Sirit Reports Second Consecutive Record Revenue Year in 2007



    TORONTO, March 18 /CNW/ - Sirit Inc. ("Sirit") (TSX: SI), a leading
provider of radio frequency identification ("RFID") technology, reports its
financial results for the fourth quarter and year ended December 31, 2007. All
amounts are stated in Canadian Dollars unless otherwise noted.
    For the second consecutive year, Sirit attained double digit growth and a
record revenue level. Total revenue for fiscal 2007 reached $24.5 million, a
13% growth rate over the $21.7 million reported for 2006. In constant
US dollars, the growth rate was 20% with the difference from the reported
Canadian Dollar growth rate due to the strengthening Canadian Dollar in
relation to the US Dollar.
    Revenue from Sirit's Automatic Vehicle Identification ("AVI")
applications reached $18.7 million (US$17.4 million) compared to $16.8 million
(US$14.8 million) in 2006 and Radio Frequency Solutions ("RFS") revenue
reached $5.8 million (US$5.5 million) compared to $4.9 million
(US$4.3 million) in 2006. Sirit effectively managed its resources in 2007 with
total cash utilization of $0.5 million and a 24% decrease in total expenses
compared to 2006, excluding foreign exchange impacts.
    "After successfully integrating two acquisitions in 2006, Sirit managed
operations in 2007 at a level that would sustain the business for the
long-term. We experienced our first quarterly sales level above $6.5 million
in the second quarter of 2007 and reached a cash flow neutral position in the
fourth quarter," commented Anastasia Chodarcewicz, Chief Financial Officer,
Sirit Inc. "We maintained our position of financial strength which has brought
the Company to a point where we can begin to invest in high growth prospects
that we believe are starting to take shape."

    Fourth Quarter Ended December 31, 2007

    Sirit reported total revenue of $5.4 million (US$5.6 million) for the
fourth quarter of 2007 compared to $5.7 million (US$5.0 million) in the fourth
quarter of 2006. In US Dollars, revenue grew by 12% but declined by just under
5% as reported in Canadian dollars. This reflects an exchange rate difference
between Q4 2006 and Q4 2007 of approximately 15%. AVI revenue was $4.2 million
or 77% of total sales and RFS revenue contributed $1.2 million or 23% of total
sales in Q4 2007.
    Gross profit in the fourth quarter of 2007 was 33.1% compared to 27.4% in
the fourth quarter of 2006. The fourth quarter of 2006 was impacted by a
$0.4 million inventory write-down from a product rationalization effort and a
further $0.1 million in the fourth quarter of 2007.
    Operating expenses for the fourth quarter of 2007 were $2.8 million, a
26% decrease compared to $3.8 million in the fourth quarter of 2006, both
excluding the impact of foreign exchange. The decrease related to the Company
completing its acquisition integration efforts during the last quarter of
2006.
    Operating loss for the quarter was $1.2 million compared to a
$2.2 million loss in the same period last year. Net loss for the quarter was
$0.8 million compared to a $2.1 million loss in the last quarter of 2006.
During the fourth quarter of 2007, the Company sold its last remaining
long-term investment in Horizon Wimba, Inc. for $0.4 million with a gain on
sale of $0.3 million.
    The Company was cash flow neutral during the fourth quarter of 2007. As a
result, Sirit closed the year with $8.9 million in cash, the same amount as
the third quarter of 2007 and down $0.5 million for the fiscal year from a
cash balance of $9.4 million at December 31, 2006.

