Press Releases

Intrinsyc Reports Second Quarter Financial Results

Company achieves fifth consecutive quarter of positive EBITDA

VANCOUVER, BRITISH COLUMBIA – August 12, 2010 – 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, 2010, 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, 2010 and the three-month period ended June 30, 2009.

Revenue for the quarter was approximately $3.0 million compared to approximately $3.5 million in the previous quarter and compared to approximately $4.9 million in the three months ended June 30, 2009. The overall gross margin was 50% compared to 60% in the previous quarter and compared to 56% in the three months ended June 30, 2009. While revenue for the quarter represents a sequential decline of 14% from the previous quarter, revenue and margins were impacted by a significant transaction in the period that deviated from the Company’s historic business model for service engagements in which revenue is recognized as services are performed. Rather, the Company was compensated at a lower initial margin for services and will receive royalty revenue as the customer sells the product developed.

During the quarter, Intrinsyc assisted an original design manufacturer in the development of an Android tablet device that is planned by the customer to be launched in the third quarter of 2010. Much of the revenue from this project should be recognized in the second half of 2010 in the form of a royalty payment per device for licensed Intrinsyc intellectual property.

Total operating expenses, excluding amortization, stock-based compensation, Technology Partnerships Canada (“TPC”) funding investment, restructuring charges, and loss/(gain) on disposal of equipment, for the three months ended June 30, 2010 were approximately $1.5 million representing a decrease of 25 percent and 37 percent from approximately $2.0 million and $2.4 million in the quarter ended March 31, 2010 and the quarter ended June 30, 2009, respectively. Earnings before interest, amortization, stock-based compensation expense, restructuring, loss/(gain) on disposal of equipment, foreign exchange loss/(gain), TPC funding investment, and income tax (“EBITDA”) for the three months ended June 30, 2010 was $11,012 compared to EBITDA of $102,994 for the three months ended March 31, 2010 and $310,242 for the three months ended June 30, 2009. Cash and cash equivalents were $10.3 million with net working capital of $10.9 million as of June 30, 2010 compared to cash and cash equivalents of $11.7 million with net working capital of $11.3 million as of December 31, 2009.

The Company reported revenue of approximately $6.5 million for the six-month period ended June 30, 2010 as compared to approximately $9.3 million for the six month period ended June 30, 2009. Total revenue attributable to the Company’s software solutions decreased to 39 percent of revenues, including software licensing, maintenance/support and software-related services, as compared to 41 percent in the respective comparative period. Gross margin was 56 percent for the six month period ended June 30, 2010, up from 52 percent in the six months ended June 30, 2009.

Total operating expenses, excluding amortization, stock-based compensation, TPC funding investment, restructuring charges, and loss/(gain) on disposal of equipment, for the six months ended June 30, 2010 were approximately $3.5 million, compared to approximately $5.7 million for the six months ended June 30, 2009. EBITDA for the six months ended June 30, 2010 was $114,006 compared to ($880,160) for the six months ended June 30, 2009.

Technology Partnerships Canada (“TPC”) Funding Agreement Termination

The Company, on August 10, 2010, entered into an agreement to terminate its TPC funding agreement. This termination agreement requires an amount of CDN$350,000 to be paid by the Company over a three year period as full settlement of all amounts owing under the TPC funding agreement, inclusive of current and future royalty payments and future obligations as well as the elimination of the disputed claim of CDN $929,183.

“Terminating the TPC funding agreement is beneficial for the Company as this eliminates all current and future royalty payable and future obligations, as well as the elimination of the disputed claim,” stated Tracy Rees, President and Chief Executive Officer.

Business Highlights
  • Signed four new Destinator® licensees: Nanovision, for an in-dash navigation system in an electric automobile from Coda Automotive, SP by Design, Rydeen Mobile Electronics, and Echomaster for use in personal navigation devices.
  • Signed an engineering services and software license agreement (SLA) for RapidRIL™ with Tattu Mobile to support the development of an Android Tablet device.
  • Launched Destinator 9 application for the Apple iPhone™ in Western Europe, Australia and New Zealand.
  • Launched Destinator 9 application for the Apple iPhone which will be sold under the brand, Apontador Navegador™, by Apontador.
  • Announced a partnership to integrate GyPSii’s award-winning social media and contextual advertising/coupon functionality into the globally acclaimed Destinator navigation application for smart phones. The combination of the two heralds a first for the mobile navigation segment with the full integration of social media features into a mobile turn-by-turn navigation application.
  • Announced a partnership with MIPS technology to bring 3.5G functionality to the MIPS architecture. The companies are porting Intrinsyc's RapidRIL software to the MIPS architecture in order to accelerate mobile SoC development for MIPS licensees around the globe.
  • Established user interface (UI) and Application Center of Excellence, based in Beijing, China will support Original Equipment Manufacturer (OEM) and Original Design Manufacturer (ODM) customers with development of innovative UIs and applications with Microsoft® Silverlight 4.

“We are pleased to have sustained positive operations despite reduced revenue during the quarter,” stated Tracy Rees, President and Chief Executive Officer. “Intrinsyc is also making progress in signing agreements with recurring revenue models that should enhance future revenue and bottom line results.”

Conference call

The Company will release its fiscal second quarter 2010 financial results on Thursday, August 12, 2010 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 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. Analysts and investors are invited to participate on the call. Questions may be submitted to invest@intrinsyc.com prior to the call.


Adobe PDF 2010 Second Quarter Financial Statements (PDF)

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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, 2009. 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 devices faster, with higher quality, and with differentiating innovation. We help our customers deliver compelling products using our unmatched expertise with the leading OS platforms including Android, Apple, Blackberry, Linux, Symbian, Windows CE and Windows Phone. Intrinsyc delivers Destinator, the most feature rich navigation application with the best integration for leading smartphones, including those from OEMs like Motorola and LG Electronics. Destinator is also available through leading application stores and Intrinsyc’s own navigation store www.destinatornavstore.com Intrinsyc is publicly traded (TSX: ICS) and is headquartered in Vancouver, Canada, with offices in China and the United States.

www.Intrinsyc.com



For more information, please contact:

George Reznik
Chief Financial Officer
Intrinsyc Software International, Inc.
Email: greznik@intrinsyc.com
Phone: +1-604-678-3734



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