 million, a gain
of over 3 times the historical book value.

    Conference Call and Webcast
    Sirit will host a conference call to discuss the quarterly and year end
results on Thursday March 15, 2007 at 10:00am EST. The call will be Webcast on
the Internet and is accessible at www.sirit.com.

    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 13 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 (including
Electronic Tolling), Access Control, Automatic Vehicle Identification,
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 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. 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
    December 31

                                                            2006       2005
                                                         ---------  ---------
    Assets
      Current Assets
        Cash and cash equivalents                        $  9,397   $  6,079
        Accounts receivable                                 3,957      2,941
        Inventory                                           2,997      2,020
        Prepaids and deposits                                 348        108
                                                         ---------  ---------
                                                           16,699     11,148

      Long-term investments                                   849      3,182
      Property and equipment                                1,095        838
      Intangible assets                                     1,734        370
      Deferred development costs                                -         59
      Goodwill                                              3,905      2,829
                                                         ---------  ---------

                                                         $ 24,282   $ 18,426
                                                         ---------  ---------
                                                         ---------  ---------
    Liabilities
      Current Liabilities
        Accounts payable and accrued liabilities         $  4,954   $  3,526
        Deferred revenue                                      800        815
        Warranty obligations                                  298        290
                                                         ---------  ---------
                                                            6,052      4,631
                                                         ---------  ---------

    Shareholders' Equity
      Share capital                                        47,830     35,195
      Contributed surplus                                   2,075      1,316
      Deficit                                             (31,675)   (22,716)
                                                         ---------  ---------
                                                           18,230     13,795
                                                         ---------  ---------

                                                         $ 24,282   $ 18,426
                                                         ---------  ---------
                                                         ---------  ---------



    Sirit Inc.
    Interim Consolidated Statements of Operations
    (expressed in thousands of Canadian dollars except per share amounts)
    December 31
    Unaudited

                                    Three Months Ended   Twelve Months Ended
                                      2006       2005       2006       2005
                                   ---------  ---------  ---------  ---------

    Revenue                        $  5,709   $  4,254   $ 21,715   $ 16,419
    Cost of sales                     4,144      2,731     14,624     10,680
                                   ---------  ---------  ---------  ---------
    Gross profit                      1,565      1,523      7,091      5,739
                                   ---------  ---------  ---------  ---------

    Expenses
      Selling, general and
       administrative                 1,933      1,664      9,130      7,713
      Stock-based compensation          163        201        759        987
      Development                     1,473        704      5,517      3,185
      Amortization                      251        188        872        645
      Foreign exchange loss             (50)       (18)        69         47
                                   ---------  ---------  ---------  ---------
                                      3,770      2,739     16,347     12,577
                                   ---------  ---------  ---------  ---------
    Operating loss                   (2,205)    (1,216)    (9,256)    (6,838)

      Write-down of long-term
       investments                        -     (1,109)         -     (2,009)
      Other income                       78          -         78          -
      Loss on disposal of assets        (34)         -        (34)         -
      Interest income, net               87         46        253        149
                                   ---------  ---------  ---------  ---------
    Net loss for the period        $ (2,074)  $ (2,279)  $ (8,959)  $ (8,698)

      Deficit, beginning of period  (29,601)   (20,437)   (22,716)   (14,018)
                                   ---------  ---------  ---------  ---------

    Deficit, end of period         $(31,675)  $(22,716)  $(31,675)  $(22,716)
                                   ---------  ---------  ---------  ---------
                                   ---------  ---------  ---------  ---------

    Basic and diluted loss per
     share                         $  (0.01)  $  (0.02)  $  (0.07)  $  (0.09)
                                   ---------  ---------  ---------  ---------
                                   ---------  ---------  ---------  ---------

    Basic and diluted weighted
     average number of common
     shares ('000s)                 145,533     92,958    124,859     92,641



    Sirit Inc.
    Interim Consolidated Statements of Cash Flows
    (expressed in thousands of Canadian dollars)
    December 31
    Unaudited

                                    Three Months Ended   Twelve Months Ended
                                      2006       2005       2006       2005
                                   ---------  ---------  ---------  ---------
    Cash provided by/(used in):
    Operating Activities
      Net loss for the period      $ (2,074)  $ (2,279)  $ (8,959)  $ (8,698)
      Items not involving cash
       and cash equivalents             448      1,498      1,665      3,641
                                   ---------  ---------  ---------  ---------
                                     (1,626)      (781)    (7,294)    (5,057)

      Net change in non-cash
       working capital items           (246)      (102)      (387)     1,074
                                   ---------  ---------  ---------  ---------
                                     (1,872)      (883)    (7,681)    (3,983)
                                   ---------  ---------  ---------  ---------
    Investing Activities
      Additions to property and
       equipment                         (8)       (82)      (282)      (320)
      Acquisitions, net of cash
       acquired                           -          -     (2,667)         -
      Proceeds on sale of
       long-term investment           2,333          -      2,333          -
                                   ---------  ---------  ---------  ---------
                                      2,325        (82)      (616)      (320)
                                   ---------  ---------  ---------  ---------
    Financing Activities
      Public offering of common
       shares, net of associated
       expenses                         (17)         -     11,506          -
      Issuance of common shares
       upon exercise of stock
       options                            -         51        109        361
                                   ---------  ---------  ---------  ---------
                                        (17)        51     11,615        361
                                   ---------  ---------  ---------  ---------

    Exchange rate impact on cash
     and cash equivalents                 -        (21)         -          -
                                   ---------  ---------  ---------  ---------

    Increase/(Decrease) in cash
     and cash equivalents               436       (935)     3,318     (3,942)
      Cash and cash equivalents,
       beginning of period            8,961      7,014      6,079     10,021
                                   ---------  ---------  ---------  ---------
    Cash and cash equivalents,
     end of period                 $  9,397   $  6,079   $  9,397   $  6,079
                                   ---------  ---------  ---------  ---------
                                   ---------  ---------  ---------  ---------

    Cash and cash equivalents
     consist of:
      Cash                         $  1,277   $    251   $  1,277   $    251
      Short-term commercial paper     8,120      5,828      8,120      5,828
                                   ---------  ---------  ---------  ---------
                                   $  9,397   $  6,079   $  9,397   $  6,079
                                   ---------  ---------  ---------  ---------
                                   ---------  ---------  ---------  ---------
    





For further information:

For further information: Lorelei L. Luchkiw, Sirit Inc., (416) 367-1897
x249, lluchkiw@sirit.com

Organization Profile

SIRIT INC.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890