Intrinsyc Software International, Inc.
TSX : ICS

Intrinsyc Software International, Inc.

August 11, 2011 16:00 ET

Intrinsyc Reports 2011 Second Quarter Financial Results

Company continues positive EBITDA performance and strong financial position

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 11, 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 second quarter ended June 30, 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 March 31, 2011 and the three months ended June 30, 2010, also in accordance with IFRS.

"We are pleased with our continued achievement of positive EBITDA and improvements in cash and net working capital as at June 30, 2011," stated Tracy Rees, Chief Executive Officer. "During the second quarter, we announced a new customer for our proprietary RapilRIL™ telephony software, expanded our strategic alliances through selection into the Open Handset Alliance (OHA) and initiated our third party distribution business with the signing of an agreement with AnyDATA Corporation that will allow us to sell communication modules for a wide variety of vertical and consumer applications. Revenue in the quarter was constrained by the timing of delivery of a customer engagement and resource limitations. We are aggressively seeking to increase our services capacity to meet demand."

The Company reported second quarter revenue of approximately $2.4 million as compared to approximately $2.6 million for the three months ended March 31, 2011 and approximately $3.0 million in the period ended June 30, 2010. Total revenue attributable to the Company's Software Solutions was 30 percent of revenues, including software licensing, maintenance/support and software-related services, as compared to 36 percent and 37 percent in the respective comparative quarters. Gross margin was 50 percent during the second quarter of 2011, which was lower than 55 percent for the three months ended March 31, 2011 but consistent with the margin experienced of 50 percent for the three months ended June 30, 2010.

Total operating expenses, excluding other operating expenses, for the three months ended June 30, 2011 were 3 percent lower over the preceding three months ended March 31, 2011 and 23 percent lower over the three months ended June 30, 2010. Earnings before other operating expenses, finance income and foreign exchange gain (loss) ("EBITDA") for the three months ended June 30, 2011 was $53,776 compared to $212,136 in the previous three months ended March 31, 2011 and $11,012 for the three months ended June 30, 2010. Cash and cash equivalents were approximately $8.9 million and short-term investments were approximately $3.0 million with net working capital of approximately $12.0 million as of June 30, 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.

The Company reported revenue of approximately $5.0 million for the six months ended June 30, 2011 as compared to approximately $6.5 million for the six months ended June 30, 2010. Total revenue attributable to the Company's Software Solutions decreased to 33 percent of revenues, including software licensing, maintenance/support and software-related services, as compared to 39 percent in the respective comparative period. Gross margin was 53 percent for the six months ended June 30, 2011, down from 56 percent in the six months ended June 30, 2010.

Total operating expenses, excluding other operating expenses, for the six months ended June 30, 2011 were approximately $2.4 million, compared to approximately $3.5 million for the six months ended June 30, 2010. EBITDA for the six months ended June 30, 2011 was $265,912 compared to $114,006 for the six months ended June 30, 2010.

Business Highlights

  • Signed a software license agreement with u-blox for RapidRIL telephony software. u-blox will integrate Intrinsyc's technology into its LISA family of 3G modules for use in its wireless devices for consumer, industrial, and automotive applications.
  • Joined the Open Handset Allilance (OHA). The OHA is a consortium with over 80 mobile industry members that are strongly committed to promoting the open and royalty free Android platform.
  • Signed a distribution agreement with AnyDATA Corporation, a leader in the quality design and manufacture of high-performance wireless devices for network operators and OEMs worldwide. Intrinsyc will distribute and support AnyDATA's industry leading M2M modules based on Qualcomm's Internet of Everything Module (IEM) technology.

The new accounting policies under IFRS 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 June 30, 2011.

