TORONTO, May 15 /PRNewswire-FirstCall/ -- Sirit Inc. ("Sirit") (TSX: SI), a leading provider of radio frequency identification ("RFID") technology, today reported its financial results for the first quarter ending March 31, 2007. All amounts are stated in Canadian Dollars unless otherwise noted.

Financial Achievements ---------------------- - Consecutive record-setting quarterly revenue of $6.5 million in Q1 2007 up 14% from the prior quarter's high of $5.7 million and over 20% growth from the first quarter of 2006 - Realization of operational efficiencies and reduction of operating expenses by over $0.4 million from prior quarter; total expenses of $3.3 million in line with management expectations - Cash increase of $0.5 million during the quarter supported by sale of long-term investment - Net income for the quarter of $0.5 million compared to a net loss of $2.1 million in the fourth quarter of last year

"Sirit has put forth a very strong first quarter with year over year revenue increases across all areas culminating in a record-setting revenue level. In addition, operating expenses have been curtailed to pre-acquisition levels as the Company received the full benefit of the integration efforts completed in 2006," commented Anastasia Chodarcewicz, Chief Financial Officer, Sirit Inc. "Sirit is focused on revenue growth as well as expense management, and remains on target to achieve a cash flow neutral position by the end of the year."

Revenue from the Automatic Vehicle Identification (AVI) group of $5.2 million represented an impressive 21% growth rate over prior quarter of $4.3 million and an 18% growth rate over $4.4 million reported in Q1 2006. Radio Frequency Solutions (RFS) revenue of $1.3 million is in line with prior quarter and reflects a 30% growth over the same quarter last year. For Q1 2007, AVI sales growth is attributed to increased volumes with our largest customers as well as revenue from the new SR-125 highway, a contract award announced in 2006. RFS has experienced increased traction with new customers and strengthened revenue streams from existing OEM partners.

Gross profit of 34.8% during the quarter is consistent with annual 2006 results, as management continues to pursue avenues to improve manufacturing costs.

Operating expenses during the quarter were $3.3 million compared to $3.0 million reported in the first quarter of 2006. The increase reflects higher average salary costs related to changes in staffing mix plus costs associated with additional locations assumed from the acquisitions which were first recorded in the second quarter of 2006.

Operating loss for the quarter was $1.1 million consistent with a $1.0 million loss in the same period last year. The Company reported net income for the first quarter of $0.5 million which includes the gain on sale of the Company's long-term investment in Applied Data Systems, Inc. compared to a net loss of $1.0 million or ($0.01) per share in the prior year first quarter.

In January 2007, Sirit reported the sale of its long-term investment in Applied Data Systems, Inc. for proceeds of $2.1 million. This supported the increase in cash which totaled $9.9 million at March 31, 2007, up from $9.4 million at December 31, 2006.

Corporate Highlights --------------------

During the first quarter, Sirit announced some exciting new developments and partners:

- NXP Software appointed Sirit as its first global reseller and integration partner for Java-based near field communications ("NFC") middleware. Sirit also announced the availability of its Mobile NFC Platform ("Sirit MNP") middleware solution for mobile phones - Sirit was selected by Kyocera Technology Research Corp. to supply NFC software and technology engineering services related to their mobile phone products - Sirit renewed a three year supplier contract for US$2.0 million from the Orange County Transportation Authority ("OCTA") in Southern California for its UHF RFID transponder technology - Sirit expanded its distribution agreement with Component Distributors, Inc., a high-tech electronics distributor based in Denver, Colorado, to carry its full line of INfinity RFID reader modules throughout North America

"I am proud of our continuing record revenue pace and excited with the new opportunities we are pursuing across all our application areas. AVI's continued growth supports our enthusiasm for further expansion of this RFID vertical and the mounting interest from new customers in our RFS products is strengthening Sirit's RFID leadership position, which is aimed at increasing shareholder value," stated Norbert Dawalibi, President and Chief Executive Officer, Sirit Inc.

