Intrinsyc Software International, Inc.
TSX : ICS

Intrinsyc Software International, Inc.

March 23, 2011 16:00 ET

Intrinsyc Reports 2010 Fourth Quarter and Full-Year Financial Results; Company Achieves Seventh Consecutive Quarter of Positive EBITDA

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 23, 2011) - Intrinsyc Software International, Inc. (TSX:ICS), a leading provider of software solutions for mobile devices, today announced its financial results for the fourth quarter and full year ended December 31, 2010, 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 and twelve months ended December 31, 2009.

"We achieved our seventh consecutive quarter and the first full year of positive EBITDA," stated Tracy Rees, President and Chief Executive Officer. "Although the challenges in the navigation software industry negatively impacted our software revenue, the company continued to operate with high efficiency and benefited from our leadership in Android media tablet development with new tablet and eReader customer wins, including the high margin contribution from a royalty based project during the second half of the year." "Our focus in 2011 is to continue our leadership in Android media tablet development, while expanding opportunities in new markets like Machine-to-Machine (M2M) communications and automotive infotainment, and enhancing our products and services portfolio."

Q4 2010 Comparative Results

The Company reported revenue of approximately $2.9 million for the three months ended December 31, 2010 as compared to approximately $3.9 million for the three months ended December 31, 2009. The decline in revenue is primarily attributable to the decline in revenues of the Destinator® navigation software. Total revenue attributable to the Company's Software Solutions was 17 percent of revenues, compared to 52 percent in the comparative quarter with revenue attributable to the Company's Device Development Solutions increasing to 82 percent in the three months ended December 31, 2010 from 42 percent in the prior year period. Overall, gross margin was 63 percent in the fourth quarter of 2010 representing a slight increase from 60 percent in the three months ended December 31, 2009.

During the three months ended December 31, 2010, the Company recorded a non-cash expense of approximately $2.5 million due to the write down of intangible assets associated with Destinator software acquired in 2008.

Total operating expenses, excluding amortization, stock-based compensation, TPC royalty, asset impairment, restructuring charges and loss (gain) on disposal of equipment, for the three months ended December 31, 2010 were approximately $1.6 million representing a decrease of 19 percent from the approximately $2.0 million for the three months ended December 31, 2009. Earnings before interest, amortization, stock-based compensation expense, restructuring charges, asset impairment, loss (gain) on disposal of equipment, foreign exchange loss (gain), TPC royalty, and income tax ("EBITDA") for the three months ended December 31, 2010 was $243,902 compared to EBITDA of $314,938 for the three months ended December 31, 2009. Cash and cash equivalents were approximately $11.2 million with net working capital of approximately $11.6 million as of December 31, 2010 compared to cash and cash equivalents of approximately $11.7 million with net working capital of approximately $11.3 million as of December 31, 2009.

Fiscal 2010 Comparative Results

The Company reported revenue of approximately $12.7 million for the year ended December 31, 2010 as compared to approximately $17.5 million for the year ended December 31, 2009. Total revenue attributable to the Company's Software Solutions decreased to 31 percent of revenues, including software licensing, maintenance/support and software-related services, as compared to 44 percent in the respective comparative period. Gross margin was 57 percent for the year ended December 31, 2010, consistent with 56 percent in the year ended December 31, 2009.

During the twelve months ended December 31, 2010, the Company recorded a non-cash expense of approximately $2.5 million due to the write down of intangible assets acquired in 2008. In addition, the Company incurred total restructuring charges during this period of approximately $485,000 resulting from the cost reduction initiatives previously announced by the Company in February 2010.

Total operating expenses, excluding amortization, stock-based compensation, TPC royalty, asset impairment, restructuring charges and loss (gain) on disposal of equipment, for the year ended December 31, 2010 were approximately $6.9 million, compared to approximately $10.0 million for the year ended December 31, 2009. EBITDA for the year ended December 31, 2010 was $420,619 compared to ($293,460) for the year ended December 31, 2009.

Business Highlights

During the fourth quarter, Intrinsyc continued the expansion of software and service solutions for Windows® and Android based mobile devices. Notable developments and achievements include the following:

  • Signed a long-term agreement with Movix that provides Movix with access to Intrinsyc's core navigation assets in source code form and enables Movix to sublicense to other navigation and location based service providers throughout Latin America. In addition to collaboration on future innovation, Intrinsyc and Movix will work together to customize solutions for Spanish and Portuguese speaking markets.
  • Signed a software license agreement with Sierra Wireless for RapidRIL™ telephony technology. Sierra Wireless will integrate Intrinsyc's RapidRIL software into its market leading cellular embedded modules for use in eReaders, tablets and other mobile wireless devices.
  • Signed an engineering services agreement with Advanced Systems Research Technology Corporation (ASRT) to develop a tablet device designed for the education market in Asia.
  • Announced its membership in the GENIVI Alliance. Intrinsyc, a highly experienced participant in the smartphone and consumer device development arena will be active in the Alliance ecosystem, providing software and services to automotive manufacturers and suppliers.
  • Announced it will offer a complete software reference design platform based on Freescale Semiconductor's i.MX53 chipset. This platform is an ideal solution for a variety of consumer applications such as: tablets, smartbooks, gaming devices, video enabled IP phones, and more. Availability is expected in the second quarter of 2011.
  • Announced the availability of the iQ Development Kit. Intrinsyc's iQ Development Kit provides developers utilizing Qualcomm's compact and powerful Internet of Everything Modules with a low cost, high performance development platform for creating real-time, location aware solutions.