    Twelve Months Ended December 31, 2007

    Total revenue in 2007 of $24.5 million (US$22.9 million) compared to
$21.7 million (US$19.1 million) in 2006 is the highest level reported for
Sirit to date. This was a significant achievement as the Company experienced
its fourth consecutive year of downward pressure on the US Dollar relative to
the Canadian Dollar. At year end, the Canadian and US Dollars were virtually
at par.
    AVI revenue reached $18.7 million in 2007, comprised of $15.8 million
from toll related sales and $2.9 million related to parking and access control
("PACS") related sales. For 2006, total AVI revenue was $16.8 million
including $14.0 million from tolling related sales and $2.8 million from PACS
related sales. The overall growth resulted from the highest volume of toll
transponders delivered in a twelve month period by the Company.
    RFS revenue reached $5.8 million compared to the $4.9 million in 2006,
representing an 18% annual growth rate. The growth is attributed primarily to
sales of fixed position readers and new customers testing and piloting RFID
technology.
    Gross profit for the year was 35.0% consistent with the 34.6% reported
for 2006, excluding the previously discussed inventory impact in 2006. Overall
margins have been slightly impacted by price reductions in toll transponders
during 2007 offset by cost reductions associated with more efficient
manufacturing of our fixed position readers.
    Total operating expenses for the year were $12.4 million compared to
$16.3 million in 2006, both excluding the impact of foreign exchange. The 24%
decrease in operating expenses during 2007 compared to 2006 reflects efforts
to contain discretionary costs and a streamlined operation after the
completion of the integration efforts from two acquisitions in 2006. Including
foreign exchange total operating expenses in 2007 were $14.1 million.
    Excluding the impact of foreign exchange, the operating loss for the year
is $3.8 million, down $5.4 million from a loss in 2006 of $9.2 million.
Including foreign exchange expenses of $1.7 million, operating loss for 2007
was $5.5 million.
    Net loss for fiscal 2007 is $3.5 million or $0.02 per share, including
the gain on sale of the Company's remaining two long-term investments of
$1.7 million. This compares to a net loss of $9.0 million or $0.07 per share
in 2006. Total shares outstanding at December 31, 2007 are 145.7 million
compared to 145.5 million at December 31, 2006.
    The Company started the year with $9.4 million in cash and ended the year
with $8.9 million, utilizing only $0.5 million in 2007. Cash utilized in 2007
included $1.0 million for operating activities plus $2.1 million earned from
the sale of long-term investments net against a reported exchange rate impact
of $1.7 million during the year. As the majority of the Company's revenue and
expenses are based in US Dollars, the reported foreign exchange loss has
minimal impact on operations.

    2008 Perspective

    We expect 2008 to bring another year of increased revenue growth across
all of our application areas. This growth however, will follow a different
revenue trend when compared to prior years as we anticipate that the majority
of our revenue will come in the second half of the year.
    In our AVI applications, our largest customer, which last year
contributed 30% of our revenue in the first half of 2007, has been shifting a
portion of their projected deliveries under their existing agreement with
Sirit to the second half of 2008. This will result in our AVI revenue being
lower in the first half of 2008 when compared to the first half of 2007. From
our RFS applications, we will continue to experience quarterly fluctuations in
our results due to the timing of specific deliveries and deployments by our
customers.
    "We strongly believe our value is not accurately reflected when
considering, in isolation, fluctuations in short-term results due to timing of
specific orders. We are working hard on an increasing number of opportunities
in a focused and targeted manner that we expect will convert into major wins
throughout 2008. These exciting prospects combined with our operational
strengths should bring increased value to all shareholders of the Company,"
noted Norbert Dawalibi, President and CEO, Sirit Inc.
    During 2008, expect to learn about new partnerships and look for new
product announcements as well as participation in more global projects. These
will be the catalysts to bring the Company to higher levels of growth,
resultant profitability and increased overall value.

    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 19, 2007 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)
    As at December 31
    Unaudited

                                                           2007       2006
                                                        ---------- ----------
    Assets
      Current Assets
        Cash and cash equivalents                        $  8,855   $  9,397
        Accounts receivable                                 2,951      3,957
        Inventory                                           2,450      2,997
        Prepaids and deposits                                 233        348
                                                        ---------- ----------
                                                           14,489     16,699

      Long-term investments                                     -        849
      Property and equipment                                1,070      1,095
      Intangible assets                                     1,205      1,734
      Goodwill                                              3,905      3,905
                                                        ---------- ----------

                                                         $ 20,669   $ 24,282
                                                        ---------- ----------
                                                        ---------- ----------
    Liabilities
      Current Liabilities
        Accounts payable and accrued liabilities         $  4,178   $  4,954
        Deferred revenue                                      306        293
        Warranty obligations                                  134        136
                                                        ---------- ----------
                                                            4,618      5,383

      Long-term deferred revenue                              569        507
      Long-term warranty obligations                          124        162
                                                        ---------- ----------
                                                            5,311      6,052
                                                        ---------- ----------

    Shareholders' Equity
      Share capital                                        47,852     47,830
      Contributed surplus                                   2,699      2,075
      Deficit                                             (35,193)   (31,675)
                                                        ---------- ----------
                                                           15,358     18,230
                                                        ---------- ----------

