VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 8, 2012) - Intrinsyc Software International, Inc. (TSX:ICS) ("Intrinsyc" or the "Company"), developer of intelligent connected devices, today announced its financial results for the third quarter ended September 30, 2012, reported in United States dollars and in accordance with International Financial Reporting Standards ("IFRS"). The Company's results are presented in comparison to the three months ended June 30, 2012 and the three months ended September 30, 2011, also in accordance with IFRS.
Intrinsyc achieved revenue of approximately $1.6 million in the third quarter, 24% lower than in the previous quarter, with lower operating expenses. The Company reported negative EBITDA(1) of $94,356 and a Net Loss of $227,936.
"Revenue was lower in the quarter corresponding with a reduction in engineering capacity and decline from navigation software," stated Tracy Rees, President and Chief Executive Officer of Intrinsyc. "We are addressing our declining revenue through the development of new products that can provide recurring revenue, including the recently announced DragonBoard(TM) Development Kit and production ready Open-Q(TM) System on Module. These products complement our engineering services business and offer broader customer opportunities."
(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.
Three Month Comparative Results
The Company reported revenue of approximately $1.6 million for three months ended September 30, 2012 as compared to approximately $2.2 million for the three months ended June 30, 2012 and approximately $2.8 million in the period ended September 30, 2011. Total revenue attributable to the Company's Software Solutions was 28% of revenues, including software licensing, maintenance/support and software-related services, as compared to 18% and 25% in the respective comparative quarters ended June 30, 2012 and September 30, 2011. Gross margin(2) was 42% in the three months ended September 30, 2012, which was slightly lower than 43% in the three months ended June 30, 2012 and lower than the gross margin experienced of 56% in the three months ended September 30, 2011.
Total expenses (excluding other operating expenses)(3) for the three months ended September 30, 2012 were approximately $781,000 which was a decrease of 28% over the preceding three months ended June 30, 2012 and 29% decrease over the three months ended September 30, 2011.
EBITDA for the three months ended September 30, 2012 was ($94,356) compared to ($143,703) in the previous three months ended June 30, 2012 and $452,121 for the three months ended September 30, 2011.
(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.
Nine Month Comparative Results
The Company reported revenue of approximately $6.0 million for the nine months ended September 30, 2012 as compared to approximately $7.7 million for the nine months ended September 30, 2011. Total revenue attributable to the Company's Software Solutions decreased to 22% of revenues, including software licensing, maintenance/support and software-related services, as compared to 30% in the respective comparative period which is primarily due to the decline in the Company's navigation business. Gross margin was 41% for the nine months ended September 30, 2012, a decrease from 54% for the nine months ended September 30, 2011.
Total operating expenses (excluding other operating expenses) for the nine months ended September 30, 2012 were approximately $2.9 million, compared to approximately $3.5 million for the nine months ended September 30, 2011.
EBITDA for the nine months ended September 30, 2012 was ($442,119) compared to $718,003 for the nine months ended September 30, 2011.
Working capital(4) as of September 30, 2012 was approximately $11.8 million (which included cash and cash equivalents of approximately $7.6 million and short-term investments of approximately $4.5 million). This is compared to net working capital of approximately $11.9 million as of December 31, 2011 (which included cash and cash equivalents of approximately $9.4 million and short-term investments of approximately $2.7 million).
(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.
Business Highlights
Notable events, developments, and achievements during the third quarter include the following:
-- Announced the development of the DragonBoard Development Kit and OPEN-Q
System-on-Module ("SOM").
-- Showcased the DragonBoard and Open-Q SOM in Qualcomm's booth, at the
Design East Conference, at the Hynes Convention Center, Boston, MA, from
September 17-20, 2012.
-- Released 64-bit version of its market leading bi-directional Java-COM
bridging software, "J-Integra(R)."
Conference call
The Company will release its fiscal third quarter financial results on Thursday, November 8, 2012 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, toll-free, by dialing 1-866-226-1793, and internationally by dialing 1-416-340-2218 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.
The Audit Committee of the Company has reviewed the contents of this news release.
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 restructuring 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; 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, 2011. 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 is a product development company that brings to market next generation intelligent connected devices, from smartphones and tablets, to emerging categories of Machine-to-Machine ("M2M") solutions. Intrinsyc is helping to lead the way to a networked society with 50 billion intelligent connected devices expected by 2020. Intrinsyc is publicly traded (TSX:ICS) and is headquartered in Vancouver, Canada, with operations in Taiwan and the United States.
INTRINSYC SOFTWARE INTERNATIONAL, INC.
