Business & Finance
Business and Finance
Business and Finance 
Fri, November 13, 2009
Thu, November 12, 2009
Intrinsyc Reports Third Quarter 2009 Financial Results
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 12, 2009) - Intrinsyc Software International, Inc. (TSX:ICS), a leading provider of software solutions for mobile devices, today announced its financial results for the third quarter ended September 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 June 30, 2009 and the three-month period ended September 30, 2008.
The Company reported second quarter revenue of $4.4 million as compared to $4.9 million for the three months ended June 30, 2009 and $7.9 million in the three months ended September 30, 2008. Total revenue attributable to the Company's software solutions was 44 percent of revenues, including software licensing, maintenance/support and software-related services, as compared to 43 percent and 37 percent in the respective comparative quarters. Gross margin was 59 percent in the third quarter of 2009 representing an increase from 56 percent in the three months ended June 30, 2009 and a decrease from 61 percent in the three months ended September 30, 2008.
Total operating expenses, excluding amortization, TPC royalty, stock-based compensation and loss on disposal of equipment, for the three months ended September 30, 2009 were $2.3 million representing a decrease of 4 percent and 74 percent from the $2.4 million and $8.9 million in the preceding quarter ended June 30, 2009 and the three months ended September 30, 2008, respectively. Earnings before interest, amortization, stock-based compensation expense, restructuring, loss (gain) on disposal of equipment, foreign exchange loss (gain), TPC royalty, extraordinary expenses (income) and income tax ("EBITDA") for the three months ended September 30, 2009 was $271,763 compared to EBITDA of $310,242 for the three months ended June 30, 2009 and EBITDA of ($4.1 million) for the three months ended September 30, 2008. Cash and cash equivalents were $11.1 million with net working capital of $11.0 million as of September 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.
"The achievement of positive EBITDA for the past two quarters during very challenging macro economic conditions is a major milestone for Intrinsyc resulting from continued increased operating efficiency. While we continue to experience challenges to revenue growth, we look forward to substantial improvement from expanded distribution of our feature-rich Destinator navigation software through new versions to be released in Q4 for iPhone, Android, Microsoft and other industry application stores. Our relationship with LG Electronics will also build revenue incrementally as they launch new smartphones and expand into new regions around the world," stated Tracy Rees, President and Chief Executive Officer.
The Company reported revenue of $13.6 million for the nine-month period ended September 30, 2009 as compared to $19.0 million for the nine month period ended September 30, 2008. Total revenue attributable to the Company's software solutions increased to 43 percent of revenues, including software licensing, maintenance/support and software-related services, as compared to 27 percent in the respective comparative period. Gross margin was 55 percent for the nine-month period ended September 30, 2009, up from 52 percent in the nine months ended September 30, 2008.
Total operating expenses, excluding amortization, TPC royalty, stock-based compensation and loss on disposal of equipment, for the nine months ended September 30, 2009 were $8.0 million, compared to $21.4 million for the nine months ended September 30, 2008. EBITDA for the nine months ended September 30, 2009 was ($608,000) compared to ($11.5 million) for the nine months ended September 30, 2008.
Business Highlights
During the third quarter the Company continued the execution of its strategy to support the Android operation system and announced additional customer wins for Destinator and Device Development Solutions:
- LG Electronics (LG), a worldwide technology and design leader in mobile communications, has begun shipping Destinator 9 on select smartphones.
- Hong Kong-based GPS Technologies Company, Ltd. (GPS-E) began shipping a connected PND (cPND) running on the Soleus® Transit software platform. In November 2008, GPS-E licensed Soleus Transit, a turnkey software platform optimized for the development of connected personal navigation devices. Soleus Transit allows device makers to add compelling features that enable innovative and differentiated devices while significantly reducing development time and costs.
- A leading producer of DC power systems selected the Intrinsyc Device Development Solutions group to design and implement a User Interface (UI) system based on Microsoft Windows® Embedded CE 6.0. The dynamic UI system is being developed for advanced digital controllers for DC power system monitoring and control. The new UI will allow users of these products to access a management website from a broad range of web browsers and display screens, ranging from XVGA desktop to QVGA mobile.
- Announced the appointment of Howard "Skip" Speaks to the Board of Directors effective August 11, 2009.
- Entered into a worldwide Value Added Reseller (VAR) agreement with Entrek Software, Inc., makers of CodeSnitch, an automated code-debugging tool for Windows Embedded CE and Windows Mobile.
- Entered into a worldwide Value Added Reseller (VAR) agreement with Kryos, makers of the Velocity Mobile Platform, a leading integrated development environment specifically designed for building enterprise applications that run on BlackBerry® smartphones.
