Intrinsyc Software International, Inc.
TSX : ICS

Intrinsyc Software International, Inc.

April 10, 2007 18:22 ET

Intrinsyc Reports 2007 Second Quarter Financial Results

Achieves Second Consecutive Quarter of Record Setting Revenue Secures Soleus™ Platform Design Win

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - April 10, 2007) - Intrinsyc Software International, Inc. (TSX:ICS) today announced its financial results for the second quarter ended February 28, 2007, reported in Canadian dollars and in accordance with Canadian GAAP.

For the second quarter of FY2007, the Company reported record level revenue of $5.0 million, which represents an increase of 5 percent from $4.8 million in the same quarter in the prior year. The year-over-year increase in revenue was primarily due to strength in the Company's engineering services business.

"We are very pleased to report record quarterly revenue for the second quarter in a row, resulting in the best first half in the company's history," said Glenda Dorchak, Chairman and CEO of Intrinsyc. "These results were driven by another strong quarter for our engineering services business, which is concentrating on strategic customer engagements around our core competencies in wireless platform telephony, power management and board support package development."

"Additionally, our Soleus business has delivered on key objectives beginning with the production release of version 1.0 early in the quarter; the announcement of our partnership with Marvell to use Soleus on the PXA3xx reference design for consumer feature phones in China, and most recently the announcement of our second Soleus licensing agreement and first design win," continued Ms. Dorchak. Previously, the company announced that this original equipment manufacturer (OEM), a major personal navigation device (PND) manufacturer, plans to utilize Soleus to integrate telephony features in its personal navigation products, along with other consumer-driven features, such as camera, media player and more.

"This customer engagement agreement will generate site license revenue, invoiced at the time of signing, and unit-based royalty revenue upon the shipment of completed devices. The signing of this license represents a key milestone towards Intrinsyc becoming one of the leading providers in the wireless software business," concluded Ms. Dorchak.

For the second quarter of FY2007, the EBITDA loss was $3.8 million as compared to the EBITDA loss of $3.4 million in the same quarter of FY2006. Expenditures for Soleus marketing and research and development were $3.8 million in the second quarter of FY2007 compared to $2.5 million in second quarter of FY2006. The calculation of EBITDA excludes stock-based compensation expense. See further discussion on EBITDA under the heading supplemental information later in this press release.

Cash used in operations was $3 million in the second quarter of FY2007 compared to cash used in operations of $2.5 million in the second quarter of FY2006. The increase in cash used in operations is a result of the increased investment in Soleus and as a result of the payment of liabilities during the quarter. Cash on hand at the end of the second quarter was $6.0 million compared to $9.2 million at the end of the first quarter of FY2007.

Supplemental Information

In addition to results in accordance with generally accepted accounting principles (GAAP), Intrinsyc discloses a non-GAAP measure of EBITDA as a method to evaluate the Company's operating performance. This non-GAAP measure should not be considered a substitute for measurements required by accounting principles generally accepted in Canada such as loss and loss per share. Management believes that this non-GAAP metric provides additional information allowing comparability regarding the Company's ongoing operating performance and the items excluded are considered to be non-operational and/or non-recurring. EBITDA is defined as earnings before interest, tax, depreciation and amortization. This non-GAAP measure is not necessarily comparable to non-GAAP information provided by other issuers. A reconciliation of the Company's EBITDA loss to the loss under Canadian GAAP is provided in the table attached.

Conference call

Consolidated unaudited financial statements are attached and a conference call to discuss these results will be held at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time), April 11, 2007.

Questions may be submitted to invest@intrinsyc.com prior to the call.

The conference call may be accessed on the Company's investor site at: http://www.intrinsyc.com/investors/pres_and_conf_calls.asp.

To listen to the conference call live by telephone, dial +1-866-400-2280 toll free for participants in North America and +1-416-850-9143 for Toronto area and international participants approximately 10 minutes before the start time. A telephone playback will be available for three business days, beginning approximately two hours after the call. To listen to the telephone replay please dial +1-866-245-6755 toll free and for international callers, dial +1-416-915-1035. Enter access code 933422.

The Audit Committee of the Company has reviewed the contents of this news release.

About Intrinsyc Software International, Inc.

Intrinsyc is a mobility software and services company that is using its wireless technology and expertise to become a leading enabler of next generation consumer handheld products including mobile handsets, smart phones and converged devices. The Company's mobile software products and engineering services expertise help OEMs, service providers and silicon providers deliver compelling wireless products with faster time-to-market and improved development cost. Intrinsyc is the creator and licensor of the Soleus™ platform based on Windows® Embedded CE for consumer handset development. Intrinsyc is a Microsoft® Windows® Embedded Gold Partner and a Symbian Platinum Partner.