Conference call

The Company will release its fiscal fourth quarter and full-year 2010 financial results on Wednesday, March 23, 2011 at 4:00 p.m. Eastern Time (1:00 p.m. Pacific Time). The company will hold a conference call to discuss the financial results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) the same day. On the call, Tracy Rees, President and Chief Executive Officer, and George Reznik, Chief Financial Officer, will discuss the financial results announced. This conference call may be accessed in North America, toll-free, by dialing 1-866-610-8602, and internationally by dialing +1-212-401-8152 approximately 10 minutes prior to the start of the call. This conference line is operator assisted and an access PIN is not required. 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 customer's 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, 2010. 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 empowers device makers, mobile operators, and silicon vendors to deliver compelling, next generation mobile devices faster with higher quality, and differentiating innovation. We help our customers deliver compelling products using our unmatched expertise with the leading OS platforms including Android, Apple, Blackberry, Linux, Symbian, QNX, Windows® CE and Windows Mobile. Intrinsyc is publicly traded (TSX:ICS) and is headquartered in Vancouver, Canada, with operations in China, Taiwan and the United States.

www.intrinsyc.com

INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Balance Sheets
(Expressed in U.S. dollars)
As at December 31,
2010
December 31,
2009
     
ASSETS    
Current assets    
  Cash and cash equivalents $ 11,152,439 $ 11,710,227
  Accounts receivable 2,992,007 3,401,467
  Inventory 26,208 14,269
  Prepaid expenses - current 162,336 313,528
Total current assets 14,332,990 15,439,491
     
Restricted cash - 95,147
Prepaid expenses 44,551 47,063
Equipment 549,945 735,807
Intangible assets 580,434 3,880,481
Total assets $ 15,507,920 $ 20,197,989
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities    
  Accounts payable and accrued liabilities $ 2,164,951 $ 3,574,134
  Current portion of long-term payable to Technology Partnerships Canada 72,561 -
  Capital lease obligations - current 7,818 45,179
  Deferred revenue 471,285 526,169
Total current liabilities 2,716,615 4,145,482
     
Long-term payable to Technology Partnerships Canada 179,162 -
Long-term capital lease obligations - 7,388
Total liabilities 2,895,777 4,152,870
     
Shareholders' equity    
  Share capital 108,288,585 108,288,585
  Warrants and underwriters' options - 4,029,953
  Contributed surplus 9,499,731 5,230,217
  Accumulated other comprehensive income 2,863,087 2,068,103
  Deficit (108,039,260) (103,571,739)
Total shareholders' equity 12,612,143 16,045,119
Total liabilities and shareholders' equity $ 15,507,920 $ 20,197,989
INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of Operations and Deficit
(Expressed in U.S. dollars)
For the Three months
ended December 31, 2010 (unaudited)
Three months ended December 31, 2009 (unaudited) Year ended December 31, 2010 Year ended December 31, 2009
         
Revenues $ 2,936,636 $ 3,854,306 $ 12,712,290 $ 17,485,074
Cost of sales 1,080,154 1,542,204 5,430,696 7,738,538
  1,856,482 2,312,102 7,281,594 9,746,536
         
Expenses        
  Sales and marketing 490,591 706,946 1,989,403 3,345,696
  Research and development 313,155 1,133,457 2,271,452 4,576,596
  Administration 808,834 156,761 2,600,120 2,117,704
  Amortization 323,562 287,641 1,190,023 1,252,184
  Stock-based compensation 57,771 148,956 239,561 510,238
  Technology Partnerships Canada Funding Investment - - 287,192 342,055
  Asset impairment 2,542,543 - 2,542,543 -
  Restructuring - - 485,478 -
  Loss (gain) on disposal of equipment - 23,631 (2,150) 204,166
  4,536,456 2,457,392 11,603,622 12,348,639
         
Loss before other expenses (earnings) and income taxes 2,679,974 145,290 4,322,028 2,602,103
Other expense (earnings)        
  Foreign exchange loss 163,524 164,075 261,607 665,847
  Extraordinary expenses - 166,171 - -
  Interest income (9,440) (25,515) (45,698) (72,350)
Loss before income taxes 2,834,058 450,021 4,537,937 3,195,600
         
Income tax recovery        
  Current - (68,791) (70,416) (265,495)
  - (68,791) (70,416) (265,495)
         
