Torq Resources Inc. press release
Sirit Reports Financial Results for the Third Quarter Ended September 30, 2005
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TORONTO, Nov. 10 /CNW/ - Sirit Inc. (TSX: SI), a leading provider of radio frequency identification (RFID) technology, today reported its financial results for the third quarter ended September 30, 2005. All amounts are stated in Canadian Dollars unless otherwise noted.
Third Quarter 2005 Financial Highlights
Total revenue of $3.1 million in Q3 2005 compared to $5.2 million in Q3 2004. For the third quarter, sales of modules supporting RF Solutions (RFS) applications contributed $0.5 million or 16% of revenue. Fluctuations in quarterly results continue to be reflective of early stage market adoption within supply chain management. Sales of products for Automatic Vehicle Identification applications (AVI) contributed $2.6 million or 84% of quarterly revenue. Company wins $4.0 million toll tag supplier contract in early October with deliveries commencing in the fourth quarter. Net loss for Q3 2005 of $2.8 million, including the write-down of a non-core investment of $0.9 million, compared to a net loss of $2.6 million in Q2 2005. Cash utilization of $0.9 million during third quarter 2005 compared to $1.5 million in the second quarter 2005.
Three and Nine Months Ended September 30, 2005
Revenue for the nine months ended September 30, 2005 totaled $12.2 million, a 21.8% or $3.4 million decrease from $15.6 million in the first nine months of 2004. The year-to-date decline is due to foreign exchange fluctuations of approximately $1.0 million, a decline in AVI revenue resulting from customers building inventory levels in the prior year which did not recur in the current year and the consolidation of three toll agency customers. Revenue from sales of RFS related products was $0.5 million during the quarter compared to $1.0 million in the 2004 third quarter. Sales of RFS products remain unpredictable and are expected to fluctuate on a quarterly basis as customers continue to roll out pilots and tests which vary in timing, size and value. Revenue from sales of AVI related products was $2.6 million for the third quarter and $9.3 million year-to-date. Sirit maintains strong supplier relationships with all of its AVI customers evidenced by the recent $4.0 million win with the Bay Area Transportation Authority ("BATA"). Revenue from all applications is expected to be within guidance provided during the third quarter for the remainder of 2005. Gross margin for the third quarter of 2005 was 33.4% compared to 43.3% in the third quarter of 2004. Gross margin declined both on a quarterly and yearly comparative basis due to the portion of overhead costs which represent a larger percentage of the lower sales base for the periods. On a year-over- year comparison, gross margin in 2005 was 34.7%, a decline of 7.3 basis points from the same period in 2004. Total operating expenses during the third quarter were $2.9 million compared to $4.2 million in the second quarter. The decrease is attributable to management's decision during the third quarter to reduce 2005 year end bonuses whereas the second quarter included a one-time retirement charge of $0.8 million. R&D expenditures remain consistent with the second quarter of 2005. "Sirit is focused on maintaining a strong financial position as evidenced in the reduction in our cash utilization as well as the cost cutting efforts undertaken during the third quarter," commented Anastasia Chodarcewicz, Vice President Finance and CFO. "We are committed to controlling discretionary spending while we continue to invest in marketing and product development efforts to broaden the reach of our offerings." The Company utilized $0.9 million to fund ongoing operations and development efforts ending the quarter with $7.0 million in cash compared to $7.9 million at the beginning of the quarter. The working capital balance at September 30, 2005 remains solid at $11.6 million with the change from June 30, 2005 attributable to the reclassification of investments to short-term and use of cash to fund operations during the quarter. The Company has undertaken activities to divest of its interest in its non-core assets and will utilize any cash generated from the disposition of these investments to support its RFID operations. The Company believes that it has sufficient resources to fund operations through the balance of 2006. "We have taken decisive actions to streamline our teams and to focus on all application areas in which Sirit has had historical successes and demonstrated technical expertise," said Norbert Dawalibi, President and CEO, Sirit Inc. "Combined with the recently announced supplier contract win with our long standing customer, BATA, and as other AVI customers return to normal ordering patterns, we remain confident that our business is solid and will experience growth in 2006."
