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.
| 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 | |
Contact Information: Intrinsyc Software International, Inc.
George Reznik
Chief Financial Officer
+1-604-678-3734
greznik@intrinsyc.com
www.intrinsyc.com