Sirit Reports Third Quarter 2009 Financial Results

Revenue Growth and Improved Margins Compared to Prior Year

TORONTO, Nov. 10 /CNW/ - Sirit Inc. ("Sirit") (TSX: SI), a leading provider of radio frequency identification ("RFID") technology, reports its financial results for the third quarter ended September 30, 2009. All amounts are stated in Canadian Dollars unless otherwise noted.

Q3 2009 Financial Results

Bolstered by increasing sales in Latin America during the third quarter of 2009, Sirit continues to withstand the current weak economic environment achieving revenue growth for the third consecutive quarter in comparison to prior year quarterly results. For the third quarter of 2009, the Company is reporting revenue of $4.4 million (US$4.0 million) representing a 16% quarter over quarter improvement when compared to the $3.8 million (US$3.7 million) reported for third quarter of 2008.

For the first three quarters of 2009, total revenue has reached $15.2 million compared to $12.9 million in the first three quarters of 2008, an improvement of almost 18%. The largest component of the 2009 revenue growth has been from toll related applications across North and South America in accordance with Sirit's strategy to focus on the AVI market. The Company now has its passive toll technology installed in five countries across Latin America, adding Argentina and Colombia during the third quarter. The Company is focusing on adding to this growing list over the next several months.

Ongoing efforts to manage cash spend at Sirit have yielded strong results during the third quarter of 2009. In US Dollars, the Company achieved a cash neutral position beginning and ending the quarter with a cash balance of US$2.5 million. In Canadian Dollars, the reported cash balance of $2.7 million represents a small decline of $0.2 million for the quarter, due solely to a change in the exchange rates during the quarter. This does not impact daily operations as Sirit completes nearly all its business in US Dollars. As the Company has controlled its cash spend during these tough economic times, we expect continued progress as the economy starts to improve and revenue levels increase.

AVI applications contributed $3.2 million or 73% of the reported $4.4 million revenue for the third quarter of 2009. This reflects a $0.5 million or 19% increase compared to AVI related revenue in Q3 2008 of $2.7 million. During the first three quarters of 2009, AVI applications generated revenue of $11.0 million compared to $9.3 million in the first three quarters of 2008.

RFS applications contributed the remaining $1.2 million or 27% of the total third quarter 2009 revenue. This is comparable to the $1.1 million reported in Q3 2008 when RFS related revenue represented 29% of the total quarterly revenue. Year-to-date 2009 total RFS related revenue has reached $4.2 million compared to $3.6 million in the first nine months of 2008.

"Sirit has managed the business effectively, achieving a US Dollar cash neutral quarter during some of the toughest economic conditions in recent history. Our efforts to match current revenue and expense levels have been successful in generating this positive result for the Company. We are looking towards Q4 2009 to be the strongest of the year as we continue to strengthen our overall financial condition," commented Anastasia Chodarcewicz, Chief Financial Officer, Sirit.

Sirit reports an improved gross profit for the third quarter of 2009 of 39.2% up from 33.1% reported in the third quarter of 2008. For the first three quarters of 2009, gross profit is reported at 35.7% compared to 30.0% in the same nine month period in 2008. The improvement in margin experienced in 2009, particularly in the third quarter, has resulted from efforts to reduce manufacturing costs of key products as well as higher margin sales.

Cash operating expenses, consisting of selling, general and administrative as well as development costs are $1.9 million down from $2.5 million in Q3 2008 and $2.1 million in Q2 2009. The lower levels of cash operating expenses during 2009 result from temporary salary cutbacks by staff at all levels as well as a company-wide commitment to controlling discretionary spending. The remaining expenses including stock compensation, amortization and foreign exchange, all non-cash expenses, were $0.8 million during the third quarter of 2009 compared to $0.6 million in the third quarter of 2008. The Company will closely manage operating expense levels with the intention of achieving recurring operating profits.

For the third quarter of 2009, net loss is $1.0 million compared to $2.0 million reported in Q3 2008. For the first three quarters of 2009 net loss is reported at $2.9 million, a significant improvement from the $5.5 million reported in the first nine months of 2008.

