Intrinsyc Software International, Inc.
TSX : ICS

Intrinsyc Software International, Inc.

August 13, 2009 16:00 ET

Intrinsyc Reports Second Quarter Financial Results

Company Achieves positive EBITDA Ahead of Plan

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 13, 2009) - Intrinsyc Software International, Inc. (TSX:ICS), a leading provider of software solutions for mobile devices, today announced its financial results for the second quarter ended June 30, 2009, reported in United States dollars and in accordance with Canadian Generally Accepted Accounting Principles ("GAAP"). The Company's results are presented in comparison to the three-month period ended March 31, 2009 and the three-month period ended June 30, 2008.

The Company reported second quarter revenue of $4.9 million as compared to $4.4 million for the three months ended March 31, 2009 and $5.6 million in the three months ended June 30, 2008. Total revenue attributable to the Company's software solutions was 43 percent of revenues, including software licensing, maintenance/support and software-related services, as compared to 40 percent and 23 percent in the respective comparative quarters. Gross margin was 56 percent in the second quarter of 2009 representing an increase from 48 percent in the three months ended March 31, 2009 and 47 percent in the three months ended June 30, 2008.

Total operating expenses, excluding amortization, Technology Partnerships Canada ("TPC") funding investment, stock-based compensation and loss on disposal of equipment, for the three months ended June 30, 2009 were $2.4 million representing a decrease of 27 percent and 62 percent from the $3.3 million and $6.3 million in the quarter ended March 31, 2009 and the three months ended June 30, 2008, respectively. Earnings before interest, amortization, foreign exchange gains or losses, stock-based compensation expense, loss on disposal of equipment, TPC funding investment and income tax ("EBITDA") for the three months ended June 30, 2009 was $310,242 compared to EBITDA of ($1.2 million) for the three months ended March 31, 2009 and ($3.7 million) for the three months ended June 30, 2008. Cash and cash equivalents were $10.6 million with net working capital of $9.9 million as of June 30, 2009 compared to cash and cash equivalents of $12.4 million with net working capital of $10.7 million as of December 31, 2008.

"We successfully executed our operational restructuring plan begun in the fourth quarter of 2008, and achieved our goals of business stabilization," stated Tracy Rees, President and Chief Executive Officer. "The achievement of positive EBITDA is a major milestone for Intrinsyc. We expanded our solution offering with the launch of a substantial version upgrade to our Destinator navigation software, as well as new solutions to aid in development of Android based mobile devices. The enhancement of our product line and relationships with industry leaders like LG Electronics helps establish a solid foundation for future growth."

The Company reported revenue of $9.3 million for the six-month period ended June 30, 2009 as compared to $11.1 million for the six month period ended June 30, 2008. Total revenue attributable to the Company's software solutions increased to 41 percent of revenues, including software licensing, maintenance/support and software-related services, as compared to 20 percent in the respective comparative period. Gross margin was 52 percent for the six month period ended June 30, 2009, up from 46 percent in the six months ended June 30, 2008.

Total operating expenses, excluding amortization, stock-based compensation, loss on disposal of equipment and TPC funding investment, for the six months ended June 30, 2009 were $5.7 million, compared to $12.5 million for the six months ended June 30, 2008. EBITDA for the six months ended June 30, 2008 was ($880,160) compared to ($7.4 million) for the six months ended June 30, 2008.

Business Highlights

During the second quarter, the Company made progress in expanding its product offering and securing new business as indicated in the following announcements:

- Launched Destinator 9, the newest version of Destinator that offers the industry's best navigation experience for Microsoft Windows and Android mobile operating systems

- Announced an extension to the agreement with Fortune 500 company for Android device development

- Opened development center in Beijing, China to support Android handset makers

- Launched UX-Zone in partnership with Ubiquisys - UX-Zone is the wireless industry's first solution for Android that automatically detects femtocells and puts relevant applications and services at the end user's fingertips

- Announced partnership with the BLOM Group for the integration of the Blom 3D PhotoNav Technology into the Destinator routing engine to cover more than 1000 cities in Europe

- Launched Android platform development tools including RapidRIL and Telephony Test Suite

Conference call

Consolidated unaudited financial statements are attached and a conference call to discuss these results will be held at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time), August 13, 2009. To listen to the conference call live by telephone, dial +1-866-610-8602 toll free for participants in North America, and +1-212-401-8152 for international participants, approximately 10 minutes before the start time. A telephone playback will be available for three business days, beginning approximately two hours after the call. To listen to the telephone replay please dial +1-866-245-6755 toll free, and for international callers, dial +1-416-915-1035. Enter access code 984490.

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, 2008. 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 provides software solutions that enable next-generation mobile devices. The company provides award winning software and services for mobile device design and development and industry leading navigation and location based services software. Intrinsyc helps device makers, mobile operators, and silicon vendors deliver compelling mobile products with faster time-to-market, higher quality, and differentiating innovation. Intrinsyc supports customers globally with solutions that span all major mobile operating systems and platforms, including Windows CE, Windows Mobile, Linux, Android, and Symbian. Intrinsyc is a Microsoft Windows Embedded Gold Partner and a winner of Windows Embedded Excellence Awards in 2007 and 2008, and S60 and Symbian Competence Centers. Intrinsyc is publicly traded (TSX:ICS) and headquartered in Vancouver, Canada, with offices in China, Israel, Taiwan, U.K., and the United States. www.intrinsyc.com.



INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Balance Sheets
(Unaudited and expressed in U.S. dollars)
---------------------------------------------------------------------------
June December
As at 30, 2009 31, 2008
---------------------------------------------------------------------------

ASSETS
Current assets
Cash and cash equivalents $ 10,604,074 $ 12,391,452
Restricted cash 118,712 207,755
Accounts receivable 4,335,457 6,083,190
Inventory - 14,649
Prepaid expenses - current 284,553 523,916
---------------------------------------------------------------------------
Total current assets 15,342,796 19,220,962

Restricted cash 85,984 -
Prepaid expenses 43,342 18,998
Equipment 868,126 1,567,464
Intangible assets 3,843,086 4,034,000
---------------------------------------------------------------------------
Total assets $ 20,183,334 $ 24,841,424
---------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued
liabilities $ 4,577,686 $ 7,727,497
Capital lease obligation - current 40,026 82,911
Deferred revenue 789,281 754,301
---------------------------------------------------------------------------
Total current liabilities 5,406,993 8,564,709

Long-term capital lease obligation 21,038 39,483
---------------------------------------------------------------------------
Total liabilities 5,428,031 8,604,192
---------------------------------------------------------------------------

Shareholders' equity
Share capital 108,288,133 108,288,133
Warrants and underwriters' options 4,047,763 4,489,508
Contributed surplus 4,895,749 4,260,625
Accumulated other comprehensive (loss)
income 498,424 (159,400)
Deficit (102,974,766) (100,641,634)
---------------------------------------------------------------------------
Total shareholders' equity 14,755,303 16,237,232
---------------------------------------------------------------------------
Total liabilities and shareholders'
equity $ 20,183,334 $ 24,841,424
---------------------------------------------------------------------------



INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of Operations and Deficit
(Unaudited and expressed in U.S. dollars)
---------------------------------------------------------------------------
Three Three
months months Six months Six months
ended June ended June ended June ended June
For the 30, 2009 30, 2008 30, 2009 30, 2008
---------------------------------------------------------------------------

Revenues $ 4,874,621 $ 5,566,017 $ 9,275,428 $ 11,121,551
Cost of sales 2,144,748 2,956,178 4,425,363 5,975,526
---------------------------------------------------------------------------
2,729,873 2,609,839 4,850,065 5,146,025
---------------------------------------------------------------------------

Expenses
Sales and
marketing 744,602 1,822,475 1,888,517 3,650,850
Research and
development 1,140,993 2,694,824 2,504,082 5,241,471
Administration 534,036 1,794,631 1,337,626 3,615,608
Amortization 339,417 210,896 658,746 422,704
Stock-based
compensation 108,871 283,367 193,379 567,626
Technology
Partnerships
Canada
Funding
Investment 143,135 158,682 278,069 182,101
Loss on disposal
of equipment 199,793 - 220,345 -
---------------------------------------------------------------------------
3,210,847 6,964,875 7,080,764 13,680,360
---------------------------------------------------------------------------

Loss before
other expense
(earnings)
and income taxes 480,974 4,355,036 2,230,699 8,534,335
Other expense
(earnings)
Foreign exchange
(gain) loss 310,261 52,604 197,078 (161,889)
Interest expense
(income) 3,898 (254,420) (33,931) (426,365)
---------------------------------------------------------------------------
Loss before
income taxes 795,133 4,153,220 2,393,846 7,946,081
---------------------------------------------------------------------------

Income tax
expense
(recovery)
Current (86,463) 110,817 (60,714) 178,392
Future - (12,852) - (36,407)
---------------------------------------------------------------------------
(86,463) 97,965 (60,714) 141,985
---------------------------------------------------------------------------

Net loss for the
period 708,670 4,251,185 2,333,132 8,088,066

Deficit,
beginning of
period 102,266,096 65,618,633 100,641,634 61,781,752
---------------------------------------------------------------------------

Deficit, end of
period 102,974,766 69,869,818 102,974,766 69,869,818
---------------------------------------------------------------------------

Loss per share
(basic and
diluted) $ 0.01 $ 0.03 $ 0.02 $ 0.06
---------------------------------------------------------------------------

Weighted average
number of shares
outstanding 163,254,903 151,002,445 163,254,903 141,273,052
---------------------------------------------------------------------------



INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of Comprehensive Loss
(Unaudited and expressed in U.S. dollars)
---------------------------------------------------------------------------
Three Three
months months Six months Six months
ended June ended June ended June ended June
For the 30, 2009 30, 2008 30, 2009 30, 2008
---------------------------------------------------------------------------

Net loss for the
period ($708,670) ($4,251,185) ($2,333,132) ($8,088,066)

