Torq Resources Inc. press release
Sirit Reports Financial Results for the Second Quarter Ended June 30, 2006
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Year-to-Date Revenue Increases 21 Percent
TORONTO, Aug. 10 /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, 2006. All amounts are stated in Canadian Dollars unless otherwise noted. Revenue for the second quarter of fiscal 2006 was $5.5 million, up 3% from $5.4 million in the first quarter of 2006 and up 20% from $4.6 million in the same quarter of last year. The revenue breakdown for the quarter was approximately 79% or $4.4 million for Automatic Vehicle Identification (AVI) related products and 21% or $1.1 million for Radio Frequency Solutions (RFS) related revenue. "We are very pleased with the progress achieved by Sirit over the past quarter and we are encouraged by our prospects for the second half of the fiscal year," said Norbert Dawalibi, President and CEO, Sirit Inc. "We are entering the second half of the year with solid market positioning and an impressive line-up of new products." Gross margin for the second quarter of 2006 was 33.4% a decline from gross margin of 36.9% from the first quarter attributable to customer and product mix changes plus increased overhead costs to support Sirit's larger product portfolio. Total operating expenses during the second quarter were $5.2 million compared to $3.0 million in the first quarter. The increase is primarily attributable to higher staff levels, development, sales and marketing expenditures plus non-recurring severance costs associated with the integration of two acquisitions early in the quarter. The resultant net loss was $3.3 million in the second quarter compared to $1.0 million in the first quarter. Revenue for the six months ended June 30, 2006 totaled $10.9 million, a 21% or $1.8 million increase from $9.1 million in the first half of 2005. Year-to-date, RFS revenue totaled $2.1 million compared to $2.4 million in the first half of 2005. In the previous year, Sirit reported a non-recurring sale of over 1,000 UHF reader modules which represented approximately $0.8 million in revenue. Revenue year-to-date from the AVI vertical was $8.8 million compared to $6.7 million for the first six months in 2005. The increase is due to a 39% growth in sales of tolling solutions compared to the first six months of 2005 and reflects return-to-normal sales volumes within this RFID vertical. The Company raised net cash of $11.6 million in a successful fund raising effort and utilized $2.2 million to fund ongoing operations and development efforts and $3.9 million in non-recurring acquisition and financing related costs. Sirit ended the quarter with $11.7 million in cash compared to $5.2 million at the beginning of the quarter and had a working capital balance of $12.3 million (March 31, 2006 - $5.8 million). The Company remains financially secure and has sufficient resources to fund operations.
Q2 Corporate Highlights
Sirit continues to make strategic corporate advancements to address its key target markets:
<< Sirit completed two acquisitions, TradeWind Technologies LLC and SAMSys Technologies Inc., for aggregate consideration of $1.9 million and $1.8 million respectively.
Sirit concluded a public offering for total net proceeds of $11.6 million including the exercise of the over-allotment option.
Towards the end of the quarter, Sirit began the rationalization of its combined organizational structure to reduce its operational expenses on a go forward basis.
Subsequent to quarter end, Sirit announced that it expects to receive cash proceeds within the next 30 days from the sale of one of its long-term investments, Medsite, Inc. of approximately US$1.9 million.
Q2 Announcements
Sirit also made the following product and customer announcements during the quarter:
Leveraging the technology developments of its recent acquisition, Sirit announced the introduction of the INfinity 510, the industry's first worldwide Gen 2 RFID reader. The INfinity 510 was built for use in a variety of applications including supply chain deployments.
Sirit also launched the IDentity MaX - a UHF RFID reader for use in parking and vehicle access control deployments. The new integrated reader and antenna design delivers solid Automatic Vehicle Identification performance in single-lane read applications.
Sirit received a one year toll transponder order for $5.9 million from Bay Area Toll Authority in California. >>
"The integration of our two acquisitions is well underway and we are seeing the positive impact of additional talent and products to the Sirit portfolio," said Anastasia Chodarcewicz, Chief Financial Officer, Sirit Inc. "Sirit is now strongly positioned to take advantage of the opportunities ahead. Customers, partners and competitors alike have seen that Sirit is a true leader in the RFID market - in terms of vision and our ability to turn that vision into action."
Conference Call Sirit will host a conference call to discuss the quarterly results on Thursday, August 10, 2006 at 10:00 am EST. 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 on Sirit, 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 16, 2006 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 June 30 December 31 2006 2005 Assets Current Assets Cash and cash equivalents $ 11,725 $ 6,079 Accounts receivable 3,395 2,941 Inventory 3,165 2,020 Prepaids and deposits 345 108 18,630 11,148
Long-term investments 3,182 3,182 Property and equipment 1,206 838 Intangible asset 2,016 370 Deferred development costs 27 59 Goodwill 3,905 2,829
$ 28,966 $ 18,426
Liabilities Current Liabilities Accounts payable and accrued liabilities $ 5,175 $ 3,526 Deferred revenue 743 815 Warranty obligations 407 290 6,325 4,631
Shareholders' Equity Share capital 47,884 35,195 Contributed surplus 1,744 1,316 Deficit (26,987) (22,716) 22,641 13,795
$ 28,966 $ 18,426
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 2006 2005 2006 2005 Revenue $ 5,536 $ 4,632 $ 10,920 $ 9,058 Cost of Sales 3,685 3,113 7,081 5,879 Gross profit 1,851 1,519 3,839 3,179
Expenses Selling, general and administrative 2,972 2,710 4,810 4,534 Stock-based compensation 226 424 428 583 Development 1,699 937 2,493 1,582 Amortization 219 152 359 300 Foreign exchange loss/(gain) 62 (46) 105 (84) 5,178 4,177 8,195 6,915 Operating (loss) (3,327) (2,658) (4,356) (3,736)
Interest income, net 49 39 85 76
Net (loss) for the period $ (3,278) $ (2,619) $ (4,271) $ (3,660)
Deficit, beginning of period (23,709) (15,059) (22,716) (14,018)
Deficit, end of period $ (26,987) $ (17,678) $ (26,987) $ (17,678)
Basic and diluted (loss) per share $ (0.03) $ (0.03) $ (0.04) $ (0.04)
Basic and diluted weighted average number of common shares ('000s) 114,305 92,514 103,847 92,353
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 2006 2005 2006 2005 Cash provided by/(used in): Operating Activities (Loss) from operations $ (3,278) $ (2,619) $ (4,271) $ (3,660) Items not involving cash and cash equivalents 445 576 787 883 (2,833) (2,043) (3,484) (2,777)
Net change in non-cash working capital items 439 446 282 550 (2,394) (1,597) (3,202) (2,227) Investing Activities Additions to property and equipment (74) (100) (154) (165) Acquisitions, net of cash acquired (2,667) - (2,667) - (2,741) (100) (2,821) (165) Financing Activities Public offering of common shares, net of associated expenses 11,561 - 11,561 - Issuance of common shares upon exercise of stock options 108 188 108 281 11,669 188 11,669 281
Exchange rate impact on cash and cash equivalents - 14 - 14
Increase/(Decrease) in cash and cash equivalents 6,534 (1,495) 5,646 (2,097) Cash and cash equivalents, beginning of period 5,191 9,419 6,079 10,021
Cash and cash equivalents, end of period $ 11,725 $ 7,924 $ 11,725 $ 7,924
Cash and cash equivalents consist of: Cash and deposit accounts with banks $ 10,204 $ 1,238 $ 10,204 $ 1,238 Short-term commercial paper 1,521 6,686 1,521 6,686
$ 11,725 $ 7,924 $ 11,725 $ 7,924 >>