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Intrinsyc Reports 2012 First Quarter Financial Results

(May 10, 2012)

VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 05/10/12 -- Intrinsyc Software International, Inc. (TSX:ICS) ("Intrinsyc" or the "Company"), developer of intelligent connected devices, today announced its financial results for the first quarter ended March 31, 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 December 31, 2011 and the three months ended March 31, 2011, also in accordance with IFRS.

The Company achieved lower revenue of $2.2 million compared to the previous quarter revenue of $2.6M and broke the consecutive streak of positive EBITDA(1) achievement that spanned the previous eleven quarters. Mitigating the lower revenue performance, the Company achieved relatively strong revenue bookings during the first quarter of 2012, including two customer engagements that have potential for future royalties.

Additionally, the Company signed an agreement with a major silicon vendor to develop, market, and support a development kit based on their next generation application processor technology. The development kit will be showcased at the silicon vendor's trade show in June and an announcement in collaboration with the silicon vendor is planned prior to that event.

"With the signing of this agreement, Intrinsyc is now the premier go-to-market design and development resource for two of the leaders in application processor technology," stated Tracy Rees, Chief Executive Officer, Intrinsyc. "This is an important achievement as the company seeks to augment its engineering services business with new solutions that will provide for scalable, recurring revenue in the future." Solutions include development kits, licensable software to support design and development platforms, and production hardware solutions.


Q1 2012 Comparative Results

The Company reported revenue of approximately $2.2 million for three months ended March 31, 2012 as compared to approximately $2.6 million for the three months ended December 31, 2011 and approximately $2.6 million in the period ended March 31, 2011. Total revenue attributable to the Company's Software Solutions was 22 percent of revenues, including software licensing, maintenance/support and software-related services, as compared to 26 percent and 36 percent in the respective comparative quarters. Gross margin(2) was 39 percent in the three months ended March 31, 2012, which was lower than 46 percent in the three months ended December 31, 2011 and lower than the gross margin experienced of 55 percent in the three months ended March 31, 2011.

Total expenses (excluding other operating expenses)(3) for the three months ended March 31, 2012 were approximately $1.0 million which was a decrease of 12% over the preceding three months ended December 31, 2011 and a 13% decrease over the three months ended March 31, 2011. EBITDA for the three months ended March 31, 2012 was ($204,060) compared to $399 in the previous three months ended December 31, 2011 and $212,136 for the three months ended March 31, 2011. Working capital(4) as of March 31, 2012 was approximately $11.9 million (which included cash and cash equivalents of approximately $6.4 million and short-term investments of approximately $5.7 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).

Business Highlights

Notable events, developments, and achievements during the first quarter include the following:

-- Android Builders Summit and Embedded Linux Conference where Intrinsyc engineers gave presentations on optimizing performance of Linux and Android devices using embedded MultiMediaCard (eMMC) technology. -- Mobile World Congress where Intrinsyc demonstrated its' OPEN-6 Design and Production Platform and other technology. -- Signed agreements with (3) three new customers for product development services. Included in these agreements is a tablet project with a minimum payment guarantee as well as potential for additional royalties. -- Signed a licensing and development agreement with a leading silicon vendor for RapidRIL(TM) that includes a minimum payment guarantee and potential for additional royalties. -- Signed a material agreement worth 10% or more of projected revenues over the next 12 months. This agreement is a renewal of an annual agreement with a Fortune 500 company, and is effective through March 31, 2013. -- Signed an agreement with a leading silicon vendor for development, marketing, and support of a development kit for their next generation application processor.

The decline in revenue was due to a combination of capacity constraints as a result of recruiting and retention issues, timing of customer projects, revenue deferment from agreements with expected future royalties, and decline in Destinator?? navigation sales.

"The decline in revenue and break in achievement of positive EBITDA was a disappointment," said Tracy Rees. "Although we expect to achieve better results in the second quarter, the key catalyst for sustainable revenue growth is the execution of our strategy to expand our solution offering with silicon platform solutions, including development kits and production System on Modules."

System on Modules are complete embedded computers built on a single circuit board. The design is centered on a microprocessor with RAM, input/output controllers and other core features needed to be a functional computer for specific vertical market applications.

Development of these production hardware solutions and licensable platform software will allow Intrinsyc to offer mobile and embedded device makers with semi-custom solutions that can provide time to market and cost advantages to completely custom product development. These solutions are especially popular with vertical market OEMs and are expected to significantly expand customer opportunities for the Company.

Intrinsyc is planning to showcase the OPEN-6 Design and Production platform at the Freescale Technology Forum, from June 18-21, in San Antonio, Texas. Development kits and the licensable reference design will be available for purchase at that time, with the availability of a production ready System on Modules and carrier board in the third quarter.

Intrinsyc will announce another platform development program with a leading semiconductor vendor and showcase this development kit at an industry event in June. The Company expects to make this development kit available for purchase at that time with delivery in the third quarter. A production ready System on Modules and carrier board will also be available later in the third quarter.

Conference call

The Company will release its fiscal first quarter financial results on Thursday, May 10, 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 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.