    
    Q3 2009 Corporate Highlights

    The following highlights some of Sirit's successes during the third
quarter of 2009:

    -   Sirit announced the first installation of its electronic toll
        collection ("ETC") system in Cartagena, Colombia with its partner
        Simplexity, one the largest system integrators of Toll Solutions in
        Latin America. The system utilizes Sirit's IDentity 5100 ("ID5100")
        readers and ISO 18000 6C passive tags. The ETC system will cover a 17
        mile, 4 lane urban highway with a total of 5 toll plazas connecting
        industrial areas in the south with downtown Cartagena and the Port of
        Manga.

    -   Sirit received approval from Autopistas Urbanas S.A. ("AUSA") to
        install Sirit's ETC system in the city of Buenos Aires, Argentina.
        The system will utilize 90 ID5100 readers which will support the AUSA
        legacy tags.

    -   Sirit's long-standing customer, the Bay Area Toll Authority ("BATA"),
        placed a renewal toll transponder order valued at US$6.6 million over
        the next fifteen months. The order includes two options to purchase
        up to US$1.7 million in additional toll transponders. Under this
        order, Sirit will deliver its traditional sealed Title-21 based toll
        transponders including packaged tags available at retail locations.
        BATA began taking transponders under this order in late September
        2009.

    -   Sirit introduced the latest addition to its 'IDentity' series of high
        performance, fixed position, UHF RFID readers, the IDentity 5200
        ("ID5200"). The ID5200 is a ruggedized, multi-protocol RFID reader,
        providing increased flexibility in configuration options with similar
        performance to Sirit's leading ID5100 reader.

    -   Sirit was honoured with the 2009 North American Award for Competitive
        Strategy Leadership by Frost & Sullivan. Sirit's superior
        performance, innovation, technological advancement and sound business
        strategies have enabled the Company to evolve into the perfect choice
        for automotive vehicle identification application solutions,
        including vehicle asset tracking, congestion pricing and electronic
        vehicle registration.
    

"We have been executing on our strategy of directing our sales and development efforts on AVI and AVI related market opportunities globally. We have demonstrated success with this strategy through the deployment in five countries across South America of Sirit's passive RFID technology. During the third quarter alone, we announced Argentina and Colombia utilizing Sirit's ID5100 and passive tag technology," noted Norbert Dawalibi, President and CEO, Sirit. "With the economy showing signs of recovery, Sirit is poised for increasing growth from our traditional customers recovering from the recession as well as much larger opportunities, such as electronic vehicle registration, starting to be deployed around the world" added Mr. Dawalibi.

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 16 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

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
                                                   September 30  December 31
                                                         2009        2008
                                                    ------------ ------------

    Assets
      Current Assets
        Cash and cash equivalents                     $   2,702    $   3,325
        Accounts receivable                               2,744        4,303
        Inventory                                         2,869        3,470
        Prepaids and deposits                               337          287
                                                    ------------ ------------
                                                          8,652       11,385

      Property and equipment                              1,959        2,599
      Intangible assets                                   6,223        7,514
      Goodwill                                            3,905        3,905
                                                    ------------ ------------

                                                     $   20,739   $   25,403
                                                    ------------ ------------
                                                    ------------ ------------
    Liabilities
      Current Liabilities
        Bank indebtedness                            $    1,360   $    1,321
        Accounts payable and accrued liabilities          3,247        4,716
        Deferred revenue                                    226          339
        Warranty obligations                                113          108
        Capital lease obligations                           404          454
        Related party debt                                  965            -
                                                    ------------ ------------
                                                          6,315        6,938

      Long-term deferred revenue                            500          442
      Long-term warranty obligations                        158          150
      Long-term capital lease obligations                   479          934
      Related party debt                                      -        1,100
                                                    ------------ ------------
                                                          7,452        9,564
                                                    ------------ ------------

    Shareholders' Equity
      Share capital                                      51,252       51,252
      Contributed surplus                                 3,436        3,109
      Deficit                                           (41,401)     (38,522)
                                                    ------------ ------------
                                                         13,287       15,839
                                                    ------------ ------------

