Torq Resources Inc. press release
Sirit Announces Second Quarter 2005 Financial Results
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Record volumes of EPC UHF handheld modules shipped during first half
TORONTO, Aug. 11 /CNW/ - Sirit Inc. (TSX: SI), a leading provider of radio frequency identification (RFID) technology, today reported its financial results for the second quarter ended June 30, 2005. All amounts are stated in Canadian Dollars unless otherwise noted.
Q2 2005 Financial Highlights
Total revenue of $4.6 million (net of one-time adjustment of $0.4 million) in Q2 2005 increased from $4.4 million in Q1 2005 For the second quarter, sales of modules supporting RF Solutions (RFS), previously referred to as Supply Chain Management group (SCM), applications contributed $1.3 million or 28% of revenue, the highest quarterly total in Company history RFS revenue included a single order of over 1,000 'INfinity 200' modules for deployment into a large US retailer for an item level inventory management application Sales of products for Automatic Vehicle Identification applications (AVI) contributed $3.3 million or 72% of quarterly revenue; delays in integration projects shift revenue earning potential into 2006 Net loss for Q2 2005 was $2.6 million including one-time adjustments of $1.2 million: this is compared to a net loss of $1.0 million in the first quarter of 2005
Three and Six Months Ended June 30, 2005
Revenue for the six months ended June 30, 2005 totaled $9.1 million, a 13.3% or $1.4 million decrease from $10.5 million in the first half of 2004. The decline is due to a negative impact from foreign exchange fluctuations of $0.7 million, a decline in AVI revenue (before foreign exchange impact) by $1.5 million offset by an increase in RFS revenue (before foreign exchange impact) of $0.8 million. Revenue from sales of our RFS related products was $1.3 million during the quarter, the Company's highest quarterly RFS revenue to date. Year-to-date, RFS revenue totaled $2.4 million. The Company supports the view that the overall RFID market in the supply chain remains in the very early stages of implementation. It is, therefore, impossible to reasonably estimate future deployment wins and associated revenue potential. Revenue from sales of our AVI related products was $3.3 million for the second quarter, including a one-time adjustment of $0.4 million to cover a potential liability related to old orders, and $6.7 million year-to-date. Sirit continues to supply tags and readers to all of its AVI customers and those customers who built inventory levels in 2004 have not required the same volumes in the current year. The Company continues to see a solid pipeline for integration opportunities, but delays in this pipeline have reduced the earnings potential for the current year. As a result, for the remainder of the year, revenue from AVI applications is expected to be below prior year level. Gross margin for the second quarter of 2005 was 32.8%. This includes the $0.4 million one-time adjustment to cover a potential liability regarding old orders. Without this adjustment, the margin for the second quarter would have been 37.8%, in-line with margins for the first quarter of 2005. Year-to-date gross margin would have been 37.6%. Total operating expenses during the second quarter were $4.2 million compared to $2.7 million in the first quarter. The increase is primarily attributable to $0.8 million of non-recurring salary costs, as well as increased development, sales and marketing costs. The resultant net loss was $2.6 million in the second quarter compared to $1.0 million in the first quarter. The Company utilized $1.5 million to fund ongoing operations and development efforts ending the quarter with $7.9 million in cash compared to $9.4 million at the beginning of the quarter. The working capital balance at June 30, 2005 remains solid at $8.9 million with the change from March 31, 2005 primarily attributable to the use of cash during the quarter. The Company remains financially secure and has sufficient resources to fund operations. "Sales of Sirit's embedded 'INfinity' series of RFID modules demonstrated strong growth in the quarter led by the supply chain win in which Sirit's technology outperformed the incumbant's offering," noted Anastasia Chodarcewicz, Chief Financial Officer, Sirit Inc. "Our overall financial position remains stable as we experience delays in revenue generating opportunities with some of our AVI related products and services. We are confident these delays are temporary and will not have a long-term impact on the future of our AVI applications." "We are excited by the Company's largest shipment to date of its EPC(TM)- compliant UHF modules supporting a retail supply chain application. Sirit has once again demonstrated its ability to take a product from concept stage to successful implementation," said Norbert Dawalibi, President and CEO, Sirit Inc. "Sirit continues to make significant strides in the development of its next generation of products including UHF modules which will meet/read the EPC Gen2 standard. We remain encouraged by the overall potential in our AVI and RFS applications as we continue to participate in new proposals, evaluations, tests and pilots."