Conference call

The Company will release its fiscal second quarter financial results on Thursday, August 11, 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.
Interim Condensed Consolidated Statements of Financial Position
(Unaudited and expressed in U.S. dollars)
As at June 30,
2011
December 31,
2010
ASSETS
Current assets
Cash and cash equivalents $ 8,897,355 $ 11,152,439
Short-term investments 3,026,779 -
Trade and other receivables 1,888,258 2,992,007
Inventory 18,357 26,208
Prepaid expenses 60,989 162,336
13,891,738 14,332,990
Non-Current Assets
Prepaid expenses 44,767 44,551
Equipment 360,703 549,945
Intangible assets 292,541 580,434
Total assets $ 14,589,749 $ 15,507,920
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade and other payables $ 1,315,233 $ 2,164,951
Technology Partnerships Canada 77,760 72,561
Finance lease obligations - 7,818
Deferred revenue 507,898 471,285
1,900,891 2,716,615
Technology Partnerships Canada 192,001 179,162
Total liabilities 2,092,892 2,895,777
Shareholders' equity
Share capital 108,288,585 108,288,585
Other capital reserves 9,642,300 9,566,250
Translation of foreign operations reserve 1,185,411 794,984
Deficit (106,619,439) (106,037,676)
Total shareholders' equity 12,496,857 12,612,143
Total liabilities and shareholders' equity $ 14,589,749 $ 15,507,920






INTRINSYC SOFTWARE INTERNATIONAL, INC.
Interim Condensed Consolidated Statements of Operations and Deficit
(Unaudited and expressed in U.S. dollars)
For the Three months ended June 30, 2011 Three months ended June 30, 2010 Six months ended June 30, 2011 Six months ended June 30, 2010
Continuing Operations
Revenues $ 2,415,228 $ 3,024,458 $ 4,968,395 $ 6,531,455
Cost of sales 1,196,550 1,497,857 2,337,375 2,888,723
1,218,678 1,526,601 2,631,020 3,642,732
Expenses
Sales and marketing 435,848 399,111 1,027,816 1,014,332
Research and development 124,400 638,852 235,978 1,479,787
Administration 604,654 477,626 1,101,314 1,034,607
Other operating expenses 524,082 618,039 760,060 1,380,777
1,688,984 2,133,628 3,125,168 4,909,503
Operating Loss before other expense (earnings) and income taxes 470,306 607,027 494,148 1,266,771
Other expense (earnings)
Foreign exchange loss (gain) 38,274 (229,798) 133,516 (31,503)
Finance income (27,055) (10,194) (46,688) (16,796)
11,219 (239,992) 86,828 (48,299)
Operating Loss before income taxes 481,525 367,035 580,976 1,218,472
Income tax expense – current - (71,183) 787 (69,229)
Net loss for the period 481,525 295,852 581,763 1,149,243
Deficit, beginning of period 106,137,914 102,563,257 106,037,676 101,709,866
Deficit, end of period $ 106,619,439 $ 102,859,109 $ 106,619,439 $ 102,859,109
Loss per share (basic and diluted) $ 0.00 $ 0.00 $ 0.00 $ 0.01
Weighted average number of shares outstanding 163,259,070 163,259,070 163,259,070 163,259,070






INTRINSYC SOFTWARE INTERNATIONAL, INC.
Interim Condensed Consolidated Statements of Comprehensive Loss
(Unaudited and expressed in U.S. dollars)
For the Three months ended June 30, 2011 Three months ended June 30, 2010 Six months ended June 30, 2011 Six months ended June 30, 2010
Net loss for the period $ (481,525) $ (295,852) $ (581,763) $ (1,149,243)
Other comprehensive income (loss):
Translation of foreign operations reserve 66,445 (711,683) 390,427 (176,447)
Comprehensive loss $ (415,080) $ (1,007,535) $ (191,336) $ (1,325,690)