Net loss for the period 2,834,058 381,230 4,467,521 2,930,105
         
Deficit, beginning of period 105,205,202 103,190,509 103,571,739 100,641,634
         
Deficit, end of period $108,039,260 $103,571,739 $108,039,260 $103,571,739
         
Loss per share (basic and diluted) $0.02 $0.00 $0.03 $0.02
         
Weighted average number of shares outstanding 163,259,070 163,259,070
163,259,070
163,256,969
INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of Comprehensive Loss
(Expressed in U.S. dollars)
For the Three months ended December 31, 2010 (unaudited) Three months ended December 31, 2009 (unaudited) Year ended December 31, 2010 Year ended December 31, 2009
         
Net loss for the period ($2,834,058) ($381,230) ($4,467,521) ($2,930,105)
         
Other comprehensive gain:        
         
Unrealized gains on translating financial statements from functional currency to reporting currency $ 464,529 $ 298,172 $ 794,984 $ 2,227,503
         
Comprehensive loss for the period ($2,369,529) ($83,058) ($3,672,537) ($702,602)
INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of EBITDA and Loss
(Expressed in U.S. dollars)
For the Three months ended December 31, 2010 (unaudited) Three months ended December 31, 2009 (unaudited) Year ended December 31, 2010 Year ended December 31, 2009
         
Revenues $ 2,936,636 $ 3,854,306 $ 12,712,290 $ 17,485,074
Cost of sales 1,080,154 1,542,204 5,430,696 7,738,538
  1,856,482 2,312,102 7,281,594 9,746,536
         
Expenses        
  Sales and marketing 490,591 706,946 1,989,403 3,345,696
  Research and development 313,155 1,133,457 2,271,452 4,576,596
  Administration 808,834 156,761 2,600,120 2,117,704
  1,612,580 1,997,164 6,860,975 10,039,996
         
EBITDA Income (Loss) for the period 243,902 314,938 420,619 (293,460)
         
Amortization 323,562 287,641 1,190,023 1,252,184
Stock-based compensation 57,771 148,956 239,561 510,238
Technology Partnerships Canada Funding Investment - - 287,192 342,055
Asset impairment 2,542,543 - 2,542,543 -
Restructuring - - 485,478 -
Loss (gain) on disposal of equipment - 23,631 (2,150) 204,166
Foreign exchange loss 163,524 164,075 261,607 665,847
Extraordinary expenses - 166,171 - -
Interest income (9,440) (25,515) (45,698) (72,350)
Income tax recovery        
  Current - (68,791) (70,416) (265,495)
  3,077,960 696,168 4,888,140 2,636,645
         
Net loss for the period under Canadian GAAP ($2,834,058) ($381,230) ($4,467,521) ($2,930,105)
INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)
For the Three months ended December 31, 2010 (unaudited) Three months ended December 31, 2009 (unaudited) Year ended December 31, 2010 Year ended December 31, 2009
         
OPERATING ACTIVITIES        
Net loss for the period ($ 2,834,058) ($ 381,230) ($ 4,467,521) ($ 2,930,105)
Items not involving cash:        
  Amortization 323,562 287,641 1,190,023 1,252,184
  Future income taxes - - - (2,603)
  Stock-based compensation 57,771 148,956 239,561 510,238
  Asset impairment 2,542,543 - 2,542,543 -
  Settlement with Technology Partnerships
Canada
243,497 - 316,433 -
  Loss on disposal of equipment - 23,631 - 243,976
Changes in non-cash operating working capital:        
  Accounts receivable 531,379 1,001,497 580,121 3,318,137
  Inventory (23,313) 14,061 (11,449) 794
  Prepaid expenses 68,805 71,190 169,609 231,717
  Accounts payable and accrued liabilities (189,513) (661,829) (1,557,935) (4,580,038)
  Deferred revenue 14,778 (68,907) (80,613) (346,738)
Cash provided by (used in) operating activities 735,451 435,010 (1,079,228) (2,302,438)
         
INVESTING ACTIVITIES        
Purchase of equipment (1,432) 2,741 (71,215) (55,858)
Cash provided by (used in) investing activities (1,432) 2,741 (71,215) (55,858)
         
FINANCING ACTIVITIES        
Issuance of common shares and warrants - - - 251
Repayment of capital lease obligation (7,554) (6,835) (45,935) (78,050)
Payment as part of settlement with Technology Partnerships Canada (312,817) - (74,033) -
Restricted cash - - 97,248 139,725
Cash provided by (used in) financing activities (320,371) (6,835) (22,720) 61,926
         
Effect of exchange rate changes on cash and cash equivalents 366,616 209,987 615,375 1,615,145
         
Increase (decrease) in cash and cash equivalents 780,264 640,903 (557,788) (681,225)
Cash and cash equivalents, beginning of period 10,372,175 11,069,324 11,710,227 12,391,452
Cash and cash equivalents, end of period $ 11,152,439 $11,710,227 $ 11,152,439 $11,710,227

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