Intrinsyc Software International, Inc.
TSX : ICS

Intrinsyc Software International, Inc.

May 12, 2011 16:00 ET

Intrinsyc Reports 2011 First Quarter Financial Results

Company Continues Positive EBITDA Performance and Adds to Cash and Working Capital Balances

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 12, 2011) - Intrinsyc Software International, Inc. (TSX:ICS) ("Intrinsyc" or the "Company"), a leading provider of software solutions for mobile devices, today announced its financial results for the first quarter ended March 31, 2011, reported in United States dollars and in accordance with International Financial Reporting Standards ("IFRS"). The Company's results are presented in comparison to the three months ended December 31, 2010 and the three months ended March 31, 2010, also in accordance with IFRS. The Company's accounting policies have changed and the presentation, financial statement captions and terminology used in this news release differ from that used in all previously issued financial statements and quarterly and annual reports. The new policies have been consistently applied to all of the periods presented in this news release and all prior period information has been restated or reclassified for comparative purposes unless otherwise noted. Further details on the conversion to IFRS are provided in Management's Discussion and Analysis and in the notes to the Company's unaudited condensed consolidated financial statements as at and for the quarter ended March 31, 2011.

"We are pleased that we were able to achieve our eighth consecutive quarter of positive EBITDA, and increased our cash and net working capital balances," stated Tracy Rees, Chief Executive Officer. "During the quarter we signed a significant agreement, with a Fortune 500 customer that extends our important relationship to assist in development of future mobile devices, and signed a Destinator® software and services agreement with a system integrator developing an in-vehicle navigation solution for a performance car company. These agreements and others signed during the quarter improved our backlog and provide a stable platform for future performance."

"We are also excited about the prospects for revenue growth from our iQ wireless development kit based on Qualcomm's Internet of Everything Module, which was introduced during the quarter. In addition to the sale of the development kit and development services for a broad new customer market, we expect to have partner relationships that will allow us to sell production modules late in the second quarter."

The Company reported first quarter revenue of approximately $2.6 million as compared to approximately $2.9 million for the three months ended December 31, 2010 and approximately $3.5 million in the period ended March 31, 2010. Total revenue attributable to the Company's Software Solutions was 36 percent of revenues, including software licensing, maintenance/support and software-related services, as compared to 17 percent and 41 percent in the respective comparative quarters. Gross margin was 55 percent in the first quarter of 2011, which was lower than 63 percent in the three months ended December 31, 2010 and lower than the gross margin experienced of 60 percent in the three months ended March 31, 2010.

Total operating expenses, excluding other operating expenses, for the three months ended March 31, 2011 were approximately $1.2 million which was a decrease of 26% over the preceding three months ended December 31, 2010 and a 40% decrease over the three months ended March 31, 2010. Earnings before other operating expenses, finance income and foreign exchange loss ("EBITDA") for the three months ended March 31, 2011 was $212,136 compared to $243,902 in the previous three months ended December 31, 2010 and $102,994 for the three months ended March 31, 2010. Cash and cash equivalents were approximately $7.9 million and short-term investments were approximately $4.0 million with net working capital of approximately $12.1 million as of March 31, 2011, compared to cash and cash equivalents of approximately $11.2 million with net working capital of approximately $11.6 million as of December 31, 2010.

Business Highlights

  • Signed a material agreement worth 10% or more of Intrinsyc's total projected revenues over the next 12 months. This agreement is a renewal of an annual agreement with a Fortune 500 company, and is effective through March 31, 2012.
  • Signed an agreement with an automotive system integrator to adapt and license Destinator navigation software for an in-vehicle solution for a performance automobile company.
  • Joined the Linux Foundation, the non-profit organization dedicated to accelerating the growth of the open source Linux operating system.
  • Joined the QNX™ Partner Network from QNX Software Systems Company as a developer partner. QNX Software Systems is a leading vendor of operating systems, middleware, development tools, and professional services for the embedded systems market, and is a subsidiary of Research In Motion. The QNX Partner Network enables partners to generate complementary solutions to the QNX Neutrino® real-time operating system (RTOS) and QNX middleware products and to help market those capabilities to the widest possible audience.
  • Demonstrated Intrinsyc's latest hardware and software solutions at the Mobile World Congress (MWC) and CTIA Wireless 2011 shows.
  • Announced the availability of the iQ Wireless Development Kit. Intrinsyc's iQ Wireless Development Kit is a low cost, high performance development platform that provides a perfect starting point for creating real‐time, location aware solutions, based on Qualcomm's Internet of Everything Module (IEM).

Conference call

The Company will release its fiscal first quarter financial results on Thursday, May 12, 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.
Condensed Consolidated Statements of Financial Position
(Unaudited and expressed in U.S. dollars)
As atMarch 31,
2011
December 31,
2010
January 1,
2010
ASSETS
Current assets
Cash and cash equivalents$7,857,522$11,152,439$11,710,227
Short-term investments4,032,978--
Trade and other receivables2,470,9742,992,0073,401,467
Inventory18,09126,20814,269
Prepaid expenses143,285162,336313,528
14,522,85014,332,99015,439,491
Non-Current Assets
Restricted cash--95,147
Prepaid expenses45,11644,55147,063
Equipment509,554549,945735,807
Intangible assets437,597580,4343,880,481
Total assets$15,515,117$15,507,920$20,197,989
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade and other payables$2,034,179$2,164,951
$ 3,574,134
Technology Partnerships Canada75,87872,561-
Finance lease obligations-7,81845,179
Deferred revenue354,772471,285526,169
2,464,8292,716,6154,145,482
Long-Term Liabilities
Technology Partnerships Canada187,351179,162-
Finance lease obligations--7,388
Total liabilities2,652,1802,895,7774,152,870
Shareholders' equity
Share capital108,288,585108,288,585108,288,585
Other capital reserves9,593,3009,566,2509,466,400
Translation of foreign operations reserve1,118,966794,984-
Deficit(106,137,914)(106,037,676)(101,709,866)
Total shareholders' equity12,862,93712,612,14316,045,119
Total liabilities and shareholders' equity$15,515,117$15,507,920$20,197,989