Other
comprehensive
gain (loss):

Unrealized gains
(losses) on
translating
financial
statements from
functional
currency to
reporting
currency 1,194,857 389,183 657,824 (1,433,793)
---------------------------------------------------------------------------

Comprehensive
income (loss) $ 486,187 ($3,862,002) ($1,675,308) ($9,521,859)
---------------------------------------------------------------------------



INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of EBITDA and Loss
(Unaudited and expressed in U.S. dollars)
---------------------------------------------------------------------------
Three Three
months months Six months Six months
ended June ended June ended June ended June
For the 30, 2009 30, 2008 30, 2009 30, 2008
---------------------------------------------------------------------------

Revenues $ 4,874,621 $ 5,566,017 $ 9,275,428 $ 11,121,551
Cost of sales 2,144,748 2,956,178 4,425,363 5,975,526
---------------------------------------------------------------------------
2,729,873 2,609,839 4,850,065 5,146,025
---------------------------------------------------------------------------

Expenses
Sales and
marketing 744,602 1,822,475 1,888,517 3,650,850
Research and
development 1,140,993 2,694,824 2,504,082 5,241,471
Administration 534,036 1,794,631 1,337,626 3,615,608
---------------------------------------------------------------------------
2,419,631 6,311,930 5,730,225 12,507,929
---------------------------------------------------------------------------

EBITDA Income
(Loss) 310,242 (3,702,091) (880,160) (7,361,904)

Amortization 339,417 210,896 658,746 422,704
Stock-based
compensation 108,871 283,367 193,379 567,626
Technology
Partnerships
Canada Funding
Investment 143,135 158,682 278,069 182,101
Foreign exchange
(gain) loss 310,261 52,604 197,078 (161,889)
Interest expense
(income) 3,898 (254,420) (33,931) (426,365)
Loss on disposal
of equipment 199,793 - 220,345 -
Income tax
expense
(recovery)
Current (86,463) 110,817 (60,714) 178,392
Future - (12,852) - (36,407)
---------------------------------------------------------------------------
1,018,912 549,094 1,452,972 726,162
---------------------------------------------------------------------------

Net loss for the
period under
Canadian GAAP ($708,670) ($4,251,185) ($2,333,132) ($8,088,066)
---------------------------------------------------------------------------



INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of Cash Flows
(Unaudited and expressed in U.S. dollars)
---------------------------------------------------------------------------
Three Three
months months Six months Six months
ended June ended June ended June ended June
For the 30, 2009 30, 2008 30, 2009 30, 2008
---------------------------------------------------------------------------

OPERATING
ACTIVITIES
Net loss for the
period ($708,670) ($4,251,185) ($2,333,132) ($8,088,066)
Items not
involving cash:
Amortization 339,417 210,896 658,746 422,704
Future income
taxes (41,694) (13,351) (2,603) (34,305)
Stock-based
compensation 108,871 283,367 193,379 567,626
Loss on disposal
of equipment 199,793 - 220,345 -
Changes in
non-cash
operating
working
capital:
Accounts
receivable 593,489 972,849 1,939,018 (1,058,705)
Inventory - 52,034 14,336 102,443
Prepaid expenses 48,000 (707,881) 227,909 (614,872)
Accounts payable
and accrued
liabilities (1,457,154) 1,261,775 (3,116,015) 1,466,765
Deferred revenue (115,051) (46,037) (7,828) 81,012
---------------------------------------------------------------------------
Cash used in
operating
activities (1,032,999) (2,237,533) (2,205,845) (7,155,398)
---------------------------------------------------------------------------

INVESTING
ACTIVITIES
Purchase of
equipment (3,075) (312,248) (25,941) (558,696)
Loan receivable - (1,998,562) - (1,998,562)
Deferred
acquisition
costs - (1,021,461) - (1,448,983)
---------------------------------------------------------------------------
Cash used in
investing
activities (3,075) (3,332,271) (25,941) (4,006,241)
---------------------------------------------------------------------------

FINANCING
ACTIVITIES
Issuance of
common shares
and warrants - 53,957 - 32,173,707
Share issuance
costs - - - (2,186,676)
Repayment of
capital lease
obligation (9,596) (12,437) (63,318) (16,260)
Restricted cash 1,035 - 12,104 -
---------------------------------------------------------------------------
Cash provided by
(used in)
financing
activities (8,561) 41,520 (51,214) 29,970,771
---------------------------------------------------------------------------

Effect of
exchange rate
changes on cash
and cash
equivalents 904,620 287,105 495,622 (957,110)
---------------------------------------------------------------------------

Increase
(decrease) in
cash and cash
equivalents (140,015) (5,241,179) (1,787,378) 17,852,022
Cash and cash
equivalents,
beginning of
period 10,744,089 35,246,802 12,391,452 12,153,601
---------------------------------------------------------------------------
Cash and cash
equivalents,
end of period $ 10,604,074 $ 30,005,623 $ 10,604,074 $ 30,005,623
---------------------------------------------------------------------------


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