Intrinsyc is publicly traded on the Toronto Stock Exchange (symbol: ICS) and is headquartered in Vancouver, Canada with regional offices in the United Kingdom, the United States, Singapore, Taiwan and Barbados.

Intrinsyc and Intrinsyc logo are registered trademarks, and Soleus and Soleus logo are trademarks in Canada, the European Community and the U.S.A. of Intrinsyc Software International, Inc. All other marks are the trademarks of the respective owners and are hereby acknowledged.

Forward-Looking Statements

This press release contains statements, which to the extent that they are not recitations of historical fact may constitute forward-looking information. Such forward-looking statements may include financial and other projections as well as statements regarding the Company's future plans, objectives, performance, revenues, growth, profits, operating expenses or the Company's underlying assumptions. The words "may", "would", "could", "will", "likely", "expect", "anticipate", "intend", "estimate", "intend", "plan", "forecast", "project", "estimate" and "believe" or other similar words and phrases are intended to identify forward-looking statements. Persons reading this press release are cautioned that such statements are only predictions, and that the Company's actual future results or performance may be materially different.

Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause actual results to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include the risk factors set out in the Company's Annual Information Form.

The Company disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise.



Intrinsyc Software International, Inc.
CONDENSED OPERATING STATEMENTS AND GAAP LOSS RECONCILIATION
(in Canadian dollars, Canadian GAAP)

Three months ended Six months ended
February 28 February 28

2007 2006 2007 2006
(unaudited) (unaudited) (unaudited) (unaudited)
--------------------------------------------------------------------------
$ $ $ $
--------------------------------------------------------------------------
Revenue 5,036,431 4,792,488 10,057,518 9,345,176
Cost of sales 2,554,158 3,181,633 5,259,031 5,850,319
--------------------------------------------------------------------------
2,482,273 1,610,855 4,798,487 3,494,857

Administration 1,411,021 1,360,608 2,534,958 2,749,355
Marketing and sales 1,696,643 883,517 3,029,301 1,690,916
Research and development 3,301,702 2,653,387 6,277,972 4,301,768
Technology Partnerships
Canada Funding
Investment 1,725 - 1,725 1,173
Foreign exchange
loss (gain) (174,515) 89,136 (424,300) 196,559

EBITDA loss 3,754,303 3,375,793 6,621,169 5,444,914
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Amortization 212,579 430,722 391,339 653,195
Stock-based compensation 210,038 301,684 409,651 506,144
Interest income (57,069) (67,757) (242,376) (117,675)
Accretion and
amortization -
long-term debt - 207,609 927,778 333,983
Interest expense -
long-term debt - 246,575 213,699 405,479
Income tax expense
(recovery)
Current 156,040 45,119 242,489 67,107
Future (29,150) (10,668) (58,142) (34,320)
--------------------------------------------------------------------------

Loss under Canadian GAAP 4,246,741 4,529,077 8,505,607 7,258,827
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Intrinsyc Software International, Inc.
CONSOLIDATED BALANCE SHEETS
(in Canadian dollars, Canadian GAAP)

February 28 August 31
2007 2006
(unaudited)
$ $
--------------------------------------------------------------------------

ASSETS
Current
Cash and cash equivalents 5,950,172 22,487,076
Accounts receivable 3,982,543 3,789,743
Inventory 129,310 110,996
Prepaid expenses - current 372,487 385,816
--------------------------------------------------------------------------
Total current assets 10,434,512 26,773,631
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Prepaid expenses 187,220 61,769
Equipment 1,390,317 1,360,832
Goodwill 14,189,478 14,189,478
Intangible assets 398,455 556,120
Deferred financing costs - 516,599
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Total assets 26,599,982 43,458,429
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--------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 2,828,197 4,010,542
Taxes payable 295,174 218,912
Deferred revenue 558,656 542,515
--------------------------------------------------------------------------
Total current liabilities 3,682,027 4,771,969
--------------------------------------------------------------------------
Debentures - 7,617,946
Future income taxes 175,052 229,655
--------------------------------------------------------------------------
Total liabilities 3,857,079 12,619,570
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Shareholders' equity
Share capital 74,623,739 74,623,739
Warrants and underwriters' options 5,229,997 5,229,997
Contributed surplus 3,361,526 2,951,875
Cumulative translation adjustment (27,792) (27,792)
Deficit (60,444,567) (51,938,960)
--------------------------------------------------------------------------
Total shareholders' equity 22,742,903 30,838,859
--------------------------------------------------------------------------
Total liabilities and shareholders' equity 26,599,982 43,458,429
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Intrinsyc Software International, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(in Canadian dollars, Canadian GAAP)

Three months ended Six months ended
February 28 February 28

2007 2006 2007 2006
(unaudited) (unaudited) (unaudited) (unaudited)
$ $ $ $
--------------------------------------------------------------------------