Interim Condensed Consolidated Statements of Financial Position
(Unaudited and Expressed in U.S. dollars)
--------------------------------------------------------------------------
September 30, December 31,
As at 2012 2011
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ASSETS
Current assets
Cash and cash equivalents $ 7,611,322 $ 9,382,653
Short-term investments 4,495,569 2,688,814
Trade and other receivables 1,366,516 1,268,700
Inventory 163,549 17,702
Prepaid expenses 96,238 174,490
--------------------------------------------------------------------------
13,733,194 13,532,359
Non-Current Assets
Prepaid expenses 50,854 59,553
Equipment 345,350 355,955
Intangible assets 18,475 -
--------------------------------------------------------------------------
Total assets $ 14,147,873 $ 13,947,867
--------------------------------------------------------------------------
--------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade and other payables $ 1,236,605 $ 933,873
Government assistance 203,417 189,233
Deferred revenue 513,754 488,976
--------------------------------------------------------------------------
Total liabilities 1,953,776 1,612,082
--------------------------------------------------------------------------
Shareholders' equity
Share capital 108,288,585 108,288,585
Other capital reserves 9,812,442 9,750,619
Translation of foreign operations
reserve 932,988 514,748
Deficit (106,839,918) (106,218,167)
--------------------------------------------------------------------------
Total shareholders' equity 12,194,097 12,335,785
--------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 14,147,873 $ 13,947,867
--------------------------------------------------------------------------
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INTRINSYC SOFTWARE INTERNATIONAL, INC.
Interim Condensed Consolidated Statements of Operations and Deficit
(Unaudited and Expressed in U.S. Dollars)
--------------------------------------------------------------------------
Three months Three months Nine months Nine months
ended ended ended ended
September 30, September 30, September 30, September 30,
For the 2012 2011 2012 2011
--------------------------------------------------------------------------
Revenues $ 1,647,278 $ 2,774,842 $ 5,976,428 $ 7,743,237
Cost of sales 960,451 1,227,974 3,516,039 3,565,349
--------------------------------------------------------------------------
686,827 1,546,868 2,460,389 4,177,888
--------------------------------------------------------------------------
Expenses
Sales and
marketing 266,210 493,399 1,022,022 1,521,215
Research and
development 45,427 36,657 152,028 272,635
Administration 469,546 564,691 1,728,458 1,666,005
Other
operating
expenses 51,040 236,403 155,570 996,463
--------------------------------------------------------------------------
832,223 1,331,150 3,058,078 4,456,318
--------------------------------------------------------------------------
Operating
income (loss) (145,396) 215,718 (597,689) (278,430)
--------------------------------------------------------------------------
Other expenses
(earnings)
Foreign
exchange loss
(gain) 115,422 (385,332) 119,522 (251,816)
Interest
income (32,882) (26,056) (96,457) (72,744)
--------------------------------------------------------------------------
82,540 (411,388) 23,065 (324,560)
--------------------------------------------------------------------------
Income (loss)
before income
taxes (227,936) 627,106 (620,754) 46,130
Income tax
expense - - 997 787
--------------------------------------------------------------------------
Net Income
(loss) for
the period (227,936) 627,106 (621,751) 45,343
Deficit,
beginning of
period (106,611,982) (106,619,439) (106,218,167) (106,037,676)
--------------------------------------------------------------------------
Deficit, end of
period ($ 106,839,918) ($105,992,333) ($106,839,918) ($105,992,333)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Net Income
(loss) per
share (basic) $0.00 $0.00 $0.00 $0.00
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Net Income
(loss) per
share (fully
diluted) $0.00 $0.00 $0.00 $0.00
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Weighted
average
number of
shares
outstanding -
basic 163,259,070 163,259,070 163,259,070 163,259,070
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Weighted
average
number of
shares
outstanding -
fully diluted 163,259,070 168,195,900 163,259,070 167,187,974
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INTRINSYC SOFTWARE INTERNATIONAL, INC.
Interim Condensed Consolidated Statements of Comprehensive Loss
(Unaudited and Expressed in U.S. Dollars)
--------------------------------------------------------------------------
Three months Three months Nine months Nine months
ended ended ended ended
September 30, September 30, September 30, September 30,
For the 2012 2011 2012 2011
--------------------------------------------------------------------------
Net income
(loss) for the
period ($ 227,936) $ 627,106 ($ 621,751) $ 45,343
Other
comprehensive
income (loss):
Translation of
foreign
operations
reserve 426,364 (1,042,131) 418,240 (651,704)
--------------------------------------------------------------------------
Comprehensive
income (loss)
for the period $ 198,428 ($ 415,025) ($ 203,511) ($ 606,361)
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INTRINSYC SOFTWARE INTERNATIONAL, INC.
Interim Condensed Consolidated Statements of EBITDA and Loss
(Unaudited and Expressed in U.S. Dollars)
--------------------------------------------------------------------------
Three months Three months Nine months Nine months
ended ended ended ended
September 30, September 30, September 30, September 30,
For the 2012 2011 2012 2011
--------------------------------------------------------------------------
Revenues $ 1,647,278 $ 2,774,842 $ 5,976,428 $ 7,743,237
Cost of sales 960,451 1,227,974 3,516,039 3,565,349
--------------------------------------------------------------------------
686,827 1,546,868 2,460,389 4,177,888
--------------------------------------------------------------------------
Expenses
Sales and
marketing 266,210 493,399 1,022,022 1,521,215
Research and
development 45,427 36,657 152,028 272,635
Administration 469,546 564,691 1,728,458 1,666,005
--------------------------------------------------------------------------
781,183 1,094,747 2,902,508 3,459,855
--------------------------------------------------------------------------
EBITDA (94,356) 452,121 (442,119) 718,033
Other operating
expenses 51,040 236,403 155,570 996,463
Foreign
exchange loss
(gain) 115,422 (385,332) 119,522 (251,816)
Interest income (32,882) (26,056) (96,457) (72,744)
Income tax
expense - - 997 787
--------------------------------------------------------------------------
133,580 (174,985) 179,632 672,690
--------------------------------------------------------------------------
Net income
(loss) for the
period under
IFRS ($ 227,936) $ 627,106 ($ 621,751) $ 45,343
--------------------------------------------------------------------------
--------------------------------------------------------------------------
INTRINSYC SOFTWARE INTERNATIONAL, INC.
