Intrinsyc Software International, Inc.
TSX : ICS

Intrinsyc Software International, Inc.

April 12, 2006 09:30 ET

Intrinsyc Software Reports Q2 2006 Financial Results; Quarterly Revenues up 15% Compared to Q2 2005

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - April 12, 2006) - Intrinsyc Software International, Inc. (TSX:ICS), today announced its financial results for its second quarter of the 2006 fiscal year, which ended February 28, 2006.

- Q2 2006 revenue was $4.8 million, a 15% increase from the same quarter in the previous year (Q2 2005 - $4.2 million).

- 2006 year-to-date revenue was $9.3 million, and 18% increase from the previous year (2005 year to date - $7.9 million).

- On March 30, 2006, subsequent to end of the second quarter, the Company announced the completion of a $24.1 million Public Offering.

Executive Commentary

Vince Schiralli, President and Chief Operating Officer, said:

"Our business continues to grow, and as a result, we have expanded our engineering staff and our Vancouver facility during the quarter. We are very pleased that sales revenue continued to be in line with our internal plan of record as we concurrently focused on the launch and go-to-market activities of Soleus, our feature phone software platform. The commercial launch of Soleus during the quarter marked a key milestone for the Company and we are happy with the market feedback."

Derek Spratt, Chief Executive Officer, said:

"The completion of our March 30th financing has provided the Company with the liquidity needed to execute the Soleus business plan. We are continuing to move forward with our efforts toward establishing Soleus as one of the leading mobile phone development platforms and application frameworks in the handset industry."

Financial and Operational Highlights - Q2 2006

- On February 13, 2006, the Company announced the commercial availability of Soleus™ at the 3GSM World Congress 2006 in Barcelona, Spain. Soleus, first demonstrated in 2005 under the code name Polaris, is a turnkey development platform for feature phones that leverages the Microsoft® Windows™ CE operating system to create software that provides mobile phone manufacturers with more cost-effective and feature-laden handset design options.

- On February 13, 2006, the Company announced that Wistron Corporation (TSE:3231.tw), one of the world's largest original device manufacturers (ODM), is collaborating with Intrinsyc to integrate Soleus into custom handset solutions.

- On February 13, 2006, the Company announced that it showcased Soleus on four different silicon vendor reference designs and two different handsets at the 2006 3GSM World Congress. The devices featured leading mobile handset hardware architectures that include Texas Instrument's (NYSE:TXN) OMAP™ 730 and 850 chipsets, Freescale Semiconductor's (NYSE:FSL) i.MX31 chipset, Intel's (Nasdaq NM:INTC) PXA270 chipset and Agere System's (NYSE:AGR) Vision™ X115 chipset.

- On February 13, 2006, the Company launched a processor-level power management solution for Microsoft® Windows™ CE 5.0-based products. This delivery of ARM® Intelligent Energy Manager (IEM)™ software is the first implementation based on Microsoft® Windows™ CE 5.0 and enables Intrinsyc's customers to reduce overall power and energy levels in their mobile designs and is fully compatible with Soleus™. Soleus™, together with ARM IEM software, offers an integrated power management solution for system-on-chip (SoC) designs. Intrinsyc's implementation of IEM software marks the first delivery of the technology on the high-performance ARM11™ processor family, which is targeted for applications where memory, high performance, real time processing and low power consumption is critical.

The EBITDA(1) loss excluding stock based compensation expense for the second quarter of fiscal 2006 was $3.3 million compared to $0.6 million in the second quarter in fiscal 2005. The second quarter EBITDA losses excluding stock based compensation expense includes research and development expenditures on Soleus of $2.5 million in fiscal 2006 and $0.5 million in fiscal 2005.

The loss for the second quarter for fiscal 2006 was $4.6 million or $0.08 per share compared to a loss of $0.8 million or $0.01 per share in the second quarter of fiscal 2005 and includes stock based compensation expense of $0.3 million for the second quarter in fiscal 2006 and $0.2 million for the second quarter of fiscal 2005.

The cash used in operations increased to $2.5 million in the second quarter fiscal 2006 compared to $0.6 million cash provided by operations in the second quarter of fiscal 2005 as result of the $2.0 million increase in spending on the development of mobile software. The cash used in investing activities increased to $0.4 million in the second quarter of fiscal 2006 compared to $0.2 million for the second quarter of fiscal 2005 due to the expansion and build out of the Vancouver facility during the quarter.