INTRINSYC SOFTWARE INTERNATIONAL, INC.
Interim Condensed Consolidated Statements of EBITDA and Loss
(Unaudited and expressed in U.S. dollars)
For the Three months ended June 30, 2011 Three months ended June 30, 2010 Six months ended June 30, 2011 Six months ended June 30, 2010
Continuing Operations
Revenues $ 2,415,228 $ 3,024,458 $ 4,968,395 $ 6,531,455
Cost of sales 1,196,550 1,497,857 2,337,375 2,888,723
1,218,678 1,526,601 2,631,020 3,642,732
Expenses
Sales and marketing 435,848 399,111 1,027,816 1,014,332
Research and development 124,400 638,852 235,978 1,479,787
Administration 604,654 477,626 1,101,314 1,034,607
1,164,902 1,515,589 2,365,108 3,528,726
EBITDA Income 53,776 11,012 265,912 114,006
Other operating expenses 524,082 618,039 760,060 1,380,777
Foreign exchange loss (gain) 38,274 (229,798) 133,516 (31,503)
Finance income (27,055) (10,194) (46,688) (16,796)
Income tax expense – current - (71,183) 787 (69,229)
535,301 306,864 847,675 1,263,249
Net loss for the period under IFRS $ (481,525) $ (295,852) $ (581,763) $ (1,149,243)

INTRINSYC SOFTWARE INTERNATIONAL, INC.
Interim Condensed
Consolidated Statements of Changes in Equity
(Unaudited and expressed in U.S. dollars)
Share Capital Other
Capital Reserves
Deficit Translation of Foreign Operations Reserve Total 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
Total comprehensive loss
for the period
- - (415,080) - (415,080)
Share-based compensation - 49,000 - - 49,000
Translation of foreign operations - - (66,445)
66,445
-
Balance, June 30, 2011 $ 108,288,585 $ 9,642,300 $ (106,619,439) $ 1,185,409 $ 12,496,857
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
Total comprehensive loss
for the period
- - (1,007,535) - (1,007,535)
Share-based compensation - 45,073 - - 45,073
Translation of foreign operations - - 711,683
(711,683)
-
Balance, June 30, 2010 $ 108,288,585 $ 9,496,912 $ (102,859,109) $ (176,447) $ 14,749,941
INTRINSYC SOFTWARE INTERNATIONAL, INC
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited and expressed in U.S. dollars)
For the Three months ended June 30, 2011 Three months ended June 30, 2010 Six months ended June 30, 2011 Six months ended June 30, 2010
Cash flows from operating activities
Net loss for the period $ (481,525) $ (295,852) $ (581,763) $ (1,149,243)
Adjustments to reconcile net loss before tax to net cash flows:
Amortization 201,772 290,889 410,700 579,745
Non-cash interest 5,122 - 10,056 -
Share-based compensation 49,000 45,073 76,050 30,512
Non-cash restructuring 98,124 - 98,124 -
(127,507) 40,110 13,167 (538,986)
Working capital adjustments:
Trade and other receivables 593,627 (842,175) 1,182,095 240,511
Inventory (169) (18,958) 8,481 (12,178)
Prepaid expenses 83,338 117,153 106,771 170,253
Trade and other payables (727,064) (1,035,809) (910,627) (1,508,695)
Current portion of long-term payable to Technology Partnerships Canada - 72,936 - 72,936
Deferred revenue 150,704 1,555 24,128 (97,291)
100,436 (1,705,298) 410,848 (1,134,464)
Net cash flows from operating activities (27,071) (1,665,188) 424,015 (1,673,450)
Cash flows from investing activities
Redemption (purchase) of short-term investments 1,023,809 - (2,943,698) -
Purchase of equipment (2,059) - (2,059) -
Cash provided by (used in) investing activities 1,021,750 - (2,945,757) -
Cash flows from financing activities
Repayment of capital lease obligation - (7,233) (7,890) (14,272)
Long-term payable to Technology Partnerships Canada - 234,282 - 234,282
Restricted cash - 97,248 - 97,248
Cash provided by (used in) financing activities - 324,297 (7,890) 317,258
Effect of exchange rate changes on cash and cash equivalents 45,154 (508,944) 274,548 (103,522)
Increase (decrease) in cash and cash equivalents 1,039,833 (1,849,835) (2,255,084) (1,459,714)
Cash and cash equivalents, beginning of period 7,857,522 12,100,348 11,152,439 11,710,227
Cash and cash equivalents, end of period $ 8,897,355 $ 10,250,513 $ 8,897,355 $ 10,250,513

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