Torq Resources Inc. press release
Sirit Announces Financial Results for the Fourth Quarter and Year Ended December 31, 2005
TSXV - TSX Venture Exchange · Copper · Gold · Molybdenum · Iron · Canada
TORONTO, March 21 /CNW/ - Sirit Inc. (TSX: SI), a leading provider of radio frequency identification ("RFID") technology, today reported its financial results for the fourth quarter and year ended December 31, 2005. All amounts are stated in Canadian Dollars unless otherwise noted.
2005 Financial Highlights
Total revenue for the year was $16.4 million bolstered by Q4 2005 revenue of $4.3 million, up 36.9% from Q3 2005 revenue Radio Frequency Solutions ("RFS") revenue grew by 8.6% in 2005 reaching $3.8 million compared to $3.5 million in 2004 Automatic Vehicle Identification ("AVI") revenue comprised 77.0% of total revenue compared to 83.1% in 2004 Gross margin of 35.0% for 2005 (42.6% in 2004) reflects the impact of fixed overhead costs on a lower revenue base During 2005 the Company invested $3.2 million ($2.2 million in 2004) into primarily RFS development efforts to support its growing product portfolio including the INfinity 210 and INfinity 196 Operating loss for the year was $6.8 million compared to a $1.5 million loss in 2004 reflecting lower gross profit, non-recurring costs of $1.0 million, increased stock compensation costs and development expenditures during 2005 Cash utilized during the year was $3.9 million with a balance of $6.1 million at December 31, 2005
Fourth Quarter Ended December 31, 2005
For the fourth quarter ended December 31, 2005, Sirit reported revenue of $4.3 million, representing a 36.9% increase from Q3 2005. The growth during the last quarter of 2005 when compared to the third quarter represents a return to expected toll tag supply levels. During Q4 2004 the Company won a Transportation Management System project in the state of Florida which was a non-recurring revenue win. By excluding the revenue generated from this win for comparison purposes, 2005 fourth quarter revenue was slightly higher than 2004 fourth quarter revenue. Gross margin for the quarter was 35.8% up from 33.4% in Q3 2005 and down from 44.5% in Q4 2004. Total expenses in the fourth quarter were $2.7 million, down from $2.9 million in Q3 2005 and $3.1 million in Q4 2004. The third quarter results benefited from a reduction of year end bonuses. As a result, on a comparative basis the fourth quarter operating results were approximately $0.3 million lower than the third quarter. The Company recorded a fourth quarter operating loss of $1.2 million compared to an operating loss of $1.0 million in the same period of the previous year. As of December 31, 2005, cash and cash equivalents totaled $6.1 million compared to the cash position of approximately $7.0 million at September 30, 2005 and $10.0 million at December 31, 2004. The Company's working capital position was $6.5 million at December 31, 2005 compared to $11.5 million at December 31, 2004. "We have started to see revenue growth return in the last quarter of 2005 and expect this to continue throughout 2006 as the Company introduces new products and focuses on medium and long-term revenue generating opportunities," said Anastasia Chodarcewicz, Chief Financial Officer and Secretary, Sirit Inc. "We are confident that the non-recurring items which impacted AVI are behind us and we are excited to enter 2006 continuing the growth momentum from the fourth quarter of 2005."
Twelve Months Ended December 31, 2005
Total revenue for the twelve months ended December 31, 2005 totaled $16.4 million, compared to $20.5 million in 2004, a 19.9% decrease. As sales are primarily in US Dollars, the strength of the Canadian Dollar relative to the US Dollar negatively impacted reported revenue by $1.0 million as the average value of the US Dollar declined approximately 7% in relation to the Canadian Dollar in 2005. Revenue from the AVI vertical was $12.6 million in 2005 down from $17.0 million in 2004. The Company has not lost a single toll customer but was subject to several non-recurring items each with a negative impact on top line revenue. These include three toll agencies consolidating to one utilizing excess inventory during 2005, a large promotion for tags in 2004 which shifted sales into 2004 from 2005 and the impact of foreign exchange. RFS revenue increased by 8.6% to $3.8 million in 2005 compared to $3.5 million in 2004. The growth is attributed to increased sales of handheld reader modules, the introduction of the Infinity 210 UHF reader module and pilots associated with new and existing customers. Gross profit for 2005 was 35.0% down from 42.6% in 2004. The decline in gross profit is due to the lower overall revenue base as fixed overhead costs remained constant as well as the mix of AVI customers. Operating expenses of $12.6 million are $2.3 million higher than 2004 operating expenses of $10.3 million. Increased resources directed towards engineering and development efforts, non-recurring items and increased non-cash, stock compensation costs contributed to the higher expenditures during the year. The Company will continue to invest in people and development activities as these are critical to the future growth of the operations. For 2005, the Company reported an operating loss of $6.8 million compared with an operating loss of $1.5 million in 2004. Net loss for the year was $8.7 million or a loss of $0.09 per share. Total shares outstanding at December 31, 2005 are approximately 93.3 million compared to 92.1 million at December 31, 2004. Cash utilized in 2005 was $3.9 million with a cash balance of $6.1 million as at December 31, 2005. This available cash in combination with the anticipated sale of the non-core investments and revenue growth is expected to provide sufficient resources to fund ongoing operations throughout 2006 and into 2007. "We are entering fiscal 2006 with new products and an intense focus on operational and financial performance," said Norbert Dawalibi, President and Chief Executive Officer, Sirit Inc. "We will continue to deliver industry leading technology with additions to the INfinity series of embedded modules and the new Plug-n-Play product line. We are aggressively implementing concrete programs in the areas of delivery performance, product cost improvements and operational efficiencies. Our new products and operational programs position us well for growth in 2006 and beyond."