Condensed unaudited interim financial statements are attached and a conference call to discuss these results will be held Wednesday, April 12 at 10:00 a.m. PST. Shareholders and interested parties wishing to listen to the conference call may dial 1-800-291-5032 (toll free) five minutes prior to the scheduled time. Alternatively, you may listen to a live audio Webcast of the conference call at http://www.intrinsyc.com/investors/pres_and_conf_calls.asp.

Please submit questions to invest@intrinsyc.com prior to the call.

For those unable to participate, a replay of the conference call will be available from 12:00 p.m. PST on April 12, 2006 to 12:00 a.m. PST on April 19, 2006. The replay number is 1 800 633 8625 and the pass code for callers is 21288704. The call will also be archived at http://www.intrinsyc.com/investors/pres_and_conf_calls.asp.

The Audit Committee and Board of Directors of the Company have reviewed the contents of this news release.

About Intrinsyc Software International, Inc.

Intrinsyc is a mobility software and services company. Its mobile software products, engineering design services and systems integration expertise help customers make better decisions, improve productivity, and reduce time-to-market. Since 1996, Intrinsyc has built a strong customer base and has formed solid alliances with many leading technology companies including Microsoft, IBM, Intel, Philips, Siemens, Symbian, General Electric, Hand Held Products, Texas Instruments and Ford.

Named a Microsoft Gold Partner, Intrinsyc has extensive experience with the intricacies of designing, developing and supporting voice and data-enabled handsets built on Microsoft's Windows™ CE operating system. Intrinsyc is also the creator and licensor of Soleus™, the world's first feature phone software platform based on Windows™ CE. Soleus™ offers a new way to build feature phones, providing pre-integration with leading hardware platforms, all the telephony essentials and pre-integration of the most popular data applications.

Intrinsyc is a publicly traded company, headquartered in Vancouver, Canada with additional regional offices in Bellevue, Washington, and Birmingham, UK and Barbados. To find out more about Intrinsyc, visit: www.Intrinsyc.com.

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. Such forward-looking statements 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", "estimate", "intend", "plan", "forecast", "project", "estimate" and "believe" or other similar words and phrases are intended to identify forward-looking statements. Persons reading this press release are cautioned that such statements are only predictions, and that the Company's actual future results or performance may be materially different.

Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include the risk factors set out in the Company's Annual Information Form.

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.

Intrinsyc is a registered trademark of Intrinsyc Software International, Inc. All other trademarks are registered trademarks of the respective owners, and are hereby acknowledged.



Intrinsyc Software International, Inc.

CONSOLIDATED BALANCE SHEETS
(Unaudited)

February 28, August 31,
2006 2005
$ $
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ASSETS
Current
Cash and cash equivalents 8,167,468 7,318,210
Accounts receivable 3,733,795 3,909,596
Inventory 140,903 134,318
Prepaid expenses 316,997 306,089
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Total current assets 12,359,163 11,668,213
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Prepaid expenses 65,218 39,673
Equipment 1,336,753 980,580
Goodwill 14,189,478 14,189,478
Intangible assets 738,325 1,212,577
Deferred financing costs 755,029 -
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Total assets 29,443,966 28,090,521
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LIABILITIES AND SHAREHOLDERS'
EQUITY
Current
Accounts payable and accrued
liabilities 3,357,494 2,790,071
Taxes payable 114,953 263,382
Deferred revenue 468,735 836,660
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Total current liabilities 3,941,182 3,890,113
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Debentures 7,446,263 -
Future income taxes 269,128 261,425
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Total liabilities 11,656,573 4,151,538
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Shareholders' equity
Share capital 57,477,591 57,452,141
Warrants 599,143 163,500
Contributed surplus 2,542,904 1,896,760
Cumulative translation
adjustment (27,792) (27,792)
Deficit (42,804,453) (35,545,626)
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Total shareholders' equity 17,787,393 23,938,983
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Total liabilities and
shareholders' equity 29,443,966 28,090,521
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Intrinsyc Software International, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(Unaudited)

Three months ended Six months ended
February 28 February 28

2006 2005 2006 2005
$ $ $ $
--------------------------------------------------------------------

