Intrinsyc Software International, Inc.
TSX : ICS

Intrinsyc Software International, Inc.

May 14, 2009 09:30 ET

Intrinsyc Reports 2009 First Quarter Financial Results

Continued Improvement in Operating Expenses with Significant New Customer Wins for Navigation and Solutions Engineering in Q1 Demonstrates Execution Strength

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 14, 2009) - Intrinsyc Software International, Inc. (TSX:ICS), a leading provider of software solutions for mobile devices, today announced its financial results for the first quarter ended March 31, 2009, reported in United States dollars and in accordance with Canadian Generally Accepted Accounting Principles (GAAP). The Company's results are presented in comparison to the three-month period ended December 31, 2008 and the three-month period ended March 31, 2008.

The Company reported first quarter revenue of $4.4 million as compared to $5.7 million for the period ended December 31, 2008 and $5.6 million for the period ended March 31, 2008. Total revenue attributable to the Company's software solutions was 40 percent of revenues, including software licensing, maintenance/support and software-related services, as compared to 43 percent and 18 percent in the respective comparative quarters. Gross margin was 48 percent in the first quarter of 2009, down from 54 percent in the three months ended December 31, 2008 but higher than the gross margin experienced of 46 percent in the three months ended March 31, 2008.

Total operating expenses, excluding amortization, TPC royalty and stock-based compensation, for the three months ended March 31, 2009 were $3.3 million representing a decrease of 47 percent from $6.2 million in the preceding quarter ended December 31, 2008 and the three months ended March 31, 2008, respectively. Loss before interest, foreign exchange, loss on disposal of equipment, amortization, stock-based compensation expense, restructuring, TPC royalty and income tax ("EBITDA") for the three months ended March 31, 2009 was $1.2 million representing a 62 percent decline from $3.1 million in the previous quarter ended December 31, 2008 and a 67 percent decline from $3.6 million for the three months ended March 31, 2008. Cash and cash equivalents were $10.7 million with net working capital of $8.9 million as of March 31, 2009, compared to cash and cash equivalents of $12.4 million with net working capital of $10.7 million as of December 31, 2008.

"Although the challenging industry and macro-economic environment continued to impact our revenue performance during the past quarter, we made strong progress towards our goal of positive cash flow in 2009 due to our focus on sales execution and aggressive cost management," commented Tracy Rees, Interim Chief Executive Officer of Intrinsyc. "We expect improvement in revenue performance in subsequent quarters as a result of new agreements signed in the quarter, including the signing of a multi-million dollar agreement with a Fortune 500 Company to develop an Android-based device and with LG Electronics' selection of Destinator navigation software for multiple smart phones, as well as the launch in this quarter of our next generation navigation software, Destinator version 9. These positive indicators of future revenue performance combined with our continued disciplined cost management make us optimistic that we can achieve our goal of positive cash flow operation on a quarterly basis before the year-end."

Recent Business Highlights

During the first quarter, the Company continued the execution of its strategy to support the Android operation system and announced additional customer wins for Destinator, Soleus Transit and Solutions Engineering:

- Opened development center in Beijing to support Android handset makers

- Announced and expanded agreement with Fortune 500 company for Android device development

- Announced Destinator navigation software for Android

- Launched Android platform development tools including RapidRIL and Telephony Test Suite

- LG Electronics selected Intrinsyc to provide software for navigation and location-based services (LBS)

- Goodkap! selected Intrinsyc to provide a complete navigation solution for connected personal navigation devices (PNDs) and wireless product lines

- Marvell selected Intrinsyc for S60 Symbian development

- Supa Technology licensed Soleus Transit

Conference call

Consolidated unaudited financial statements are attached and a conference call to discuss these results will be held at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time), today. To listen to the conference call live by telephone, dial +1-866-439-4480 toll free for participants in North America, and +1-416-849-5529 for Toronto area and international participants, approximately 10 minutes before the start of the call. The participant code for the call is 632313#. The conference call will also be broadcast live over the Internet and available for replay on the company's Investor Relations Conference Calls web page (www.intrinsyc.com/investors/conference_calls.aspx). Analysts and investors are invited to participate on the call. Questions may be submitted to invest@intrinsyc.com prior to the call.

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

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 under applicable Canadian securities legislation that involve risks and uncertainties. Such forward-looking statements or information 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", "plan", "forecast", "project", "estimate" and "believe" or other similar words and phrases may identify forward-looking statements or information. Persons reading this press release are cautioned that such statements or information are only predictions, and that the Company's actual future results or performance may be materially different. Factors that could cause actual events or results to differ materially from those suggested by these forward-looking statements include, but are not limited to: the need to develop, integrate and deploy software solutions to meet the Company's customer's requirements; the possibility of development or deployment difficulties or delays; the dependence on the Company's customers' satisfaction; the timing of entering into significant contracts; customers' continued commitment to the deployment of the Company's solutions; the performance of the global economy and growth in software industry sales; market acceptance of the Company's products and services; the success of certain business combinations engaged in by the Company or by its competitors; possible disruptive effects of organizational or personnel changes; technological change, new products and standards; risks related to international expansion; concentration of sales; international operations and sales; dependence upon key personnel and hiring; reliance on a limited number of suppliers; industry growth; competition; intellectual property; product defects and product liability; currency exchange rate risk; and other factors described in the Company's reports filed on SEDAR, including its Annual Information Form and financial report for the year ended December 31, 2008. This list is not exhaustive of the factors that may affect the Company's forward-looking information. These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking information. All forward-looking statements made in this press release are qualified by this cautionary statement and there can be no assurance that actual results or developments anticipated by the Company will be realized. 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, except as required by law.