                                                     $   20,739   $   25,403
                                                    ------------ ------------
                                                    ------------ ------------



    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      Nine Months Ended
                                    September 30            September 30
                                  2009        2008        2009        2008
                              ----------- ----------- ----------- -----------

    Revenue                    $   4,447   $   3,816   $  15,211   $  12,873
    Cost of sales                  2,703       2,554       9,782       8,631
                              ----------- ----------- ----------- -----------
    Gross profit                   1,744       1,262       5,429       4,242
                              ----------- ----------- ----------- -----------

    Expenses
      Selling, general and
       administrative              1,517       1,744       4,937       5,818
      Stock-based compensation       106          90         327         319
      Development                    411         797       1,444       2,474
      Amortization                   524         551       1,601       1,264
      Foreign exchange
       loss/(gain)                   128           4        (184)       (162)
                              ----------- ----------- ----------- -----------
                                   2,686       3,186       8,125       9,713
                              ----------- ----------- ----------- -----------
    Operating loss                  (942)     (1,924)     (2,696)     (5,471)

       Interest (expense)/income,
        net                          (62)        (36)       (183)         19
                              ----------- ----------- ----------- -----------
    Net loss and comprehensive
     loss for the period       $  (1,004)  $  (1,960)  $  (2,879)  $  (5,452)

       Deficit, beginning of
        period                   (40,397)    (38,685)    (38,522)    (35,193)
                              ----------- ----------- ----------- -----------

    Deficit, end of period     $ (41,401)  $ (40,645)  $ (41,401)  $ (40,645)
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------



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

                                  Three Months Ended      Nine Months Ended
                                     September 30            September 30
                                   2009        2008        2009        2008
                              ----------- ----------- ----------- -----------
    Cash provided by/(used in):
    Operating Activities
      Net loss for the period  $  (1,004)  $  (1,960)  $  (2,879)  $  (5,452)
      Items not involving cash
       and cash equivalents          767         810       2,337       1,839
      Foreign exchange
       (gain)/loss                   128           4        (184)       (162)
                              ----------- ----------- ----------- -----------
                                    (109)     (1,146)       (726)     (3,775)

      Net change in non-cash
       working capital items         339          58         453      (2,850)
                              ----------- ----------- ----------- -----------
                                     230      (1,088)       (273)     (6,625)
                              ----------- ----------- ----------- -----------
    Investing Activities
      Additions to property
       and equipment                 (26)        (30)        (64)       (192)
      Acquisition of RSI ID
       Technologies, Inc., net         -           -           -        (205)
                              ----------- ----------- ----------- -----------
                                     (26)        (30)        (64)       (397)
                              ----------- ----------- ----------- -----------
    Financing Activities
      (Decrease)/increase in
       bank indebtedness            (107)     (1,077)         39         364
      Issuance of common shares
       upon exercise of stock
       options                         -           -           -          15
      Issuance of shares in
       private placement, net
       of costs                        -         779           -         779
      (Decrease)/increase in
       related party debt            (76)        431        (135)        504
      Decrease in capital
       lease obligations            (174)        (64)       (505)        (53)
                              ----------- ----------- ----------- -----------
                                    (357)         69        (601)      1,609
                              ----------- ----------- ----------- -----------

    Exchange rate impact on
     cash and cash equivalents       (90)       (288)        315         (44)
                              ----------- ----------- ----------- -----------

    Decrease in cash and cash
     equivalents                    (243)     (1,337)       (623)     (5,457)
      Cash and cash equivalents,
       beginning of period         2,945       4,735       3,325       8,855
                              ----------- ----------- ----------- -----------

    Cash and cash equivalents,
     end of period             $   2,702   $   3,398   $   2,702   $   3,398
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    Cash and cash equivalents
     consist of:
      Cash                     $   2,038   $     491   $   2,038   $     491
      Short-term commercial
       paper                         664       2,907         664       2,907
                              ----------- ----------- ----------- -----------

                               $   2,702   $   3,398   $   2,702   $   3,398
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    

SOURCE SIRIT INC.

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

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