Revenues 4,792,488 4,165,100 9,345,176 7,850,802
Cost of sales 3,181,633 2,100,486 5,850,319 4,098,902
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1,610,855 2,064,614 3,494,857 3,751,900
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Expenses
Administration 1,360,608 1,201,253 2,749,355 2,068,528
Marketing and sales 883,517 697,796 1,690,916 1,513,337
Research and
development 2,653,387 754,697 4,301,768 1,373,236
Amortization 430,722 211,912 653,195 414,911
Stock-based compensation 301,684 201,409 506,144 353,508
Technology Partnerships
Canada Funding
Investment - - 1,173 (37,689)
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5,629,918 3,067,067 9,902,551 5,685,831
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Loss before other
expense (income) and
income taxes 4,019,063 1,002,453 6,407,694 1,933,931
Other expense (income)
Foreign exchange loss
(gain) 89,136 (174,180) 196,559 322,294
Interest income (67,757) (41,403) (117,675) (51,940)
Accretion and
amortization
- long term debt 207,609 - 333,983 -
Interest expense
- long term debt 246,575 - 405,479 -
--------------------------------------------------------------------
475,563 (215,583) 818,346 270,354
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Loss before income
taxes 4,494,626 786,870 7,226,040 2,204,285
Income tax expense
(recovery)
Current 45,119 - 67,107 -
Future (10,668) (23,652) (34,320) (47,304)
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34,451 (23,652) 32,787 (47,304)
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Loss for the period 4,529,077 763,218 7,258,827 2,156,981

Deficit, beginning
of period 38,275,376 31,959,408 35,545,626 30,565,645
--------------------------------------------------------------------
Deficit, end of
period 42,804,453 32,722,626 42,804,453 32,722,626
--------------------------------------------------------------------
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Loss per share
(basic and diluted) 0.08 0.01 0.13 0.04
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Weighted average
number of shares
outstanding 56,237,468 56,233,718 56,235,893 52,977,687
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Intrinsyc Software International, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Three months ended Six months ended
February 28 February 28

2006 2005 2006 2005
$ $ $ $
--------------------------------------------------------------------

OPERATING ACTIVITIES
Loss for the period (4,529,077) (763,218) (7,258,827)(2,156,981)
Items not involving
cash
Amortization 430,722 211,912 653,195 414,911
Future income taxes 31,355 (23,652) 7,703 (47,304)
Stock-based
compensation 301,684 201,409 506,144 353,508
Accretion and
amortization
- long term debt 207,609 - 333,983 -
Changes in non-cash
operating
working capital
Accounts receivable 656,770 (76,169) 175,801 (452,954)
Other receivable - 985,063 - 947,374
Inventory (9,084) 30,657 (6,585) 82,650
Prepaid expenses (7,604) 93,192 (36,453) 136,887
Accounts payable and
accrued liabilities 880,455 7,705 567,423 (357,777)
Taxes payable (137,366) (60,783) (148,429) 8,904
Deferred revenue (279,801) (24,234) (367,925) 89,761
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Cash provided by
(used in)
operating activities (2,454,337) 581,882 (5,573,970) (981,021)
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INVESTING ACTIVITIES
Purchase of short term
investments - - - (5,000,000)
Purchase of equipment (430,667) (169,649) (535,117) (290,270)
--------------------------------------------------------------------
Cash used in investing
activities (430,667) (169,649) (535,117)(5,290,270)
--------------------------------------------------------------------

FINANCING ACTIVITIES
Issuance of common shares - - 1,950 5,632,671
Share issuance costs - (53,857) - (508,607)
Debentures - - 8,000,000 -
Debentures issuance costs (76,531) - (1,043,605) -
--------------------------------------------------------------------
Cash provided by (used in)
financing activities (76,531) (53,857) 6,958,345 5,124,064
--------------------------------------------------------------------

Increase (decrease)
in cash and cash
equivalents (2,961,535) 358,376 849,258 (1,147,227)
Cash and cash
equivalents,
beginning of period 11,129,003 3,094,857 7,318,210 4,600,460
--------------------------------------------------------------------
Cash and cash
equivalents,
end of period 8,167,468 3,453,233 8,167,468 3,453,233
--------------------------------------------------------------------
--------------------------------------------------------------------

Supplementary information
Interest paid 251,279 818 412,167 6,476
Income taxes paid 29,587 - 45,823 -
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(1) EBITDA is a non-GAAP measure that does not have a standardized meaning and may not be comparable to similar measures disclosed by other issuers. This measure does not have a comparable GAAP measure. EBITDA is defined as earnings before interest, tax, depreciation and amortization.

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