Intrinsyc (TSX: ITC and OTCQX: ISYRF) Reports Second Quarter Results -

Press Release


Intrinsyc (TSX: ITC and OTCQX: ISYRF) Reports Second Quarter Results

Intrinsyc achieved Revenue of US $5.5 million (CDN $7.3 million) with EBITDA of US $169,429 (CDN $226,644)

Vancouver, BC – August 14, 2019 –– Intrinsyc Technologies Corporation (TSX: ITC and OTCQX: ISYRF) (“Intrinsyc” or the “Company”), a leading provider of edge computing solutions for the development of intelligent Internet of Things (“IoT”) products, today announced its financial results for the second quarter ended June 30, 2019.  Intrinsyc achieved Revenue of US $5.5 million (CDN $7.3 million) with EBITDA of US $169,429 (CDN $226,644).

The Company achieved its most productive quarter ever with 9 new design wins.  These wins include 5 companies that are currently developing intelligent IoT products that will be powered by the Company’s edge AI computing modules and 4 new clients that have begun commercial shipments of their products.  Intelligent IoT products in production and under development include a variety of next-generation intelligent IoT products, including robotics, drones, medical devices, video conferencing, intelligent cameras, and more.  The Company expects to achieve multi-year recurring revenue from the growing list of production clients as they purchase Intrinsyc’s edge AI computing modules to power their intelligent IoT products.

The Company also achieved its most productive quarter of new product introductions with the launch of four new Edge AI computing platforms including:

  • Snapdragon™ 855 Mobile Hardware Development Kit (“HDK”)
  • Open-Q™ 212A system on module (“SOM”) and Home Hub Development Kit
  • Open-Q™ 820Pro µSOM (micro System on Module) and Development Kit
  • Snapdragon 8155 Automotive Development Platform (“ADP”)

“I was very pleased with the progress we made in adding new design wins during the quarter” stated Tracy Rees, Chief Executive Officer, Intrinsyc Technologies Corporation. “Expanding the base of clients that will purchase Intrinsyc’s edge AI computing modules on a recurring basis is key to our continued revenue growth. The prolific introduction of new products in the quarter was another bright spot, as these products are a catalyst for both product development services as well as future recurring revenue from computing modules. Although the Company is consistently achieving positive EBITDA, we are taking steps to improve our financial performance, and made additional reduction in our operating expenses in the second quarter.  Since March 2019, we have made operating expense reductions with an annualized cost savings of over US$1,000,000, with full impact of these savings beginning in the third quarter.  With these cost savings and new orders received in the latter half of the second quarter and beginning in the third quarter, we expect to have particularly strong fourth quarter financial results.”

The Company announced the Open-Q™ 212A SOM and Development Kit in May.  The Open-Q™ 212A SOM is a compact (50mm x 46.5mm) pre-certified, production-ready embedded computing module that is ideal for cost-sensitive home hub, home automation, and smart audio devices featuring voice control, AI, and wireless connectivity. It is powered by the Qualcomm® Home Hub 300 Platform based on the Qualcomm® APQ8009 System-on-Chip (“SoC”).

Intrinsyc launched the Open-Q™ 820Pro µSOM (micro System on Module); an enhanced power-performance version of our popular 820 µSOM, with increased processing power, more memory, and long-life availability, in the same ultra-compact 25×50 mm form factor. The production ready, pre-certified 820Pro µSOM is a pin compatible, drop-in replacement for the existing 820 µSOM, requiring only SW changes to provide higher performance, with more efficiency, and long-term availability.

The Company also began shipping the Snapdragon™ Automotive Development Platform (“ADP”) based on the Qualcomm® Snapdragon™ SA8155P processor from Qualcomm® Technologies, Inc. (“QTI”).  The platform provides OEMs and ecosystem partners with access to QTI’s high-performance automotive infotainment and advanced driver assist platform, for developing, testing, optimizing and showcasing next-generation in-vehicle infotainment solutions. The ADP provides an optimized application development environment for rapid deployment of high performance and power efficient connected automotive infotainment offerings.

These products are a catalyst for both product development services as well as future recurring revenue from computing modules.

Quarterly Business Events

  • l 30 – May 1, 2019, the Company’s CEO and CFO presented and participated in one on one meetings at the Planet MicroCap Showcase 2019 in Las Vegas, Nevada.
  • Announced the receipt of orders that are in aggregate valued at US$921,011. Orders for the Company’s Open-Q™ embedded computing modules are valued at US$411,200 and include an initial stocking order for a new client.  The Company also received orders from existing and new clients for product development services valued at US$509,811.  Products and services ordered are expected to be delivered over the next four months.
  • On July 3, the Company announced the receipt of orders in the last week of June that were valued at US$818,161. Orders for the Company’s Open-Q™ embedded computing modules were valued at US$384,240 and included an initial stocking order for a new production client building medical devices.  The Company also received orders from existing and new clients for product development services valued in aggregate at US$433,936.
  • Announced the resignation of the Company’s Vice President, Global Sales. Intrinsyc CEO, Tracy Rees, is managing the sales organization until a replacement is hired.
  • Introduced the following new edge AI computing platforms:
    • Snapdragon™ 855 Mobile Hardware Development Kit, a new mobile hardware development kit (“HDK”)
    • Open-Q™ 212A system on module (“SOM”) and Home Hub Development Kit
    • Open-Q™ 820Pro µSOM (micro System on Module) and Development Kit
    • Snapdragon 8155 Automotive Development Platform (“ADP”)
  • Increased design wins of companies developing their products or shipping commercial devices using the Company’s computing modules, from 62 to 71. Clients shipping products powered by Intrinsyc’s edge AI computing modules increased from 24 to 28, with 43 companies currently in development.