- Launched industry's only commercial-grade, open market solution for developing radio interface layer (RIL) software for Android mobile phones. Intrinsyc RapidRILTM, a proven 3G radio control interface product, has been adapted to the Infineon XMMTM platforms and X-Gold families of mobile device baseband processors supporting GSM/GPRS, EDGE, and WCDMA/HSPA technologies.
- Announced the expansion of solutions and expertise in Silverlight for Windows Embedded user interface framework to help customers bring highly differentiated devices based Windows Embedded CE 6.0 R3, to market faster.
Conference call
The Company released its fiscal third quarter 2009 financial results on Thursday, November 12, 2009 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 for the third quarter 2009. This conference call may be accessed in North America, toll-free, by dialing 1-866-610-8602, and internationally by dialing +1-212-401-8152 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.
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 empowers device makers, mobile operators, and silicon vendors to deliver compelling, next generation mobile and embedded devices with faster time-to-market, higher quality, and differentiating innovation. Our customers and partners rely on our award-winning device development solutions and our industry-leading navigation software and LBS solutions. We globally support our customers with solutions that span all major mobile operating systems and platforms, including Windows Embedded CE and Windows Mobile, Linux, Android, and Symbian. 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)
---------------------------------------------------------------------------
As at September 30, 2009 December 31, 2008
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(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 11,069,324 $ 12,391,452
Restricted cash - 207,755
Accounts receivable 4,327,660 6,083,190
Inventory 27,889 14,649
Prepaid expenses - current 377,692 523,916
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Total current assets 15,802,565 19,220,962
Restricted cash 93,397 -
Prepaid expenses 46,550 18,998
Equipment 874,288 1,567,464
Intangible assets 3,967,084 4,034,000
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Total assets $ 20,783,884 $ 24,841,424
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued
liabilities $ 4,161,795 $ 7,727,497
Capital lease obligation - current 43,949 82,911
Deferred revenue 584,519 754,301
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Total current liabilities 4,790,263 8,564,709
Long-term capital lease obligation 14,400 39,483
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Total liabilities 4,804,663 8,604,192
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Shareholders' equity
Share capital 108,288,585 108,288,133
Warrants and underwriters' options 4,047,763 4,489,508
Contributed surplus 5,063,451 4,260,625
Accumulated other comprehensive
income (loss) 1,769,931 (159,400)
Deficit (103,190,509) (100,641,634)
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Total shareholders' equity 15,979,221 16,237,232
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Total liabilities and shareholders'
equity $ 20,783,884 $ 24,841,424
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INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of Operations and Deficit
(Unaudited and expressed in U.S. dollars)
---------------------------------------------------------------------------
Three Three Nine Nine
months months months months
ended ended ended ended
September September September September
For the 30, 2009 30, 2008 30, 2009 30, 2008
---------------------------------------------------------------------------
Revenues $4,355,340 $7,870,120 $ 13,630,768 $ 18,991,671
Cost of sales 1,770,971 3,093,209 6,196,334 9,068,735
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2,584,369 4,776,911 7,434,434 9,922,936
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Expenses
Sales and marketing 750,233 2,317,495 2,638,750 5,968,344
Research and
development 939,057 4,096,978 3,443,139 9,338,451
Administration 623,317 2,466,342 1,960,943 6,081,949
Amortization 305,797 737,487 964,543 1,160,191
Stock-based
compensation 167,903 279,626 361,282 847,252
Technology
Partnerships
Canada Funding
Investment 63,986 117,064 342,055 299,165
Loss (gain) on
disposal of
equipment (39,810) - 180,535 -
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2,810,483 10,014,992 9,891,247 23,695,352
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Loss before other
expense (earnings)
and income taxes 226,114 5,238,081 2,456,813 13,772,416
Other expense
(earnings)
Foreign exchange
loss (gain) 304,694 (311,606) 501,772 (473,495)
Interest expense
(income) (12,904) (126,044) (46,835) (552,410)
Extraordinary
expenses (income) (166,171) - (166,171) -
Restructuring - 814,668 - 814,668
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Loss before income
taxes 351,733 5,615,099 2,745,579 13,561,179
Income tax expense
(recovery)
Current (135,990) 114,536 (196,704) 292,929
Future - 6,486 - (29,921)
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(135,990) 121,022 (196,704) 263,008
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Net loss for the
period 215,743 5,736,121 2,548,875 13,824,187
Deficit, beginning
of period 102,974,766 69,869,818 100,641,634 61,781,752
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Deficit, end of
period 103,190,509 75,605,939 103,190,509 75,605,939
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Loss per share
