Intrinsyc Technologies Corporation
TSX : ITC

Intrinsyc Technologies Corporation

November 05, 2014 16:00 ET

Intrinsyc Reports 2014 Third Quarter Results

Revenue up 84% from Prior Year

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Nov. 5, 2014) - Intrinsyc Technologies Corporation (TSX:ITC) ("Intrinsyc" or the "Company"), a leading provider of solutions for the development of embedded and wireless devices, today announced its financial results for the third quarter ending September 30, 2014. Revenue was $2.7 million in the third quarter, up 84% from $1.5 million in the third quarter of 2013 and up 7% from the previous quarter. Higher revenue resulted in achievement of positive EBITDA1 of $119,603. Financial information is reported in United States dollars and in accordance with International Financial Reporting Standards ("IFRS").

"This was our fourth consecutive quarter of sequential revenue growth and positive EBITDA," stated Tracy Rees, President and Chief Executive Officer, Intrinsyc. "Although there is no assurance that we will continue with uninterrupted sequential growth, we are clearly getting positive results from our recent computing and connectivity initiatives. We are working hard to continue our momentum, with an increasing number of customers currently developing their products using Intrinsyc's Open-Q™ computing products. We expect to see growing revenue contribution from these customers in 2015. We also are significantly expanding our product portfolio with new development kits and computing modules, including the launch of the Open-Q 8084 Development Kit and System on Module ("SOM") late in the third quarter, and several products planned to launch in the fourth quarter."

Business Highlights

Notable developments and achievements during the quarter include the following:

  • Introduced the Open-Q 8084 production-ready SOM and Development Kit.

  • Entered into agreements for support of two Mobile Development Platforms and development and support of a new embedded computing development platform. These products will be launched in the fourth quarter.

  • Participated in several key industry conferences in coordination with our strategic technology partner.

  • Hired Chris Ross to the role of CTO and Vice President of Manufacturing.

Financial Highlights

Three Month Comparative Results

The Company reported revenue of $2.7 million, up 84% year-over-year, from $1.5 million, and up 7% quarter-over-quarter, from $2.5 million.

Gross margin2 was 36%, which is consistent with the gross margin of 37% in the comparable periods.

EBITDA was $119,603, an improvement from ($245,462) in the same period in the prior year and up from $113,786 in the prior quarter.

The Company had net loss of $77,776 due primarily to decline in the value of the Canadian dollar compared to a net loss of $328,353 in the same period in the prior year and net income of $199,868 in the prior quarter.

Nine Month Comparative Results

The Company reported revenue of $7.5 million compared to $4.3 million for the nine months ended September 30, 2013.

Gross margin was 38% for the nine months ended September 30, 2014, which was consistent with gross margin experienced of 37% for the nine months ended September 30, 2013.

EBITDA for the nine months ended September 30, 2014 was $335,520 compared to ($2.3) million for the nine months ended September 30, 2013.

The Company had a net loss of $37,633 due primarily to decline in the value of the Canadian dollar during the nine months ended September 30, 2014 compared to a net loss of $2.2 million during the nine months ended September 30, 2013.

Financial Position as at September 30, 2014

Working capital3 as of September 30, 2014 was $8.9 million (which included cash and cash equivalents of $7.2 million and short term investments of $1.4 million). This is compared to net working capital of $8.8 million as of December 31, 2013 (which included cash and cash equivalents of $4.6 million and short-term investments of $4.5 million).

Subsequent Event

On October 1, 2014, Intrinsyc announced a major agreement with Stream TV Networks, Inc. ("Stream TV"), to evolve the relationship between the companies to a strategic level. Stream TV expanded its prior work with Intrinsyc and committed to acquire a minimum of $3,000,000 in Intrinsyc products, services, and royalties over the next twelve months. Intrinsyc invested in Stream TV the sum of $1,500,000 in the form of a secured convertible promissory note instrument bearing interest at 3% per annum that will convert, at Stream TV's option, into the class of securities on a future qualified equity financing by Stream TV, or principal and interest will be repayable in cash on the maturity date of December 31, 2015. "We are excited about the possibilities for mutual success with our strategic client," added Rees.

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, 2014 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 hold a conference call to discuss its fiscal third quarter 2014 financial results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) today. On the call, Mr. Rees and George Reznik, Chief Financial Officer, will discuss the financial results announced. This conference call may be accessed, toll-free, by dialing 1-800-952-4972, and internationally by dialing 1-416-340-9432 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 income (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.

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; reliance on products manufactured by other companies for resale or distribution and reliance on third-party suppliers; 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, 2013. 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 Technologies Corporation

Intrinsyc Technologies Corporation (www.intrinsyc.com) a leading provider of solutions for the development of embedded and wireless devices is a product development company that provides hardware, software, and service solutions that enable next-generation embedded and Internet of Things ("IoT") 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:ITC) and is headquartered in Vancouver, BC, Canada.

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 income (loss) less other operating expenses.

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 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.

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