Sirit Reports Solid Financial Results to Start Fiscal 2009



    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:

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

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SIRIT INC.

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