Intrinsyc Technologies Corporation
TSX : ITC

Intrinsyc Technologies Corporation

March 25, 2015 16:00 ET

Intrinsyc Reports Fiscal 2014 Annual and Fourth Quarter Financial Results

Annual revenue increased 71% with Quarterly revenue up by 59% over Prior Year

VANCOUVER, BRITISH COLUMBIA--(Marketwired - March 25, 2015) - Intrinsyc Technologies Corporation (TSX:ITC) ("Intrinsyc" or the "Company"), a leading provider of solutions for the development of intelligent connected devices, today announced its financial results for the fiscal year and fourth quarter ended December 31, 2014. Intrinsyc achieved strong annual revenue growth of 71% and 59% growth in the fourth quarter of fiscal 2014 over the prior year. Revenue was $10.1 million for the 2014 fiscal year compared to $5.9 million in the prior year with $2.6 million in the fourth quarter for 2014 representing an increase from $1.6 million in the fourth quarter of fiscal 2013. Intrinsyc achieved EBITDA(1) of $366,601 during fiscal 2014 with EBITDA of $31,081 in the fourth quarter of fiscal 2014 representing the fifth consecutive quarter of positive EBITDA by the Company. Financial information is reported in United States dollars and in accordance with International Financial Reporting Standards ("IFRS").

"Intrinsyc had a solid year of improved financial performance as well as operational improvements; including broadening our solution portfolio with several new development platforms and production-ready computing modules, enhancing our engineering and manufacturing capabilities, and expanding our customer base," stated Tracy Rees, President and Chief Executive Officer. "We are proud of the progress made in 2014, and remain focused on executing on our strategic plan to build long-term shareholder value through development of new computing products with a more attractive repeat revenue business model, and augmenting our turnkey product development capabilities. In addition to our internal initiatives, the Company is considering acquisitions as a means to accelerate our strategic plans."

"Revenue from some customers using Intrinsyc's computing modules has progressed a little slower than expected and we have experienced challenges with customers that are not meeting their volume commitments due to their internal business issues," added Rees. "However, the number of customers is increasing, as we have over 20 companies in development or currently using Intrinsyc's Open-Q™ computing modules."

Business Highlights

Notable developments and achievements during the quarter include the following:

  • Invested in Stream TV Networks, Inc. ("Stream TV"), a current customer of Intrinsyc, an amount of $1,500,000 in the form of a secured convertible promissory note bearing interest at 3% per annum with a maturity date of December 31, 2015. Stream TV committed to acquire a minimum of $3,000,000 in Intrinsyc products, services, and royalties over the next twelve months.

  • Signed a license agreement for a new application processor with a leading silicon vendor. The Company is designing and building a development platform and production-ready System on Module ("SOM") that will augment the company's embedded computing portfolio with a lower cost platform targeted for a variety of embedded computing and Internet of Things ("IoT") product categories, including the next generation of robotics, cameras, set-top-boxes, wearables, medical devices, vending machines, building automation, industrial control, digital signage, and casino gaming consoles. The Company expects to launch these products in the second quarter of 2015, with operating system support for Linux, Android, and Microsoft® Corporation's forthcoming Windows 10 for IoT

Financial Highlights

Fiscal 2014 Annual Comparative Results

The Company reported revenue of $10.1 million for the twelve months ended December 31, 2014 compared to $5.9 million for the twelve months ended December 31, 2013.

Gross margin was 39% for the twelve months ended December 31, 2014, which was slightly better than the gross margin experienced of 37% for the twelve months ended December 31, 2013.

EBITDA for the twelve months ended December 31, 2014 was $366,601 compared to ($2.2) million for the twelve months ended December 31, 2013.

The Company had a net loss of $173,668 for the twelve months ended December 31, 2014 compared to a net loss of $2.1 million for the twelve months ended December 31, 2013.

Quarterly Comparative Results

The Company reported revenue of $2.6 million, up 59% year-over-year, from $1.6 million, but down 5% quarter-over-quarter, from $2.7 million.

Gross margin(2) was 41%, which was higher than the gross margins the comparable periods.

EBITDA was $31,081, a slight improvement from $30,271 in the same period in the prior year but down from $119,603 in the prior quarter.

The Company had net loss of $136,035 compared to net income of $103,032 in the same period in the prior year and a net loss of $77,776 in the prior quarter of fiscal 2014.

Financial Position as at December 31, 2014

Working capital(3) as of December 31, 2014 was $8.8 million (which included cash and cash equivalents of $4.3 million and short term investments of $2.5 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).

Financial Statements and Management Discussion & Analysis

Please see the audited consolidated financial statements and related Management's Discussion & Analysis ("MD&A") for more details. The audited consolidated financial statements for the twelve months ended December 31, 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 fourth quarter and full year 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/company/investors). Analysts and investors are invited to participate on the call. Questions may be submitted to ir@intrinsyc.com prior to the call.

Non-IFRS Measures

The following and preceding discussion of financial results includes reference to Gross Margin, 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. 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, 2014. 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 is a product development company that provides comprehensive and tailored solutions that enable the development and production of next-generation intelligent connected devices. 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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