Conference Call Sirit will host a conference call to discuss the quarterly results on Thursday, August 11, 2005 at 10:00 am EDT. The conference call will be accessible at www.sirit.com.
About Sirit Inc. Founded in 1993, Sirit Inc. (TSX: SI) is a leading provider of Radio Frequency Identification (RFID) solutions to customers worldwide. The Company designs, manufactures, integrates and sells RFID solutions with an emphasis in several vertical markets including Supply Chain Management, Product Authentication, Asset Tracking, Security and Access Control and Automatic Vehicle Identification. Building upon years of success deploying traditional RFID products, Sirit continues to capitalize on the growing demand for next generation RFID solutions. For more information on Sirit visit www.sirit.com or call 1-800-498-8760.
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 Initial Annual Information Form dated March 22, 2005 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.
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Sirit Inc. Interim Consolidated Balance Sheets (expressed in thousands of Canadian dollars) Unaudited
As at As at June 30 December 31 2005 2004 Assets Current Assets Cash and cash equivalents $ 7,924 $ 10,021 Accounts receivable 2,974 3,319 Inventory 1,551 1,296 Prepaids and deposits 436 716 12,885 15,352
Long-term investments 5,191 5,191 Property, plant and equipment, net 880 896 Intangible asset, net 472 573 Deferred development costs, net 91 123 Goodwill 2,829 2,829
$ 22,348 $ 24,964 Liabilities Current Liabilities Accounts payable and accrued liabilities $ 2,948 $ 2,596 Deferred revenue 815 913 Warranty obligations 236 310 3,999 3,819
Shareholders' equity Share capital 35,107 34,763 Contributed surplus 920 400 Deficit (17,678) (14,018) 18,349 21,145
$ 22,348 $ 24,964
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 2005 2004 2005 2004
Revenue $ 4,632 $ 5,525 $ 9,058 $ 10,462 Cost of Sales 3,113 3,249 5,879 6,142 Gross profit 1,519 2,276 3,179 4,320
Expenses Selling, general and administrative 3,134 1,564 5,117 3,247 Development 937 598 1,582 799 Amortization 152 128 300 259 Foreign exchange (46) (80) (84) (86) 4,177 2,210 6,915 4,219 Operating income/(loss) (2,658) 66 (3,736) 101
Gain on sale of long-term investment - 1,789 - 2,019 Other income - - - 294 Interest income, net 39 34 76 65 Net income/(loss) for the period $ (2,619) $ 1,889 $ (3,660) $ 2,479
Deficit, beginning of period (15,059) (14,352) (14,018) (14,942)
Deficit, end of period $(17,678) $(12,463) $(17,678) $(12,463) Basic and diluted income/ (loss) per share $ (0.03) $ 0.02 $ (0.04) $ 0.03
Sirit Inc. Interim Consolidated Statements of Cash Flows (expressed in thousands of Canadian dollars except per share amounts) Unaudited
Three Months Ended Six Months Ended June 30 June 30 2005 2004 2005 2004
Cash provided by/(used in): Operating Activities Income/(loss) from continuing operations $ (2,619) $ 1,889 $ (3,660) $ 2,479 Items not involving cash and cash equivalents 576 (1,592) 883 (1,647) (2,043) 297 (2,777) 832 Net change in non-cash working capital items 446 (178) 550 3 (1,597) 119 (2,227) 835 Investing Activities Additions to property, plant and equipment (100) (151) (165) (174) Proceeds on sale of long-term investment - 2,701 - 3,036 Investment in Horizon Wimba, Inc. - (36) - (36) (100) 2,514 (165) 2,826 Financing Activities Issuance of common shares, net of associated expenses 188 3 281 5,015 188 3 281 5,015
Exchange rate impact on cash and cash equivalents 14 10 14 3
Increase/(decrease) in cash and cash equivalents (1,495) 2,646 (2,097) 8,679 Cash and cash equivalents, beginning of period 9,419 8,637 10,021 2,604
Cash and cash equivalents, end of period $ 7,924 $ 11,283 $ 7,924 $ 11,283
Cash and cash equivalents consist of: Cash and deposit accounts with banks $ 1,238 $ 11,283 $ 1,238 $ 11,283 Short-term commercial paper 6,686 - 6,686 - $ 7,924 $ 11,283 $ 7,924 $ 11,283
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