Intrinsyc Software International, Inc.
TSX : ICS

Intrinsyc Software International, Inc.

November 06, 2013 16:00 ET

Intrinsyc Reports 2013 Third Quarter Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Nov. 6, 2013) - Intrinsyc Software International, Inc. ("Intrinsyc" or the "Company") (TSX:ICS), a leading provider of solutions for the development of embedded and wireless devices, today announced its financial results for the third quarter ended September 30, 2013. Intrinsyc achieved revenue of approximately $1.5 million in the third quarter, which decreased by 8% over the previous quarter. The Company reported negative EBITDA(1) of $245,462 and a Net Loss of $328,353. Financial information is reported in United States dollars and in accordance with International Financial Reporting Standards ("IFRS").

"Revenue from our Machine-to-Machine ("M2M") module business was negatively impacted as planned shipments in the third quarter were delayed, with shipments expected to resume in the fourth quarter," stated Tracy Rees, CEO of Intrinsyc.

"The Company made excellent progress with the development of the DragonBoard™ 8074, shipping over 450 development kits in the quarter, to more than 100 customers, and generating significant interest in Intrinsyc's OPEN-Q™ 8074 System on Module ("SOM")," added Rees. "Two companies signed development agreements during the third quarter related to the OPEN-Q SOM, with three more added early in the fourth quarter. While it will take several months for these opportunities to reach production, we are encouraged by the long-term potential from these and other opportunities."

Business Highlights

Notable events, developments, and achievements during the third quarter include the following:

  • Signed an engineering services and royalty agreement associated with the OPEN-Q SOM with Stream TV Networks, Inc. ("Stream TV"). Intrinsyc will be paid as engineering services are performed and also a royalty per device when units ship. Stream TV, a Philadelphia based new media company has developed real-time conversion technology which converts all input content - 2D or 3D Stereo content - to Ultra-D 2160p (4K glasses free 3D content). Stream TV has announced business relationships with Hisense and other television manufacturers.
  • Signed an agreement with a military/aerospace company for the development of a proof of concept demonstration utilizing the OPEN-Q SOM.
  • Completed the development of the DragonBoard 8074 and shipped more than 450 DragonBoard development kits during the quarter to over 100 customers.
  • Announced that Alkarim Kassam, Vice President, Global Engineering, will be leaving Intrinsyc, effective October 31, 2013.

Financial Highlights

Three Month Comparative Results

The Company reported revenue of approximately $1.5 million for three months ended September 30, 2013 as compared to approximately $1.6 million for the three months ended June 30, 2013 and approximately $1.6 million in the three months ended September, 2012. Gross margin(2) was 37% for the three months ended September 30, 2013, which was lower than 48% for the three months ended June 30, 2013 and the gross margin experienced of 42% for the three months ended September 30, 2012. The decrease in gross margin percentage over the comparative periods is due to lower revenue from engineering services and increased hardware sales which typically have lower margins.

Total expenses (excluding other operating expenses)(3) for the three months ended September 30, 2013 were approximately $785,000 which was a decrease of 61% from the three months ended June 30, 2013 and consistent from the three months ended September 30, 2012.

EBITDA for the three months ended September 30, 2013 was ($245,462) compared to ($1,232,557) for the previous three months ended June 30, 2013 and ($94,356) for the three months ended September 30, 2012.

Financial Position as at September 30, 2013

Working capital(4) as of September 30, 2013 was approximately $8.9 million (which included cash and cash equivalents of approximately $4.4 million and short-term investments of approximately $4.8 million). This is compared to net working capital of approximately $11.4 million as of December 31, 2012 (which included cash and cash equivalents of approximately $6.0 million and short-term investments of approximately $5.3 million).

Financial Statements and Management Discussion & Analysis

Please see the unaudited condensed consolidated interim financial statements and related Management's Discussion & Analysis ("MD&A") for more details. The unaudited condensed consolidated interim financial statements for the three and nine month periods ended September 30, 2013 and related MD&A have been reviewed and approved by Intrinsyc's Audit Committee and Board of Directors. Intrinsyc recognizes that the majority of its investors are now accessing Intrinsyc's corporate and financial information either through pushed news services, directly from www.intrinsyc.com or SEDAR. Thus, Intrinsyc has prepared this truncated news release to alert investors to its results and that a more detailed explanation and analysis is readily available in the MD&A. These reports have been filed on SEDAR at www.sedar.com and also posted at www.intrinsyc.com.

Conference call

The Company will release its fiscal third quarter financial results on Wednesday, November 6, 2013 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 1-888-340-9642 or direct, and internationally by dialing 1-416-340-8530 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.

Non-IFRS Measures

The following and preceding discussion of financial results includes reference to Gross Margin, Total Expenses (excluding other operating expenses), EBITDA and Working Capital, which are all non-IFRS financial measures. The measure of gross margin is provided as management believes this is a good indicator in evaluating the operating performance of the Company. Total expenses excluding other operating expenses is provided as a proxy for cash expenses incurred from the operations of the business. EBITDA is defined as operating loss less other operating expenses. The measure is provided as a proxy for the cash earnings from the operations of the business as operating loss for the Company includes non-cash amortization and depreciation expense, share-based compensation and loss on disposal of equipment which are classified as other operating expenses. The measure of working capital is provided as management believes this is a good indicator of the operating liquidity available to the Company.

(1) Non-IFRS measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. This measure does not have a comparable IFRS measure. EBITDA referenced here relates to operating loss less other operating expenses. Please refer to the reconciliation of EBITDA to reported financial results attached to this press release.
(2) Non-IFRS measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Gross Margin referenced here relates to revenues less cost of sales.
(3) Non-IFRS measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Total Expenses excludes other operating expenses.
(4) Non-IFRS measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. This measure does not have a comparable IFRS measure. Working Capital is defined as current assets less current liabilities.

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, 2012. 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 Software International, Inc. (www.intrinsyc.com) is a product development company that provides hardware, software, and service solutions that enable next-generation embedded and wireless products. Solutions span the development life cycle from concept to production and help device makers and technology suppliers create compelling differentiated products with faster time-to-market. Intrinsyc is publicly traded (TSX:ICS) and is headquartered in Vancouver, BC, Canada.

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