INTRINSYC SOFTWARE INTERNATIONAL, INC.
Condensed Consolidated Statements of Operations and Deficit
(Unaudited and expressed in U.S. dollars)
For theThree months ended March 31, 2011Three months ended March 31, 2010
Continuing Operations
Revenues$2,553,167$3,506,997
Cost of sales1,140,8251,390,866
1,412,3422,116,131
Expenses
Sales and marketing591,968615,221
Research and development111,578840,935
Administration496,660556,981
Other operating expenses235,978762,738
1,436,1842,775,875
Operating loss before other expenses (earnings) and income taxes23,842659,744

Other expenses (earnings)
Foreign exchange loss95,242198,295
Finance income(19,633)(6,602)
75,609191,693
Operating Loss before income taxes99,451 851,437
Income tax expense-current7871,954

Net loss for the period
100,238853,391
Deficit, beginning of period106,037,676101,709,866
Deficit, end of period$106,137,914$102,563,257
Loss per share (basic and diluted)$0.00$0.01
Weighted average number of shares outstanding163,259,070163,259,070


INTRINSYC SOFTWARE INTERNATIONAL, INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited and expressed in U.S. dollars)
For theThree months ended March 31, 2011Three months ended March 31, 2010

Net loss for the period
($ 100,238)($ 853,391)
Other comprehensive income (loss):
Translation of foreign operations reserve323,982535,236
Comprehensive income (loss)$ 223,744($ 318,155)


INTRINSYC SOFTWARE INTERNATIONAL, INC.
Condensed Consolidated Statements of EBITDA and Loss
(Unaudited and expressed in U.S. dollars)
For theThree months ended March 31, 2011Three months ended March 31, 2010
Continuing Operations:
Revenues$ 2,553,167$ 3,506,997
Cost of sales1,140,8251,390,866
1,412,3422,116,131
Expenses
Sales and marketing591,968615,221
Research and development111,578840,935
Administration496,660556,981
1,200,2062,013,137
EBITDA Income (Loss)212,136102,994
Other operating expenses235,978762,738
Foreign exchange loss95,242198,295
Finance income
Income tax expense - current
(19,633
787
)
(6,602
1,954
)
312,374956,385
Net loss for the period under IFRS($ 100,238)($ 853,391)


INTRINSYC SOFTWARE INTERNATIONAL, INC.
Condensed Consolidated Statements of Changes in Equity
(Unaudited and expressed in U.S. dollars)
Share CapitalOther Capital ReservesDeficitTranslation of Foreign Operations ReserveTotal Shareholder's Equity
Balance, January 1, 2011$108,288,585$9,566,250($106,037,676)$794,984$12,612,143
Total comprehensive income for the period--223,744-223,744
Share-based compensation-27,050--27,050
Translation of foreign operations--(323,982)
323,982
-
Balance, March 31, 2011$108,288,585$9,593,300($106,137,914)$1,118,966$12,862,937
Balance, January 1, 2010$108,288,585$9,466,400($101,709,866)$-$16,045,119
Total comprehensive loss for the period--(318,155)-(318,155)
Share-based compensation-(14,561)--(14,561)
Translation of foreign operations--(535,236)
535,236
-
Balance, March 31, 2010$108,288,585$9,451,839($102,563,257)$535,236$15,712,403
Balance, January 1, 2010$108,288,585$9,466,400($101,709,866)$-$16,045,119
Total comprehensive loss for the period--(3,532,826)-(3,532,826)
Share-based compensation-99,850--99,850
Translation of foreign operations--(794,984)
794,984
-
Balance, December 31, 2010$108,288,585$9,566,250($106,037,676)$794,984$12,612,143
INTRINSYC SOFTWARE INTERNATIONAL, INC.
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited and expressed in U.S. dollars)
For theThree months ended March 31, 2011Three months ended March 31, 2010
Cash flows from operating activities
Net loss for the period($ 100,238)($ 853,391)

Adjustments to reconcile net loss before tax to net cash flows:
Amortization208,928288,856
Non-cash interest4,934-
Share-based compensation27,050(14,561)
140,674(579,096)

Working capital adjustments:
Trade and other receivables588,4681,082,686
Inventory8,6506,780
Prepaid expenses23,43353,100
Trade and other payables(183,563)(472,886)
Deferred revenue(126,576)(98,846)
310,412570,834
Net cash flows from operating activities451,086(8,262)
Cash flows from investing activities
Purchase of short-term investments(3,967,507)-
Cash used in investing activities(3,967,507)-
Cash flows from financing activities
Repayment of finance lease obligation(7,890)(7,039)
Cash used in financing activities(7,890)(7,039)
Effect of exchange rate changes on cash and cash equivalents229,394405,422
Increase (decrease) in cash and cash equivalents(3,294,917)390,121
Cash and cash equivalents, beginning of period11,152,43911,710,227
Cash and cash equivalents, end of period$ 7,857,522$12,100,348

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