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Intrinsyc Reports 2011 Third Quarter Financial Results

Sequential revenue growth leads to first quarter of positive net income (November 10, 2011)

VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 11/10/11 -- Intrinsyc Software International, Inc. (TSX:ICS) ("Intrinsyc" or the "Company"), a leading connected device development company, today announced its financial results for the third quarter ended September 30, 2011. The Company, for the third quarter, reported net income of $627,106 and revenue of approximately $2.8 million, up from approximately $2.4 million in the previous quarter, and an improvement in gross margin to 56%, compared to 50% in the previous quarter. Results are 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, 2011 and the three months ended September 30, 2010, also in accordance with IFRS.

"This was an exceptional quarter for Intrinsyc," said Tracy Rees, President and Chief Executive Officer. "We achieved 15 percent sequential revenue growth, including 24 percent in our core product development services. Our improved revenue performance and operational efficiency resulted in the company's tenth consecutive quarter of positive EBITDA. We were able to add four new product development projects with industry leading original equipment manufacturers (OEMs) and increased our engineering capacity and capability with several engineering hires in the quarter."

The Company reported third quarter revenue of approximately $2.8 million as compared to approximately $2.4 million for the three months ended June 30, 2011 and approximately $3.2 million in the period ended September 30, 2010. Total revenue attributable to the Company's Software Solutions was 25 percent of revenues, including software licensing, maintenance/support and software-related services, as compared to 30 percent and 24 percent in the respective comparative quarters. Gross margin improved to 56 percent during the third quarter of 2011, which was higher than 50 percent for the three months ended June 30, 2011 and up slightly from the margin experienced of 55 percent for the three months ended September 30, 2010. Improved gross margin was primarily attributable to improvements in staff utilization.

Total operating expenses, excluding other operating expenses, for the three months ended September 30, 2011 were 6 percent lower over the preceding three months ended June 30, 2011 and 36 percent lower over the three months ended September 30, 2010. Earnings before other operating expenses, finance income and foreign exchange gain (loss) ("EBITDA") for the three months ended September 30, 2011 was $452,121 compared to $53,776 in the previous three months ended June 30, 2011 and $62,711 for the three months ended September 30, 2010.


The Company reported revenue of approximately $7.7 million for the nine months ended September 30, 2011 as compared to approximately $9.8 million for the nine months ended September 30, 2010. Total revenue attributable to the Company's Software Solutions decreased to 30 percent of revenues, including software licensing, maintenance/support and software-related services, as compared to 34 percent in the respective comparative period. Gross margin was 54 percent for the nine months ended September 30, 2011, down slightly from 55 percent in the nine months ended September 30, 2010.

Total operating expenses, excluding other operating expenses, for the nine months ended September 30, 2011 were approximately $3.5 million, compared to approximately $5.2 million for the nine months ended September 30, 2010. EBITDA for the nine months ended September 30, 2011 was $718,033 compared to $176,717 for the nine months ended September 30, 2010.

Cash and cash equivalents were approximately $7.3 million and short-term investments were approximately $4.2 million with net working capital of approximately $11.8 million as of September 30, 2011, compared to cash and cash equivalents of approximately $11.2 million with net working capital of approximately $11.6 million as of December 31, 2010.

Business Highlights

-- Signed four (4) new customer projects for product development services with industry leading OEMs. -- Enhanced the iQ M2M (machine-to-machine) Development Kit with an expanded software suite and services bundle to be sold as the iQ M2M Jump Start Kit. -- Added five (5) new iQ Kit customers, bringing the total to seventeen (17) customers. -- Began the first shipment of the "Internet of Everything" wireless modules in limited production quantities. -- In October, announced a collaborative relationship with the Senoma Group that is intended to accelerate the company's growth, though the pursuit of complementary strategic opportunities.

"While we are pleased to grow our engineering services business, over the next few months we plan to introduce new solutions developed through our technology partnerships as well as internal development, that will provide more scalable revenue opportunities," added Rees.

The new accounting policies under IFRS have been consistently applied to all of the periods presented in this news release and all prior period information has been restated or reclassified for comparative purposes unless otherwise noted. Further details on the conversion to IFRS are provided in Management's Discussion and Analysis and in the notes to the Company's unaudited condensed consolidated financial statements as at and for the three months ended September 30, 2011.