Subsequent Event Subsequent to year end, on February 27, 2006 the Company announced the acquisition of TradeWind Technologies LLC, a Tennessee based High Frequency ("HF") RFID development Company. TradeWind specializes in the development of HF products and brings to Sirit an immediate complementary suite of HF plug and play readers that will expand the Company's closed loop opportunities.
Conference Call & Webcast Sirit will host a conference call to discuss the quarterly and year end results on Tuesday, March 21, 2006 at 10:00 am EST. The conference call will be Webcast over the Internet and will be accessible at 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 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 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. Consolidated Balance Sheets (expressed in thousands of Canadian dollars)
As at As at December 31 December 31 2005 2004 Assets Current Assets Cash and cash equivalents $ 6,079 $ 10,021 Accounts receivable 2,941 3,319 Inventory 2,020 1,296 Prepaids and deposits 108 716 11,148 15,352
Long-term investments 3,182 5,191 Property and equipment, net 838 896 Intangible asset, net 370 573 Deferred development costs, net 59 123 Goodwill 2,829 2,829
$ 18,426 $ 24,964 Liabilities Current Liabilities Accounts payable and accrued liabilities $ 3,526 $ 2,596 Deferred revenue 815 913 Warranty obligations 290 310 4,631 3,819
Shareholders' Equity Share capital 35,195 34,763 Contributed surplus 1,316 400 Deficit (22,716) (14,018) 13,795 21,145
$ 18,426 $ 24,964
Sirit Inc. Consolidated Statements of Operations (expressed in thousands of Canadian dollars except per share amounts)
Three months ended Twelve months ended December 31 December 31 2005 2004 2005 2004
Revenue $ 4,254 $ 4,877 $ 16,419 $ 20,500 Cost of sales 2,731 2,709 10,680 11,776 Gross Profit 1,523 2,168 5,739 8,724
Expenses Selling, general and administrative 1,865 2,000 8,700 7,009 Development 704 787 3,185 2,176 Amortization 188 146 645 534 Foreign exchange (18) 203 47 554 2,739 3,136 12,577 10,273 Operating (Loss) (1,216) (968) (6,838) (1,549)
Gain on disposal of long-term investment - - - 2,019 Write-down of long-term investments (1,109) - (2,009) - Other income - 18 - 312 Interest income, net 46 37 149 142
Net (Loss)/Income for the period $ (2,279) $ (913) $ (8,698) $ 924
Deficit, beginning of period (20,437) (13,105) (14,018) (14,942)
Deficit, end of period $ (22,716) $ (14,018) $ (22,716) $ (14,018)
Basic and Diluted Net (Loss)/Income for the period $ (0.02) $ (0.01) $ (0.09) $ 0.01
Sirit Inc. Consolidated Statements of Cash Flows (expressed in thousands of Canadian dollars)
Three months ended Twelve months ended December 31 December 31 2005 2004 2005 2004 Cash (used in)/ provided by Operating activities Net (loss)/income for the period $ (2,279) $ (913) $ (8,698) $ 924 Items not involving cash and cash equivalents 1,498 221 3,641 (1,225) (781) (692) (5,057) (301)
Net change in non-cash working capital items (102) 148 1,074 (662) (883) (544) (3,983) (963) Investing activities Investment in Horizon Wimba, Inc. - - - (36) Additions to property and equipment (82) (273) (320) (567) Proceeds on sale of long-term investment - - - 3,036 (82) (273) (320) 2,433 Financing activity Issuance of common shares, net of associated expenses 51 570 361 5,943 51 570 361 5,943
Exchange rate impact on cash and cash equivalents (21) 1 - 4
(Decrease)/increase in cash and cash equivalents (935) (246) (3,942) 7,417 Cash and cash equivalents, beginning of period 7,014 10,267 10,021 2,604
Cash and cash equivalents, end of period $ 6,079 $ 10,021 $ 6,079 $ 10,021
Cash and cash equivalents consist of: Cash and deposit accounts with banks $ 251 $ 3,521 $ 251 $ 3,521 Short-term commercial paper 5,828 6,500 5,828 6,500
$ 6,079 $ 10,021 $ 6,079 $ 10,021
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