Conference Call and Webcast

Sirit will host a conference call to discuss the quarterly results on Tuesday May 15, 2007 at 10:00 a.m. EDT. The call will be Webcast on the Internet and is accessible at http://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 13 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 (including Electronic Tolling), Access Control, Automatic Vehicle Identification, Near Field Communications, Inventory Control & Management, Asset Tracking and Product Authentication. For more information, visit http://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 19, 2007 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 does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, further events or otherwise.

"Sirit", the Sirit Design and "vision beyond sight" are all trademarks of Sirit Inc. All other names of actual companies and products mentioned herein may be the trademarks of their respective owners.

Sirit Inc. Interim Consolidated Balance Sheets (expressed in thousands of Canadian dollars) Unaudited As at As at March 31 December 31 2007 2006 --------- --------- Assets Current Assets Cash and cash equivalents $ 9,872 $ 9,397 Accounts receivable 4,147 3,957 Inventory 3,285 2,997 Prepaids and deposits 397 348 --------- --------- 17,701 16,699 Long-term investments 110 849 Property and equipment 1,206 1,095 Intangible assets 1,593 1,734 Goodwill 3,905 3,905 --------- --------- $ 24,515 $ 24,282 --------- --------- --------- --------- Liabilities Current Liabilities Accounts payable and accrued liabilities $ 4,503 $ 4,954 Deferred revenue 772 800 Warranty obligations 361 298 --------- --------- 5,636 6,052 --------- --------- Shareholders' Equity Share capital 47,844 47,830 Contributed surplus 2,247 2,075 Deficit (31,212) (31,675) --------- --------- 18,879 18,230 --------- --------- $ 24,515 $ 24,282 --------- --------- --------- --------- Sirit Inc. Interim Consolidated Statements of Operations (expressed in thousands of Canadian dollars except per share amounts) Three Months Ended March 31 Unaudited 2007 2006 --------- --------- Revenue $ 6,499 $ 5,384 Cost of sales 4,236 3,396 --------- --------- Gross profit 2,263 1,988 --------- --------- Expenses Selling, general and administrative 2,189 1,838 Stock-based compensation 172 202 Development 604 794 Amortization 223 140 Foreign exchange loss 109 43 --------- --------- 3,297 3,017 --------- --------- Operating loss (1,034) (1,029) Gain on sale of long-term investment 1,401 - Interest income, net 96 36 --------- --------- Net income/(loss) for the period $ 463 $ (993) Deficit, beginning of period (31,675) (22,716) --------- --------- Deficit, end of period $(31,212) $(23,709) --------- --------- --------- --------- Basic and diluted income/(loss) per share $ 0.00 $ (0.01) --------- --------- --------- --------- Sirit Inc. Interim Consolidated Statements of Cash Flows (expressed in thousands of Canadian dollars) Three Months Ended March 31 Unaudited 2007 2006 --------- --------- Cash provided by/(used in): Operating Activities Net income/(loss) for the period $ 463 $ (993) Items not involving cash and cash equivalents (1,006) 342 --------- --------- (543) (651) Net change in non-cash working capital items (943) (157) --------- --------- (1,486) (808) --------- --------- Investing Activities Additions to property and equipment (193) (80) Proceeds on sale of long-term investment 2,140 - --------- --------- 1,947 (80) --------- --------- Financing Activities Issuance of common shares upon exercise of stock options 14 - --------- --------- 14 - --------- --------- Increase/(decrease) in cash and cash equivalents 475 (888) Cash and cash equivalents, beginning of period 9,397 6,079 --------- --------- Cash and cash equivalents, end of period $ 9,872 $ 5,191 --------- --------- --------- --------- Cash and cash equivalents consist of: Cash $ 2,162 $ 1,478 Short-term commercial paper 7,710 3,713 --------- --------- $ 9,872 $ 5,191 --------- --------- --------- ---------

CONTACT: Anastasia Chodarcewicz, Sirit Inc., (416) 367-1897,
achodarcewicz@sirit.com