Financial Highlights

Three Month Comparative Results

The Company reported second-quarter revenue of US $5.5 million (CDN $7.3 million), down 11% over the prior period of US $6.1 million (CDN $8.2 million) and 15% over the same period in the prior year of US $6.4 million (CDN $8.3 million).

Gross margin for the three months ended June 30, 2019 was 34%, which was consistent with the gross margin in the same period in the prior year and higher than the previous three months. EBITDA was as follows:

chart

The Company had net income of US $66,247 CDN $83,377), and earnings per share of US $0.00 (CDN $0.00) compared to net loss of US $171,855 (CDN $225,414), or US $0.01 (CDN $0.01) loss per share in the prior quarter and net income of US $108,989 (CDN $142,108) or US $0,01 (CDN $0.01) earnings per share in the same period in the prior year.

Six Month Comparative Results

The Company reported revenue of US $11.6 million (CDN $15.4 million), down 7% over the same period in the prior year of US$12.5 million (CDN$16.0 million). The decrease in revenue over the comparative periods was due primarily to decreased revenue from the sale of hardware products.

Gross margin for the six months ended June 30, 2019 was 33%, which was consistent with the gross margin in the same period in the prior year.  EBITDA was as follows:

chart2

The Company had a net loss of US $105,608 (CDN $138,213) or US $0.00 (CDN $0.00) loss per share during the six months ended June 30, 2019, compared to net income of US $268,555 (CDN $340,575) or US $0.01 (CDN $0.01) during the same period in the prior year.

Financial Position as at June 30, 2019

Working capital as of June 30, 2019 was US $10.0 million (CDN $13.1 million) inclusive of cash and short-term investments of US $3.8 million (CDN $5.0 million).  This is compared to net working capital of US $10.3 million (CDN $14.1 million) as at December 31, 2018 inclusive of cash and short-term investments of US $6.0 million (CDN $8.1 million).  The decrease in working capital was due primarily to shares repurchased by the Company under its normal course issuer bid (NCIB) and capital expenditures pertaining to its investment in a new enterprise resource planning (“ERP”) system and the leasehold improvements pertaining to the opening of its new Taiwan office facility in May 2019 offset by the positive EBITDA generated by the Company during fiscal 2019 to date.

Working Capital is a 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.

Financial Statements and Management Discussion & Analysis

Please see the audited consolidated financial statements and related Management’s Discussion & Analysis (“MD&A”) for more details. The unaudited condensed consolidated financial statements for the three and six months ended June 30, 2019 and related MD&A have been reviewed and approved by Intrinsyc’s Audit Committee and Board of Directors. Intrinsyc recognizes that the majority of its investors are now accessing Intrinsyc’s corporate and financial information either through pushed news services, directly from www.intrinsyc.com or SEDAR. Thus, Intrinsyc has prepared this truncated news release to alert investors to its results and that a more detailed explanation and analysis is readily available in the MD&A. These reports have been filed on SEDAR at www.sedar.com and also posted at www.intrinsyc.com.

Conference Call

The Company will hold a conference call to discuss its fiscal second quarter 2019 financial results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) today. On the call, Tracy Rees, 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 1-800-319-4610, and internationally by dialing 1-604-638-5340 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 (https://www.intrinsyc.com/company/investors/). Analysts and investors are invited to participate on the call. Questions may be submitted to invest@intrinsyc.com prior to the call.

Financial information is reported in United States dollars and in accordance with International Financial Reporting Standards (“IFRS”).

Non-IFRS Measures

The following and preceding discussion of financial results includes reference to Gross Margin, 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. EBITDA is defined as operating income (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 and share-based compensation 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; a customer’s decision to cancel or fail to proceed with a commitment to purchase units of the Company’s products contained in an executed purchase order; 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; reliance on products manufactured by other companies for resale or distribution and reliance on third-party suppliers; 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, 2018. 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 Technologies Corporation

Intrinsyc provides comprehensive product development services, as well as the industry’s highest-performance edge computing modules, to enable rapid commercialization of intelligent Internet of Things (“IoT”) products. Intrinsyc has successfully delivered over 1,400 client projects including sophisticated consumer and industrial IoT products like: robotics, connected cameras, smart displays, augmented reality, smart buildings, wearables, in-vehicle infotainment, and many others. Intrinsyc’s Open-Q™ System on Modules incorporate the industry’s most advanced processor technology, and help OEMs to rapidly bring industry leading products, with rich functionality and high performance, to market. Intrinsyc is publicly traded (TSX: ITC and OTCQX: ISYRF) and is headquartered in Vancouver, BC, Canada; with additional product development centers in Taipei, Taiwan, and Bangalore, India.

For more information, please contact:

George W. Reznik, CPA-CA, CBV, CFE
Chief Financial Officer
Intrinsyc Technologies Corporation
Email: greznik@intrinsyc.com
Phone: +1-604-678-3734


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