Conference Call Sirit will host a conference call to discuss the quarterly results on Thursday, November 10, 2005 at 10:00 a.m. EDT. The conference call will be accessible at www.sirit.com.
About Sirit Inc. Sirit Inc. (TSX: SI) is a leading provider of Radio Frequency Identification (RFID) reader technology to OEMs and solution providers 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 12 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, 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 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.
<< Sirit Inc. Interim Consolidated Balance Sheets (expressed in thousands of Canadian dollars) Unaudited
As at As at September 30 December 31 2005 2004 Assets Current Assets Cash and cash equivalents $ 7,014 $ 10,021 Accounts receivable 1,932 3,319 Inventory 1,617 1,296 Investments 4,291 - Prepaids and deposits 244 716 15,098 15,352
Long-term investments - 5,191 Property, plant and equipment, net 856 896 Intangible asset, net 421 573 Deferred development costs, net 75 123 Goodwill 2,829 2,829 $ 19,279 $ 24,964
Liabilities Current Liabilities Accounts payable and accrued liabilities $ 2,454 $ 2,596 Deferred revenue 778 913 Warranty obligations 225 310 3,457 3,819
Shareholders' equity Share capital 35,137 34,763 Contributed surplus 1,122 400 Deficit (20,437) (14,018) 15,822 21,145
$ 19,279 $24,964
Sirit Inc. Interim Consolidated Statements of Operations (expressed in thousands of Canadian dollars except per share amounts) Unaudited
Three Months Ended Nine Months Ended September 30 September 30 2005 2004 2005 2004
Revenue $ 3,107 $ 5,162 $ 12,165 $ 15,623 Cost of Sales 2,070 2,925 7,949 9,067 Gross profit 1,037 2,237 4,216 6,556
Expenses Selling, general and administrative 1,718 1,762 6,835 5,009 Development 899 591 2,481 1,389 Amortization 157 129 457 388 Foreign exchange 149 437 65 351 2,923 2,919 9,838 7,137 Operating (loss) (1,886) (682) (5,622) (581)
Gain on sale of investment - - - 2,019 Write-down of investment (900) - (900) - Other income - - - 294 Interest income, net 27 40 103 105 Net (loss)/income for the period $ (2,759) $ (642) $ (6,419) $ 1,837
Deficit, beginning of period (17,678) (12,463) (14,018) (14,942)
Deficit, end of period $(20,437) $(13,105) $(20,437) $(13,105)
Basic and diluted (loss)/ income per share $ (0.03) $ (0.01) $ (0.07) $ 0.02
Sirit Inc. Interim Consolidated Statements of Cash Flows (expressed in thousands of Canadian dollars except per share amounts) Unaudited
Three Months Ended Nine Months Ended September 30 September 30 2005 2004 2005 2004 Cash provided by/(used in): Operating Activities (Loss)/income from continuing operations $ (2,759) $ (642) $ (6,419) $ 1,837 Items not involving cash and cash equivalents 1,260 201 2,143 (1,446) (1,499) (441) (4,276) 391 Net change in non-cash working capital items 626 (812) 1,176 (810) (873) (1,253) (3,100) (419) Investing Activities Additions to property, plant and equipment (73) (119) (238) (294) Proceeds on sale of investment - - - 3,036 Investment in Horizon Wimba, Inc. - - - (36) (73) (119) (238) 2,706 Financing Activities Issuance of common shares, net of associated expenses 29 357 310 5,373 29 357 310 5,373
Exchange rate impact on cash and cash equivalents 7 - 21 3
(Decrease)/increase in cash and cash equivalents (910) (1,015) (3,007) 7,663 Cash and cash equivalents, beginning of period 7,924 11,282 10,021 2,604
Cash and cash equivalents, end of period $ 7,014 $ 10,267 $ 7,014 $ 10,267
Cash and cash equivalents consist of: Cash and deposit accounts with banks $ 692 $ 2,354 $ 692 $ 2,354 Short-term commercial paper 6,322 7,913 6,322 7,913 $ 7,014 $ 10,267 $ 7,014 $ 10,267 >>