Sirit Achieves Third Consecutive Record Revenue Quarter



    Cash generated from operations on $7 million of revenue

    TORONTO, Aug. 9 /CNW/ - Sirit Inc. ("Sirit") (TSX: SI), a leading
provider of radio frequency identification ("RFID") technology, today reported
its financial results for the second quarter ended June 30, 2007. All amounts
are stated in Canadian Dollars, unless otherwise noted.

    
    Financial Achievements
    ----------------------

    -   Reaching a new milestone of $7.0 million in sales, Sirit reports its
        third consecutive quarter of record-setting revenue levels.

    -   Sirit achieved a 26% growth rate compared to the second quarter of
        2006 and a further 7% growth over the first quarter of 2007.

    -   Excluding the impact of foreign exchange, total operating expenses
        were $3.1 million down from the $3.2 million reported in Q1 2007.
        During the second quarter of 2006, Sirit completed two acquisitions
        and with the inclusion of these newly acquired entities, total
        operating expenses were $5.1 million.

    -   Sirit reported $9.7 million in cash at June 30, 2007 compared to
        $9.9 million at March 31, 2007. As cash is maintained in US funds to
        support primarily US based operations, the US dollar cash balance was
        US$9.1 million at June 30, 2007 compared to US$8.5 million at March
        31, 2007.
    

    "The second quarter of 2007 represents the strongest quarter in Sirit's
history. Strong revenue growth, cash generation from operations and
effectively managed operating expenses has placed Sirit in its strongest
financial position in the past 5 years," commented Anastasia Chodarcewicz,
Chief Financial Officer, Sirit Inc. "In addition, excluding the unrealized
foreign exchange losses, Sirit generated approximately $0.6 million in cash
from operations, a full two quarters ahead of the Company's targeted year end
cash flow neutral position."
    Revenue from automatic vehicle identification ("AVI") applications of
$5.2 million represented a steady level compared to $5.2 million in Q1 2007
and an 18% growth rate over $4.4 million reported in Q2 2006. Radio frequency
solutions ("RFS") applications contributed $1.8 million or a 56% growth rate
compared to the $1.1 million reported in Q2 2006 and a 37% growth rate over
Q1 2007. For Q2 2007, AVI sales remained strong at the same levels reported in
Q1 2007 while the growth in RFS reflects signing new customers as well as
experience gained from testing of RFID systems evolving into production pilots
and small roll-outs.
    Gross profit of 35.9% during the second quarter is up from the 33.4%
reported in Q2 2006 and 34.8% in Q1 2007. The improvement in quarterly margin
reflects the mix of sales to primarily AVI customers.
    The foreign exchange loss of $0.9 million reflects the impact of
converting net assets held primarily in US dollars into Canadian dollars for
financial reporting purposes only. As day-to-day operations are carried out
predominantly in US dollars, the foreign exchange impact is negligible on the
conduct of ongoing business.
    Excluding $0.9 million in foreign exchange, operating loss for the
quarter was $0.6 million compared to a loss of $3.3 million in Q2 2006. The
Company reported a net loss of $1.4 million in Q2 2007 compared to a net loss
of $3.3 million in Q2 2006.

    
    Quarterly Highlights
    --------------------

    Sirit continued to advance its business during Q2 2007:

      -  Sirit announced the continuation of its partnership with the Bay
         Area Toll Authority in California with a one-year, $US4.8 million
         contract to supply its Title 21-based RFID toll transponders.

      -  Sirit secured a Near Field Communications ("NFC") contract with
         BenQ Corporation, one of the world's largest consumer electronics
         original equipment manufacturers.

      -  Sirit was awarded a contract worth approximately US$10.6 million
         over three years from the Transportation Corridor Agencies in
         Southern California to supply its Title 21-based RFID toll
         transponders.

      -  The Company announced a partnership with Metro Group AG to provide
         Sirit's INfinity 510 UHF reader for Metro's 2007 rollout program at
         99 Real hypermarket locations throughout Germany.

      -  Sirit continues to expand its worldwide distribution network for its
         INfinity product line with the addition of Frequensys Software, a
         Malaysian-based system integrator. Frequensys joins a growing list
         of Asian-based resellers including ECO, Inc. (Korea); Tunity
         Technologies Pte Ltd. (Singapore); Smartsoft Technology Ltd. Part.
         (Thailand), Cimtrac System (Taiwan) and Systron (China) who sell and
         support Sirit's Gen 2, regionally certified INfinity 510 UHF reader
         within the Asia-Pacific market.
    

    "We have achieved some very exciting new highs over the past few months
as reflected in our revenue growth, cash generation and partnership efforts.
While we anticipate that typical seasonality will result in lower third
quarter revenue, we have clearly demonstrated our ability to manage operations
at sustainable levels two quarters ahead of schedule," stated Norbert
Dawalibi, President and CEO, Sirit Inc. "With this important milestone met, we
will now focus on driving the business to the next stage in terms of growth
and profitability."