About Intrinsyc Software International, Inc.

Intrinsyc provides software solutions that enable next-generation handheld products, including mobile handsets, smart phones, and embedded devices. The company's products include Destinator® navigation and Location Based Services platform, the Soleus® Transit platform for connected personal navigation devices and Soleus for converged device development. Combined with award winning Solutions Engineering and 12 years of expertise, Intrinsyc helps device makers, and silicon vendors deliver compelling mobile products with faster time-to-market and higher quality. Intrinsyc is a Microsoft Windows Embedded Gold Partner and a winner of Windows Embedded Excellence Awards in 2007 and 2008, and S60 and Symbian Competence Centers. Intrinsyc is publicly traded (TSX:ICS) and headquartered in Vancouver, Canada, with offices in China, Israel, Taiwan, U.K., and the United States. www.intrinsyc.com.



INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Balance Sheets
(Expressed in U.S. dollars)
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March 31, December 31,
As at 2009 2008
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(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 10,744,089 $ 12,391,452
Restricted cash - 207,755
Accounts receivable 4,546,642 6,083,190
Inventory - 14,649
Prepaid expenses - current 328,403 523,916
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Total current assets 15,619,134 19,220,962

Restricted cash 189,700 -
Prepaid expenses 18,345 18,998
Equipment 1,376,806 1,567,464
Intangible assets 3,719,543 4,034,000
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Total assets $ 20,923,528 $ 24,841,424
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 5,825,318 $ 7,727,497
Capital lease obligation - current 27,055 82,911
Deferred revenue 834,209 754,301
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Total current liabilities 6,686,582 8,564,709

Long-term capital lease obligation 38,127 39,483
Future income taxes 38,574 -
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Total liabilities 6,763,283 8,604,192
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Shareholders' equity
Share capital 108,288,133 108,288,133
Warrants and underwriters' options 4,489,508 4,489,508
Contributed surplus 4,345,133 4,260,625
Accumulated other comprehensive (loss) income (696,433) (159,400)
Deficit (102,266,096) (100,641,634)
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Total shareholders' equity 14,160,245 16,237,232
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Total liabilities and shareholders' equity $ 20,923,528 $ 24,841,424
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INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of Operations and Deficit
(Unaudited and expressed in U.S. dollars)
---------------------------------------------------------------------------
Three months Three months
ended ended
March 31, March 31,
For the 2009 2008
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Revenues $ 4,400,807 $ 5,555,535
Cost of sales 2,280,615 3,019,349
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2,120,192 2,536,186
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Expenses
Sales and marketing 1,143,915 1,828,375
Research and development 1,363,089 2,546,648
Administration 803,590 1,820,975
Amortization 319,329 211,808
Stock-based compensation 84,508 284,260
Technology Partnerships Canada Funding
Investment 134,934 23,419
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3,849,365 6,715,485
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Loss before other expense (earnings) and income
taxes 1,729,173 4,179,299
Other expense (earnings)
Foreign exchange (gain) loss (113,183) (214,493)
Interest income (37,829) (171,945)
Loss on disposal of equipment 20,552 -
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Loss before income taxes 1,598,713 3,792,861
Income tax expense
Current 25,749 67,575
Future - (23,555)
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25,749 44,020
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Net loss for the period 1,624,462 3,836,881

Deficit, beginning of period 100,641,634 61,781,752
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Deficit, end of period $102,266,096 $ 65,618,633
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Loss per share (basic and diluted) $0.01 $0.03
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Weighted average number of shares outstanding 163,254,903 131,128,763
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INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of Comprehensive Loss
(Unaudited and expressed in U.S. dollars)
---------------------------------------------------------------------------
Three months Three months
ended ended
March 31, March 31,
For the 2009 2008
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Net loss for the period $ (1,624,462) $ (3,836,881)

Other comprehensive gain (loss):

Unrealized gains (losses) on translating
financial statements from functional currency to
reporting currency (537,033) (1,822,976)
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Comprehensive loss $ (2,161,495) $ (5,659,857)
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INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of Cash Flows
(Unaudited and expressed in U.S. dollars)
---------------------------------------------------------------------------
Three months Three months
ended ended
March 31, March 31,
For the 2009 2008
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OPERATING ACTIVITIES
Net loss for the period $ (1,624,462) $ (3,836,881)
Items not involving cash:
Amortization 319,329 211,808
Future income taxes 39,091 (20,954)
Stock-based compensation 84,508 284,260
Loss on disposal of equipment 20,552 -
Changes in non-cash operating working capital:
Accounts receivable 1,345,529 (2,031,554)
Inventory 14,336 50,408
Prepaid expenses 179,909 93,009
Accounts payable and accrued liabilities (1,697,659) 248,647
Taxes payable 38,798 (43,658)
Deferred revenue 107,223 127,049
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Cash used in operating activities (1,172,846) (4,917,866)
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INVESTING ACTIVITIES
Purchase of equipment (22,866) (246,448)
Deferred acquisition costs - (427,522)
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Cash used in investing activities (22,866) (673,970)
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FINANCING ACTIVITIES
Issuance of common shares and warrants - 32,119,750
Share issuance costs (note 7) - (2,186,676)
Repayment of capital lease obligation (53,722) (3,822)
Restricted cash 11,069 -
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Cash provided by financing activities (42,653) 29,929,252
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Effect of exchange rate changes on cash
and cash equivalents (408,998) (1,244,215)
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Increase (decrease) in cash and cash equivalents (1,647,363) 23,093,201
Cash and cash equivalents, beginning of period 12,391,452 12,153,601
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Cash and cash equivalents, end of period $ 10,744,089 $ 35,246,802
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