Revenues 5,036,431 4,792,488 10,057,518 9,345,176
Cost of sales 2,554,158 3,181,633 5,259,031 5,850,319
--------------------------------------------------------------------------
2,482,273 1,610,855 4,798,487 3,494,857
--------------------------------------------------------------------------

Expenses
Administration 1,411,021 1,360,608 2,534,958 2,749,355
Marketing and sales 1,696,643 883,517 3,029,301 1,690,916
Research and development 3,301,702 2,653,387 6,277,972 4,301,768
Amortization 212,579 430,722 391,339 653,195
Stock-based compensation 210,038 301,684 409,651 506,144
Technology Partnerships
Canada Funding
Investment 1,725 -- 1,725 1,173
--------------------------------------------------------------------------
6,833,708 5,629,918 12,644,946 9,902,551
--------------------------------------------------------------------------

Loss before other
expense (income) and
income taxes 4,351,435 4,019,063 7,846,459 6,407,694
Other expense (income)
Foreign exchange
loss (gain) (174,515) 89,136 (424,300) 196,559
Interest income (57,069) (67,757) (242,376) (117,675)
Accretion and
amortization-
long-term debt -- 207,609 927,778 333,983
Interest expense -
long-term debt -- 246,575 213,699 405,479
--------------------------------------------------------------------------
(231,584) 475,563 474,801 818,346
--------------------------------------------------------------------------

Loss before income taxes 4,119,851 4,494,626 8,321,260 7,226,040
Income tax expense
(recovery)
Current 156,040 45,119 242,489 67,107
Future (29,150) (10,668) (58,142) (34,320)
--------------------------------------------------------------------------
126,890 34,451 184,347 32,787
--------------------------------------------------------------------------

Loss for the period 4,246,741 4,529,077 8,505,607 7,258,827

Deficit, beginning of
period 56,197,826 38,275,376 51,938,960 35,545,626
--------------------------------------------------------------------------
Deficit, end of period 60,444,567 42,804,453 60,444,567 42,804,453
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Loss per share (basic
and diluted) 0.05 0.08 0.10 0.13
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Weighted average number
of shares outstanding 83,043,369 56,237,468 83,043,369 56,235,893
--------------------------------------------------------------------------
--------------------------------------------------------------------------


Intrinsyc Software International, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in Canadian dollars, Canadian GAAP)

Three months ended Six months ended
February 28 February 28

2007 2006 2007 2006
(unaudited) (unaudited) (unaudited) (unaudited)
$ $ $ $
--------------------------------------------------------------------------

OPERATING ACTIVITIES
Loss for the period (4,246,741) (4,529,077) (8,505,607) (7,258,827)
Items not involving cash
Amortization 212,579 430,722 391,339 653,195
Future income taxes (27,710) 31,355 (54,603) 7,703
Stock-based compensation 210,038 301,684 409,651 506,144
Accretion and
amortization -
long-term debt -- 207,609 222,322 333,983
Changes in non-cash
operating working capital
Accounts receivable 996,694 656,770 (192,800) 175,801
Inventory 20,774 (9,084) (18,314) (6,585)
Prepaid expenses 23,753 (7,604) (112,122) (36,453)
Accounts payable and
accrued liabilities (266,172) 880,455 (1,182,346) 567,423
Taxes payable 132,985 (137,366) 76,262 (148,429)
Deferred revenue (90,596) (279,801) 16,141 (367,925)
--------------------------------------------------------------------------
Cash used in operating
activities (3,034,396) (2,454,337) (8,950,077) (5,573,970)
--------------------------------------------------------------------------

INVESTING ACTIVITIES
Purchase of equipment (184,847) (430,667) (263,158) (535,117)
--------------------------------------------------------------------------
Cash used in investing
activities (184,847) (430,667) (263,158) (535,117)
--------------------------------------------------------------------------

FINANCING ACTIVITIES
Issuance of common shares -- -- -- 1,950
Debentures -- -- (8,000,000) 8,000,000
Debentures issuance costs -- (76,531) (29,125) (1,043,605)
Accretion and
amortization
realized on early
redemption of debentures -- -- 705,456 --
--------------------------------------------------------------------------
Cash provided by (used
in) financing activities -- (76,531) (7,323,669) 6,958,345
--------------------------------------------------------------------------

Increase (decrease) in
cash and cash
equivalents (3,219,243) (2,961,535) (16,536,904) 849,258
Cash and cash
equivalents,
beginning of period 9,169,415 11,129,003 22,487,076 7,318,210
--------------------------------------------------------------------------
Cash and cash
equivalents,
end of period 5,950,172 8,167,468 5,950,172 8,167,468
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Supplementary information
Interest paid 198 251,279 213,897 412,167
Income taxes paid -- 29,587 211,076 45,823
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Contact Information