    Conference Call and Webcast

    Sirit will host a conference call to discuss the quarterly results on
Thursday August 9, 2007 at 10:00 am EDT. The call will be Webcast on the
Internet and is accessible by visiting 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 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)
    Unaudited

                                                           As at       As at
                                                            June    December
                                                         30 2007     31 2006
                                                       ----------  ----------
    Assets
      Current Assets
        Cash and cash equivalents                      $   9,689   $   9,397
        Accounts receivable                                3,977       3,957
        Inventory                                          2,841       2,997
        Prepaids and deposits                                415         348
                                                       ----------  ----------
                                                          16,922      16,699

      Long-term investments                                  110         849
      Property and equipment                               1,132       1,095
      Intangible assets                                    1,452       1,734
      Goodwill                                             3,905       3,905
                                                       ----------  ----------

                                                       $  23,521   $  24,282
                                                       ----------  ----------
                                                       ----------  ----------
    Liabilities
      Current Liabilities
        Accounts payable and accrued liabilities       $   4,740   $   4,954
        Deferred revenue                                     733         800
        Warranty obligations                                 358         298
                                                       ----------  ----------
                                                           5,831       6,052
                                                       ----------  ----------

    Shareholders' Equity
      Share capital                                       47,852      47,830
      Contributed surplus                                  2,442       2,075
      Deficit                                            (32,604)    (31,675)
                                                       ----------  ----------
                                                          17,690      18,230
                                                       ----------  ----------

                                                       $  23,521   $  24,282
                                                       ----------  ----------
                                                       ----------  ----------



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

                                 Three Months Ended       Six Months Ended
                                       June 30                 June 30
                                  2007        2006        2007        2006
                               ----------  ----------  ----------  ----------
    Revenue                    $   6,964   $   5,536   $  13,463   $  10,920
    Cost of sales                  4,465       3,685       8,701       7,081
                               ----------  ----------  ----------  ----------
    Gross profit                   2,499       1,851       4,762       3,839
                               ----------  ----------  ----------  ----------

    Expenses
      Selling, general and
       administrative              2,118       2,972       4,307       4,810
      Stock-based compensation       195         226         367         428
      Development                    568       1,699       1,172       2,493
      Amortization                   232         219         455         359
      Foreign exchange loss          867          62         976         105
                               ----------  ----------  ----------  ----------
                                   3,980       5,178       7,277       8,195
                               ----------  ----------  ----------  ----------
    Operating loss                (1,481)     (3,327)     (2,515)     (4,356)

      Gain on sale of
       long-term investment            -           -       1,401           -
      Interest income, net            89          49         185          85
                               ----------  ----------  ----------  ----------
    Net loss for the period    $  (1,392)  $  (3,278)  $    (929)  $  (4,271)

      Deficit, beginning
       of period                 (31,212)    (23,709)    (31,675)    (22,716)
                               ----------  ----------  ----------  ----------

    Deficit, end of period     $ (32,604)  $ (26,987)  $ (32,604)  $ (26,987)
                               ----------  ----------  ----------  ----------
                               ----------  ----------  ----------  ----------

    Basic and diluted loss
     per share                 $   (0.01)  $   (0.03)  $   (0.01)  $   (0.04)
                               ----------  ----------  ----------  ----------
                               ----------  ----------  ----------  ----------

    Basic and diluted weighted
     average number of common
     shares ('000s)              145,673     114,305     145,611     103,847




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

                                 Three Months Ended       Six Months Ended
                                       June 30                 June 30
                                  2007        2006        2007        2006
                               ----------  ----------  ----------  ----------
    Cash provided by/(used in):
    Operating Activities
      Net loss for the period  $  (1,392)  $  (3,278)  $    (929)  $  (4,271)
      Items not involving cash
       and cash equivalents          427         445        (579)        787
      Exchange rate impact on
       cash and cash
       equivalents                   740           -         740           -
                               ----------  ----------  ----------  ----------
                                    (225)     (2,833)       (768)     (3,484)

      Net change in non-cash
       working capital items         791         439        (152)        282
                               ----------  ----------  ----------  ----------
                                     566      (2,394)       (920)     (3,202)
                               ----------  ----------  ----------  ----------

    Investing Activities
      Additions to property
       and equipment                 (17)        (74)       (210)       (154)
      Acquisitions, net of
       cash acquired                   -      (2,667)          -      (2,667)
      Proceeds on sale of
       long-term investment            -           -       2,140           -
                               ----------  ----------  ----------  ----------
                                     (17)     (2,741)      1,930      (2,821)
                               ----------  ----------  ----------  ----------

    Financing Activities
      Public offering of
       common shares, net of
       associated expenses             -      11,561           -      11,561
      Issuance of common
       shares upon exercise
       of stock options                8         108          22         108
                               ----------  ----------  ----------  ----------
                                       8      11,669          22      11,669
                               ----------  ----------  ----------  ----------

    Exchange rate impact on
     cash and cash equivalents      (740)          -        (740)          -
                               ----------  ----------  ----------  ----------

    (Decrease)/increase in cash
     and cash equivalents           (183)      6,534         292       5,646
      Cash and cash
       equivalents, beginning
       of period                   9,872       5,191       9,397       6,079
                               ----------  ----------  ----------  ----------

    Cash and cash equivalents,
     end of period             $   9,689   $  11,725   $   9,689   $  11,725
                               ----------  ----------  ----------  ----------
                               ----------  ----------  ----------  ----------

    Cash and cash equivalents
     consist of:
      Cash                     $   2,455   $   1,521   $   2,455   $   1,521
      Short-term commercial
       paper                       7,234      10,204       7,234      10,204
                               ----------  ----------  ----------  ----------

                               $   9,689   $  11,725   $   9,689   $  11,725
                               ----------  ----------  ----------  ----------
                               ----------  ----------  ----------  ----------
    





For further information:

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

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SIRIT INC.

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