(basic and diluted) $0.00 $0.04 $0.02 $0.09
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Weighted average
number of shares
outstanding 163,259,025 160,928,816 163,256,969 147,861,766
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INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of Comprehensive Loss
(Unaudited and expressed in U.S. dollars)
---------------------------------------------------------------------------
Three Three Nine Nine
months months months months
ended ended ended ended
September September September September
For the 30, 2009 30, 2008 30, 2009 30, 2008
---------------------------------------------------------------------------
Net loss for the
period ($ 215,743) ($5,736,121) ($2,548,875) ($ 13,824,187)
Other comprehensive
gain (loss):
Unrealized gains
(losses) on
translating
financial
statements from
functional
currency to
reporting currency 1,271,508 (1,023,660) 1,929,331 (2,457,503)
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Comprehensive income
(loss) $1,055,765 ($6,759,781) ($ 619,544) ($ 16,281,690)
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INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of EBITDA and Loss
(Unaudited and expressed in U.S. dollars)
---------------------------------------------------------------------------
Three Three Nine Nine
months months months months
ended ended ended ended
September September September September
For the 30, 2009 30, 2008 30, 2009 30, 2008
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Revenues $ 4,355,340 $7,870,120 $ 13,630,768 $18,991,671
Cost of sales 1,770,971 3,093,209 6,196,334 9,068,735
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2,584,369 4,776,911 7,434,434 9,922,936
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Expenses
Sales and marketing 750,233 2,317,495 2,638,750 5,968,344
Research and
development 939,057 4,096,978 3,443,139 9,338,451
Administration 623,317 2,466,342 1,960,943 6,081,949
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2,312,607 8,880,815 8,042,832 21,388,744
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EBITDA Income (Loss) 271,762 (4,103,904) (608,398) (11,465,808)
Amortization 305,797 737,487 964,543 1,160,191
Stock-based
compensation 167,903 279,626 361,282 847,252
Technology
Partnerships
Canada Funding
Investment 63,986 117,064 342,055 299,165
Foreign exchange
loss (gain) 304,694 (311,606) 501,772 (473,495)
Interest expense
(income) (12,904) (126,044) (46,835) (552,410)
Loss (gain) on
disposal of
equipment (39,810) - 180,535 -
Extraordinary
expenses (income) (166,171) - (166,171) -
Restructuring - 814,668 - 814,668
Income tax expense
(recovery)
Current (135,990) 114,536 (196,704) 292,929
Future - 6,486 - (29,921)
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487,505 1,632,217 1,940,477 2,358,379
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Net loss for the
period under
Canadian GAAP ($215,743) ($5,736,121) ($2,548,875) ($13,824,187)
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INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)
---------------------------------------------------------------------------
Three Three Nine Nine
months months months months
ended ended ended ended
September September September September
For the 30, 2009 30, 2008 30, 2009 30, 2008
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OPERATING ACTIVITIES
Net loss for the
period ($215,743) ($5,736,121) ($2,548,875) ($13,824,187)
Items not involving
cash:
Amortization 305,797 737,487 964,543 1,160,191
Future income
taxes - 1,212 (2,603) (33,093)
Stock-based
compensation 167,903 279,626 361,282 847,252
Loss on disposal
of equipment - - 220,345 -
Changes in non-cash
operating working
capital:
Accounts receivable 377,622 (2,310,216) 2,316,640 (3,368,921)
Inventory (27,603) - (13,267) 102,443
Prepaid expenses (67,382) 529,778 160,527 (85,094)
Accounts payable
and accrued
liabilities (802,194) 3,838,147 (3,918,209) 5,304,910
Deferred revenue (270,003) (155,982) (277,831) (74,970)
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Cash used in
operating activities ($531,603) ($2,816,069) ($2,737,448) ($9,971,469)
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INVESTING ACTIVITIES
Purchase of
equipment (32,658) (1,048,149) (58,599) (1,606,846)
Loan receivable - 1,936,241 - (62,321)
Deferred acquisition
costs - - - (1,448,982)
Cash paid on acquisition
of Destinator,
net of cash acquired - (7,844,260) - (7,844,260)
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Cash used in investing
activities (32,658) (6,956,168) (58,599) (10,962,409)
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FINANCING ACTIVITIES
Issuance of common
shares and warrants 251 - 251 32,119,750
Share issuance costs - - - (2,186,676)
Repayment of capital
lease obligation (7,897) (16,175) (71,215) (32,434)
Restricted cash 127,621 - 139,725 -
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Cash provided by
financing activities 119,975 (16,175) 68,761 29,900,640
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Effect of exchange
rate changes on cash
and cash equivalents 909,536 (558,494) 1,405,158 (1,461,646)
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Increase (decrease)
in cash and cash
equivalents 465,250 (10,346,906) (1,322,128) 7,505,116
Cash and cash
equivalents,
beginning of
period 10,604,074 30,005,623 12,391,452 12,153,601
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Cash and cash
equivalents,
end of period $ 11,069,324 $ 19,658,717 $ 11,069,324 $19,658,717
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