                                                         $ 20,669   $ 24,282
                                                        ---------- ----------
                                                        ---------- ----------



    Sirit Inc.
    Interim Consolidated Statements of Operations, Comprehensive Loss and
    Deficit
    (expressed in thousands of Canadian dollars except per share amounts)
    Unaudited

                                    Three Months Ended   Twelve Months Ended
                                        December 31           December 31
                                     2007       2006       2007       2006
                                  ---------- ---------- ---------- ----------

    Revenue                        $  5,426   $  5,709   $ 24,524   $ 21,715
    Cost of sales                     3,631      4,144     15,942     14,624
                                  ---------- ---------- ---------- ----------
    Gross profit                      1,795      1,565      8,582      7,091
                                  ---------- ---------- ---------- ----------

    Expenses
      Selling, general and
       administrative                 1,757      1,933      8,298      9,130
      Stock-based compensation          151        163        624        759
      Development                       755      1,473      2,625      5,517
      Amortization                      182        251        871        872
      Foreign exchange loss/(gain)      138        (50)     1,711         69
                                  ---------- ---------- ---------- ----------
                                      2,983      3,770     14,129     16,347
                                  ---------- ---------- ---------- ----------
    Operating loss                   (1,188)    (2,205)    (5,547)    (9,256)

      Other income                        -         78          -         78
      Loss on disposal of assets          -        (34)         -        (34)
      Gain on sale of long-term
       investments                      263          -      1,664          -
      Interest income, net               90         87        365        253
                                  ---------- ---------- ---------- ----------
    Net loss and comprehensive
     loss for the period               (835)    (2,074)    (3,518)    (8,959)

      Deficit, beginning of period  (34,358)   (29,601)   (31,675)   (22,716)
                                  ---------- ---------- ---------- ----------

    Deficit, end of period         $(35,193)  $(31,675)  $(35,193)  $(31,675)
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------

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

    Basic and diluted weighted
     average number of common
     shares ('000s)                 145,703    145,533    145,657    124,859



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

                                    Three Months Ended   Twelve Months Ended
                                        December 31           December 31
                                     2007       2006       2007       2006
                                  ---------- ---------- ---------- ----------
    Cash provided by/(used in):
    Operating Activities
      Net loss for the period      $   (835)  $ (2,074)  $ (3,518)  $ (8,959)
      Items not involving cash
       and cash equivalents             333        448      1,495      1,665
      Gain on sale of long-term
       investments                     (263)         -     (1,664)         -
      Foreign exchange loss/(gain)      138        (50)     1,711         69
                                  ---------- ---------- ---------- ----------
                                       (627)    (1,676)    (1,976)    (7,225)

      Net change in non-cash
       working capital items            431        (53)       995       (207)
                                  ---------- ---------- ---------- ----------
                                       (196)    (1,729)      (981)    (7,432)
                                  ---------- ---------- ---------- ----------
    Investing Activities
      Additions to property
       and equipment                    (45)        (8)      (316)      (282)
      Acquisitions, net of
       cash acquired                      -          -          -     (2,667)
      Proceeds on sale of
       long-term investments            374      2,063      2,384      2,063
                                  ---------- ---------- ---------- ----------
                                        329      2,055      2,068       (886)
                                  ---------- ---------- ---------- ----------
    Financing Activities
      Public offering of common
       shares, net of associated
       expenses                           -        (17)         -     11,506
      Issuance of common shares
       upon exercise of stock
       options                            -          -         22        109
                                  ---------- ---------- ---------- ----------
                                          -        (17)        22     11,615
                                  ---------- ---------- ---------- ----------

    Exchange rate impact on cash
     and cash equivalents              (124)       127     (1,651)        21
                                  ---------- ---------- ---------- ----------

    Increase/(decrease) in cash
     and cash equivalents                 9        436       (542)     3,318
      Cash and cash equivalents,
       beginning of period            8,846      8,961      9,397      6,079
                                  ---------- ---------- ---------- ----------

    Cash and cash equivalents,
     end of period                 $  8,855   $  9,397   $  8,855   $  9,397
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------

    Cash and cash equivalents
     consist of:
      Cash                         $  1,826   $  1,277   $  1,826   $  1,277
      Short-term commercial paper     7,029      8,120      7,029      8,120
                                  ---------- ---------- ---------- ----------

                                   $  8,855   $  9,397   $  8,855   $  9,397
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------
    





For further information:

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

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