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 EBITDA1 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™ Development Kit and production ready Open-Q™ 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 margin2 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 capital4 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®."
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) | |||
| As at | September 30, 2012 |
December 31, 2011 |
|
| 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 | |
| INTRINSYC SOFTWARE INTERNATIONAL, INC. | |||||||||
| Interim Condensed Consolidated Statements of Operations and Deficit | |||||||||
| (Unaudited and Expressed in U.S. Dollars) | |||||||||
| For the | Three months ended September 30, 2012 |
Three months ended September 30, 2011 |
Nine months ended September 30, 2012 |
Nine months ended September 30, 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 | $0.00 | |||||
| Weighted average number of shares outstanding - basic | 163,259,070 | 163,259,070 | 163,259,070 | 163,259,070 | |||||
| Weighted average number of shares outstanding - fully diluted | 163,259,070 | 168,195,900 | 163,259,070 | 167,187,974 | |||||
| INTRINSYC SOFTWARE INTERNATIONAL, INC. | ||||||||
| Interim Condensed Consolidated Statements of Comprehensive Loss | ||||||||
| (Unaudited and Expressed in U.S. Dollars) | ||||||||
| For the | Three months ended September 30, 2012 |
Three months ended September 30, 2011 |
Nine months ended September 30, 2012 |
Nine months ended September 30, 2011 |
||||
| Net income (loss) for the period | ($ 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 | ) | |
| INTRINSYC SOFTWARE INTERNATIONAL, INC. | |||||||||
| Interim Condensed Consolidated Statements of EBITDA and Loss | |||||||||
| (Unaudited and Expressed in U.S. Dollars) | |||||||||
| For the | Three months ended September 30, 2012 |
Three months ended September 30, 2011 |
Nine months ended September 30, 2012 |
Nine months ended September 30, 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) | |||||
| Share Capital |
Other Capital Reserves |
Deficit | Translation of Foreign Operations Reserve |
Total Share- holders' 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 | $12,142,794 |
| INTRINSYC SOFTWARE INTERNATIONAL, INC. | |||||||||
| Interim Condensed Consolidated Statements of Cash Flows | |||||||||
| (Unaudited and Expressed in U.S. Dollars) | |||||||||
| For the | Three months ended September 30, 2012 |
Three months ended September 30, 2011 |
Nine months ended September 30, 2012 |
Nine months ended September 30, 2011 |
|||||
| Cash provided by (used in): | |||||||||
| Operating Activities | |||||||||
| Net income (loss) for the period | ($ 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 | |||||
Contact Information:
George Reznik
Chief Financial Officer
1-604-678-3734
greznik@intrinsyc.com
www.intrinsyc.com