Interim Condensed Consolidated Statements of Changes in Shareholders'
Equity
(Unaudited and Expressed in U.S. Dollars)
---------------------------------------------------------------------------
Translation Total
Other of Foreign Share-
Share Capital Operations holders'
Capital Reserves Deficit Reserve Equity
---------------------------------------------------------------------------
Balance,
January 1,
2012 $108,288,585 $ 9,750,619 ($106,218,167) $ 514,748 $12,335,785
Net loss for
the period - - (621,751) - (621,751)
Stock-based
compensation - 61,823 - - 61,823
Translation
of foreign
operations
into U.S.
dollars - - - 418,240 418,240
---------------------------------------------------------------------------
Balance,
September
30, 2012 $108,288,585 $ 9,812,442 ($106,839,918) $ 932,988 $12,194,097
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Balance,
January 1,
2011 $108,288,585 $ 9,566,250 ($106,037,676) $ 794,984 $12,612,143
Net income
for the
period - - 45,343 - 45,343
Stock-based
compensation - 137,012 - - 137,012
Translation
of foreign
operations
into U.S.
dollars - - - (651,704) (651,704)
---------------------------------------------------------------------------
Balance,
September
30, 2011 $108,288,585$ 9,6703,262 ($105,992,333) $ 143,280 $12,142,794
---------------------------------------------------------------------------
INTRINSYC SOFTWARE INTERNATIONAL, INC.
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited and Expressed in U.S. Dollars)
--------------------------------------------------------------------------
Three months Three months Nine months Nine months
ended ended ended ended
September 30, September 30, September 30, September 30,
For the 2012 2011 2012 2011
--------------------------------------------------------------------------
Cash provided
by (used in):
Operating
Activities
Net income
(loss) for
the period ($ 227,936) $ 627,106 ($ 621,751) $ 45,343
Adjustments to
reconcile net
loss to net
cash flows:
Depreciation 32,891 31,578 88,685 140,648
Amortization 1,741 143,863 2,303 445,493
Non-cash
interest - 3,670 7,507 13,726
Stock-based
compensation 13,649 60,962 61,823 137,012
Loss on
disposal of
equipment 2,759 - 2,759 -
Non-cash
restructuring - - - 98,124
--------------------------------------------------------------------------
(176,896) 867,179 (458,674) 880,346
--------------------------------------------------------------------------
Working capital
adjustments:
Trade and
other
receivables 632,491 (95,287) (33,811) 1,086,808
Inventory (103,051) (1,777) (144,881) 6,704
Prepaid
expenses (40,629) (398,951) 91,997 (292,180)
Trade and
other
payables (148,052) 126,920 260,316 (783,707)
Deferred
revenue (14,622) 78,169 6,088 102,297
--------------------------------------------------------------------------
326,237 (290,926) 179,709 119,922
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Cash provided
by (used in)
operating
activities 149,341 576,253 (278,965) 1,000,268
--------------------------------------------------------------------------
Investing
Activities
Redemption
(purchase) of
short-term
investments 752,978 (1,528,162) (1,671,455) (4,471,860)
Purchase of
equipment (28,334) - (68,775) (2,059)
Purchase of
intangible
assets - - (20,226) -
--------------------------------------------------------------------------
Cash provided
by (used in)
investing
activities 724,644 (1,528,162) (1,760,456) (4,473,919)
--------------------------------------------------------------------------
Financing
Activities
Repayment of
capital lease
obligation - - - (7,890)
--------------------------------------------------------------------------
Cash used in
financing
activities - - - (7,890)
--------------------------------------------------------------------------
Effect of
exchange rate
changes on
cash and cash
equivalents 226,831 (649,256) 268,090 (374,708)
--------------------------------------------------------------------------
Increase
(decrease) in
cash and cash
equivalents 1,100,816 (1,601,165) (1,771,331) (3,856,249)
Cash and cash
equivalents,
beginning of
period 6,510,506 8,897,355 9,382,653 11,152,439
--------------------------------------------------------------------------
Cash and cash
equivalents,
end of period $ 7,611,322 $ 7,296,190 $ 7,611,322 $ 7,296,190
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FOR FURTHER INFORMATION PLEASE CONTACT:
Intrinsyc Software International, Inc.
George Reznik
Chief Financial Officer
1-604-678-3734
greznik@intrinsyc.com
www.intrinsyc.com