Conference call

The Company will release its 2011 third quarter for the three and nine months ending September 30, 2011 financial results on Thursday, November 10, 2011 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 (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, 2010. 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 is dedicated to bringing industry leading next generation intelligent connected devices to market, from smartphones and tablets, to emerging categories of M2M (Machine-to-Machine) solutions. Intrinsyc is helping to lead the way to a networked society where 50 billion intelligent connected devices are expected by 2020. Intrinsyc is publicly traded (TSX:ICS) and is headquartered in Vancouver, Canada, with operations in China, 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 2011 2010 --------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents $ 7,296,190 $ 11,152,439 Short-term investments 4,214,987 - Trade and other receivables 1,826,639 2,992,007 Inventory 18,553 26,208 Prepaid expenses 412,289 162,336 --------------------------------------------------------------------------- 13,768,658 14,332,990 Non-Current Assets Prepaid expenses 58,321 44,551 Equipment 302,352 549,945 Intangible assets 134,569 580,434 --------------------------------------------------------------------------- Total assets $ 14,263,900 $ 15,507,920 --------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Trade and other payables $ 1,328,969 $ 2,164,951 Technology Partnerships Canada 71,551 72,561 Finance lease obligations - 7,818 Deferred revenue 540,484 471,285 --------------------------------------------------------------------------- 1,941,004 2,716,615 Technology Partnerships Canada 180,102 179,162 --------------------------------------------------------------------------- Total liabilities 2,021,106 2,895,777 --------------------------------------------------------------------------- Shareholders' equity Share capital 108,288,585 108,288,585 Other capital reserves 9,703,262 9,566,250 Translation of foreign operations reserve 143,280 794,984 Deficit (105,992,333) (106,037,676) --------------------------------------------------------------------------- Total shareholders' equity 12,142,794 12,612,143 --------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 14,263,900 $ 15,507,920 --------------------------------------------------------------------------- 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 2011 2010 2011 2010 --------------------------------------------------------------------------- Continuing Operations Revenues $ 2,774,842 $ 3,244,199 $ 7,743,237 $ 9,775,654 Cost of sales 1,227,974 1,461,819 3,565,349 4,350,542 --------------------------------------------------------------------------- 1,546,868 1,782,380 4,177,888 5,425,112 --------------------------------------------------------------------------- Expenses Sales and marketing 493,399 484,480 1,521,215 1,498,812 Research and development 36,657 478,510 272,635 1,958,297 Administration 564,691 756,679 1,666,005 1,791,286 Other operating expenses 236,403 331,230 996,463 1,712,007 --------------------------------------------------------------------------- 1,331,150 2,050,899 4,456,318 6,960,402 --------------------------------------------------------------------------- Operating income (loss) before other expense (earnings) and income taxes 215,718 (268,519) (278,430) (1,535,290) --------------------------------------------------------------------------- Other expense (earnings) Foreign exchange gain (loss) 385,332 (129,586) 251,816 (98,083) Finance income 26,056 19,462 72,744 36,258 --------------------------------------------------------------------------- 411,388 (110,124) 324,560 (61,825) Operating Income (Loss) before income taxes 627,106 (378,643) 46,130 (1,597,115) Income tax recovery (expense) - current - 1,187 (787) 70,416 --------------------------------------------------------------------------- Net Income (Loss) for the period 627,106 (377,456) 45,343 (1,526,699) Deficit, beginning of period (106,619,439) (102,859,109) (106,037,676) (101,709,866) --------------------------------------------------------------------------- Deficit, end of period ($105,992,333) ($103,236,565) ($105,992,333) ($103,236,565) --------------------------------------------------------------------------- Income (Loss) per share (basic) $0.00 $0.00 $0.00 ($0.01) --------------------------------------------------------------------------- Income (Loss) per share (fully diluted) $0.00 $0.00 $0.00 ($0.01) --------------------------------------------------------------------------- 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 168,195,900 163,259,070 168,187,974 163,259,070 --------------------------------------------------------------------------- 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 2011 2010 2011 2010 --------------------------------------------------------------------------- Net income (loss) for the period $ 627,106 ($ 377,456) $ 45,343 ($1,526,699) Other comprehensive income (loss): Translation of foreign operations reserve (1,042,131) 506,902 (651,704) 330,455 --------------------------------------------------------------------------- Comprehensive income (loss) ($ 415,025) $ 129,446 ($606,361) ($1,196,244) --------------------------------------------------------------------------- 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 2011 2010 2011 2010 --------------------------------------------------------------------------- Continuing Operations Revenues $ 2,774,842 $ 3,244,199 $ 7,743,237 $ 9,775,654 Cost of sales 1,227,974 1,461,819 3,565,349 4,350,542 --------------------------------------------------------------------------- 1,546,868 1,782,380 4,177,888 5,425,112 --------------------------------------------------------------------------- Expenses Sales and marketing 493,399 484,480 1,521,215 1,498,812 Research and development 36,657 478,510 272,635 1,958,297 Administration 564,691 756,679 1,666,005 1,791,286 --------------------------------------------------------------------------- 1,094,747 1,719,669 3,459,855 5,248,395 --------------------------------------------------------------------------- EBITDA Income 452,121 62,711 718,033 