Torq Resources Inc. press release
Sirit Announces First Quarter 2005 Financial Results
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SCM revenue remains stable at $1.1 million while Company advances product development efforts
TORONTO, May 10 /CNW/ - Sirit Inc. (TSX: SI), a leading provider of radio frequency identification (RFID) hardware technology, today reported its financial results for the first quarter ended March 31, 2005. All amounts are stated in Canadian Dollars unless otherwise noted.
Q1 2005 Financial Highlights Total revenue of $4.4 million in Q1 2005 compared to $4.9 million in Q1 2004, with Q1 2005 Automatic Vehicle Identification (AVI) revenue impacted by the timing of quarter end shipments Supply Chain Management (SCM) revenue up from prior quarter and comparable to Q1 of prior year AVI revenue comprised 76% or approximately $3.3 million of total revenue while SCM revenue comprised 24% or $1.1 million of total revenue for Q1 2005 SCM development expenditures were consistent with 2004 investment levels. As a result, solid progress has been made in development efforts where the market should expect SCM product introductions at end of second quarter and into third quarter 2005 The loss for Q1 2005 was $1.0 million approximately equal to the loss for the prior quarter. This is compared to net income of $0.6 million in Q1 2004 resulting primarily from the sale of non-core assets of $0.5 million The Company continued to strengthen its IP portfolio with three new patent filings
"Following on a successful year in 2004, Sirit continues to execute on its operational and development plans. The Company generated solid performance from its SCM vertical and maintains a strong financial position allowing us to fund operations in anticipation of future revenues," noted Anastasia Chodarcewicz, Chief Financial Officer, Sirit Inc.
Three Months Ended March 31, 2005 Revenue for the three months ended March 31, 2005 totaled $4.4 million, a 10% or $0.5 million decrease from $4.9 million in the first quarter of 2004. The quarter to quarter fluctuation was principally due to the timing of two shipments of AVI products totaling $0.4 million with terms FOB destination shipped in March but not received by the customers until April 1; hence, this revenue was recognized in Q2 rather than Q1. Revenue from the SCM vertical was approximately $1.1 million which was in-line with revenue reported in Q1 2004. This revenue was generated notwithstanding the fact that the industry is experiencing slower then anticipated conversion rates from pilot projects to full deployments as companies take additional time to evaluate specific requirements in their RFID implementation plans. Gross margin for the quarter was 37.5% compared to $41.4% in Q1 2004. The decline relates to the proportion of fixed overhead costs in relation to total revenue, as well as the mix of AVI product sales. Total operating expenses of $2.7 million were $0.7 million higher than Q1 2004, related to higher development and compensation costs when compared to the first quarter of 2004. Management views these increased expenditures in advance of potential sales as essential to ensure the future growth of the Company. The resulting net loss was $1.0 million for the quarter. The Company utilized $0.6 million to fund ongoing operations and development efforts ending the quarter with $9.4 million in cash compared to $10.0 million at the beginning of the quarter. The working capital balance remains solid at $10.8 million as at March 31, 2005 compared to $11.5 million as at December 31, 2004. The Company remains financially secure and has sufficient resources to fund ongoing and growth operations. "Even with the decline in AVI revenue in the first quarter, for the remainder of 2005, this sector is quite predictable since contracts with our major customers are in place. We are pleased with the results of the SCM business which totaled $1.1 million for the quarter. Our products continue to gain traction with customers as the entire industry moves toward wider adoption of RFID technology," said William Staudt, President and CEO, Sirit Inc. "With our best of breed technology and new products to be introduced in the coming months, we believe Sirit is well positioned to capture an increasing market share."
Conference Call Sirit will host a conference call to discuss the quarterly results on Tuesday, May 10, 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. <<
Sirit Inc. Interim Consolidated Balance Sheets (expressed in thousands of Canadian dollars) Unaudited
As at As at March 31 December 31 2005 2004 Assets Current Assets Cash and cash equivalents $ 9,419 $ 10,021 Accounts receivable 2,788 3,319 Inventory 1,919 1,296 Prepaids and deposits 690 716 14,816 15,352
Long-term investments 5,191 5,191 Property, plant and equipment, net 880 896 Intangible asset, net 522 573 Deferred development costs, net 107 123 Goodwill 2,829 2,829
$ 24,345 $ 24,964
Liabilities Current Liabilities Accounts payable and accrued liabilities $ 3,058 $ 2,596 Deferred revenue 736 913 Warranty obligations 195 310 3,989 3,819
Shareholders' equity Share capital 34,856 34,763 Contributed surplus 559 400 Deficit (15,059) (14,018) 20,356 21,145
$ 24,345 $ 24,964
Sirit Inc. Interim Consolidated Statements of Operations (expressed in thousands of Canadian dollars except per share amounts) Unaudited
Three Months Ended March 31 2005 2004
Revenue $ 4,426 $ 4,937 Cost of Sales 2,766 2,893 Gross margin 1,660 2,044
Expenses Selling, general and administrative 1,983 1,683 Development 645 201 Amortization 148 131 Foreign exchange (38) (6) 2,738 2,009 Operating income/(loss) (1,078) 35
Gain on disposal of long-term investment - 230 Other income - 294 Interest income, net 37 31 Net income/(loss) for the period $ (1,041) $ 590
Deficit, beginning of period (14,018) (14,942)
Deficit, end of period $(15,059) $(14,352)
Basic and diluted income/(loss) per share $ (0.01) $ 0.01
Sirit Inc. Interim Consolidated Statements of Cash Flows (expressed in thousands of Canadian dollars) Unaudited
Three Months Ended March 31 2005 2004 Cash provided by/(used in):
Operating Activities Income/(loss) from continuing operations $ (1,041) $ 590 Items not involving cash and cash equivalents 307 (55) (734) 535
Net change in non-cash working capital items 104 181 (630) 716 Investing Activities Additions to property, plant and equipment (65) (23) Proceeds on sale of long-term investment - 335 (65) 312
Financing Activities Issuance of common shares, net of associated expenses 93 5,012 93 5,012
Exchange rate impact on cash and cash equivalents - (7)
Increase/(decrease) in cash and cash equivalents (602) 6,033 Cash and cash equivalents, beginning of period 10,021 2,604
Cash and cash equivalents, end of period $ 9,419 $ 8,637
Cash and cash equivalents consist of: Cash and deposit accounts with banks $ 2,316 $ 2,137 Short-term commercial paper 7,103 6,500 $ 9,419 $ 8,637
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