176,717 --------------------------------------------------------------------------- Other operating expenses (236,403) (331,230) (996,463) (1,712,007) Foreign exchange gain (loss) 385,332 (129,586) 251,816 (98,083) Finance income 26,056 19,462 72,744 36,258 Income tax recovery (expense) - current - 1,187 (787) 70,416 --------------------------------------------------------------------------- 174,985 (440,167) (672,690) (1,703,416) --------------------------------------------------------------------------- Net income (loss) for the period under IFRS $ 627,106 ($ 377,456) $ 45,343 ($1,526,699) --------------------------------------------------------------------------- INTRINSYC SOFTWARE INTERNATIONAL, INC. Interim Condensed Consolidated Statements of Changes in Equity (Unaudited and expressed in U.S. dollars) --------------------------------------------------------------------------- Translation Total Other of Foreign Share- Capital Operations holder's Share Capital Reserves Deficit Reserve Equity --------------------------------------------------------------------------- Balance, January 1, 2011 $108,288,585 $ 9,566,250 ($106,037,676) $ 794,984 $12,612,143 Total comprehensive income for the period - - 223,744 - 223,744 Share- based compensation - 27,050 - - 27,050 Translation of foreign operations - - (323,982) 323,982 - --------------------------------------------------------------------------- Balance, March 31, 2011 $108,288,585 $ 9,593,300 ($106,137,914)$ 1,118,966 $12,862,937 Total comprehensive loss for the period - - (415,080) - (415,080) Share- based compensation - 49,000 - - 49,000 Translation of foreign operations - - (66,445) 66,445 - --------------------------------------------------------------------------- Balance, June 30, 2011 $108,288,585 $ 9,642,300 ($106,619,439)$ 1,185,411 $12,496,857 Total comprehensive loss for the period - - (415,025) - (415,025) Share- based compensation - 60,962 - - 60,962 Translation of foreign operations - - 1,042,131 (1,042,131) - --------------------------------------------------------------------------- Balance, September 30, 2011 $108,288,585 $ 9,703,262 ($105,992,333) $ 143,280 $12,142,794 --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- Balance, January 1, 2010 $108,288,585 $ 9,466,400 ($101,709,866) $ - $16,045,119 Total comprehensive loss for the period - - (318,155) - (318,155) Share- based compensation - (14,561) - - (14,561) Translation of foreign operations - - (535,236) 535,236 - --------------------------------------------------------------------------- Balance, March 31, 2010 $108,288,585 $ 9,451,839 ($102,563,257) $ 535,236 $15,712,403 Total comprehensive loss for the period - - (1,007,535) - (1,007,535) Share- based compensation - 45,073 - - 45,073 Translation of foreign operations - - 711,683 (711,683) - --------------------------------------------------------------------------- Balance, June 30, 2010 $108,288,585 $ 9,496,912 ($102,859,109) ($ 176,447)$14,749,941 Total comprehensive loss for the period - - 129,446 - 129,446 Share- based compensation - 44,514 - - 44,514 Translation of foreign operations - - (506,902) 506,902 - --------------------------------------------------------------------------- Balance, September 30, 2010 $108,288,585 $ 9,541,426 ($103,236,565) $ 330,455 $14,923,901 --------------------------------------------------------------------------- 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 2011 2010 2011 2010 --------------------------------------------------------------------------- Cash flows from operating activities Net income (loss) for the period $627,106 ($377,456) $45,343 ($1,526,699) Adjustments to reconcile net loss before tax to net cash flows: Amortization 175,441 286,716 586,141 866,461 Non-cash interest 3,670 4,502 13,726 4,502 Share-based compensation 60,962 44,514 137,012 75,026 Non-cash restructuring - - 98,124 - Settlement with Technology Partnerships Canada - - - 307,218 --------------------------------------------------------------------------- 867,179 (41,724) 880,346 (273,492) --------------------------------------------------------------------------- Working capital adjustments: Trade and other receivables (95,287) (191,769) 1,086,808 48,742 Inventory (1,777) 24,042 6,704 11,864 Prepaid expenses (398,951) (69,449) (292,180) 100,804 Trade and other payables 126,920 140,273 (783,707) (1,368,422) Deferred revenue 78,169 1,900 102,297 (95,391) --------------------------------------------------------------------------- (290,926) (95,003) 119,922 (1,302,403) --------------------------------------------------------------------------- --------------------------------------------------------------------------- Net cash flows from operating activities 576,253 (136,727) 1,000,268 (1,575,895) --------------------------------------------------------------------------- Cash flows from investing activities Redemption (purchase) of short-term investments (1,528,162) - (4,471,860) - Purchase of equipment - (69,783) (2,059) (69,783) --------------------------------------------------------------------------- Cash provided by (used in) investing activities (1,528,162) (69,783) (4,473,919) (69,783) --------------------------------------------------------------------------- Cash flows from financing activities Repayment of capital lease obligation - (24,109) (7,890) (38,381) Restricted cash - - - 97,248 --------------------------------------------------------------------------- Cash provided by (used in) financing activities - (24,109) (7,890) 58,867 --------------------------------------------------------------------------- Effect of exchange rate changes on cash and cash equivalents (649,256) 352,281 (374,708) 248,759 --------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (1,601,165) 121,662 (3,856,249) (1,338,052) Cash and cash equivalents, beginning of period 8,897,355 10,250,513 11,152,439 11,710,227 --------------------------------------------------------------------------- Cash and cash equivalents, end of period $7,296,190 $10,372,175 $7,296,190 $10,372,175 ---------------------------------------------------------------------------

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


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