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 evaluation 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 expense, share-based compensation, restructuring, asset impairment and loss (gain) on disposal of equipment 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 M2M (Machine-to-Machine) 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 China, Taiwan and the United States.

INTRINSYC SOFTWARE INTERNATIONAL, INC. Interim Condensed Consolidated Statements of Financial Position (Expressed in U.S. dollars) ---------------------------------------------------------------------------- March 31, 2012 As at (Unaudited) December 31, 2011 ---------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents $ 6,374,988 $ 9,382,653 Short-term investments 5,667,956 2,688,814 Trade and other receivables 1,412,262 1,268,700 Inventory 49,203 17,702 Prepaid expenses 87,378 174,490 ---------------------------------------------------------------------------- 13,591,787 13,532,359 Non-Current Assets Prepaid expenses 60,150 59,553 Equipment 340,054 355,955 ---------------------------------------------------------------------------- Total assets $ 13,991,991 $ 13,947,867 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Trade and other payables $ 1,131,424 $ 933,873 Government assistance 196,681 189,233 Deferred revenue 368,583 488,976 ---------------------------------------------------------------------------- Total liabilities 1,696,688 1,612,082 ---------------------------------------------------------------------------- Shareholders' equity Share capital 108,288,585 108,288,585 Other capital reserves 9,790,606 9,750,619 Translation of foreign operations reserve 754,911 514,748 Deficit (106,538,799) (106,218,167) ---------------------------------------------------------------------------- Total shareholders' equity 12,295,303 12,335,785 ---------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 13,991,991 $ 13,947,867 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- INTRINSYC SOFTWARE INTERNATIONAL, INC. Interim Condensed Consolidated Statements of Operations and Deficit (Unaudited and Expressed in U.S. Dollars) ---------------------------------------------------------------------------- Three months ended Three months ended For the March 31, 2012 March 31, 2011 ---------------------------------------------------------------------------- Revenues $ 2,160,004 $ 2,553,167 Cost of sales 1,320,726 1,140,825 ---------------------------------------------------------------------------- 839,278 1,412,342 ---------------------------------------------------------------------------- Expenses Sales and marketing 471,877 591,968 Research and development 53,766 111,578 Administration 517,695 496,660 Other operating expenses 65,976 235,978 ---------------------------------------------------------------------------- 1,109,314 1,436,184 ---------------------------------------------------------------------------- Operating loss 270,036 23,842 Other expenses (earnings) Foreign exchange loss 85,096 95,242 Interest income (35,497) (19,633) ---------------------------------------------------------------------------- 49,599 75,609 ---------------------------------------------------------------------------- Loss before income taxes 319,635 99,451 Income tax expense 997 787 ---------------------------------------------------------------------------- Net loss for the period 320,632 100,238 Deficit, beginning of period 106,218,167 106,037,676 ---------------------------------------------------------------------------- Deficit, end of period $ 106,538,799 $ 106,137,914 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Loss per share (basic and fully diluted) $ 0.00 $ 0.00 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Weighted average number of shares outstanding 163,259,070 163,259,070 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- INTRINSYC SOFTWARE INTERNATIONAL, INC. Interim Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited and Expressed in U.S. Dollars) ---------------------------------------------------------------------------- Three months ended Three months ended For the March 31, 2012 March 31, 2011 ---------------------------------------------------------------------------- Net loss for the period ($ 320,632) ($ 100,238) Other comprehensive income: Translation of foreign operations reserve 240,163 323,982 ---------------------------------------------------------------------------- Comprehensive income (loss) for the period ($ 80,469) $ 223,744 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- INTRINSYC SOFTWARE INTERNATIONAL, INC. Interim Condensed Consolidated Statements of EBITDA and Loss (Unaudited and Expressed in U.S. Dollars) ---------------------------------------------------------------------------- Three months ended Three months ended For the March 31, 2012 March 31, 2011 ---------------------------------------------------------------------------- Revenues $ 2,160,004 $ 2,553,167 Cost of sales 1,320,726 1,140,825 ---------------------------------------------------------------------------- 839,278 1,412,342 ---------------------------------------------------------------------------- Expenses Sales and marketing 471,877 591,968 Research and development 53,766 111,578 Administration 517,695 496,660 ---------------------------------------------------------------------------- 1,043,338 1,200,206 ---------------------------------------------------------------------------- EBITDA (204,060) 212,136 Other operating expenses 65,976 235,978 Foreign exchange loss 85,096 95,242 Interest income (35,497) (19,633) Income tax expense 997 787 ---------------------------------------------------------------------------- 116,572 312,374 ---------------------------------------------------------------------------- Net loss for the period under IFRS ($ 320,632) ($ 100,238) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- INTRINSYC SOFTWARE INTERNATIONAL, INC. Interim Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited and Expressed in U.S. Dollars) ---------------------------------------------------------------------------- Translation of Total Other Foreign Share- Share Capital Operations holders' Capital Reserves Deficit Reserve Equity ---------------------------------------------------------------------------- Balance, January 1, 2012 $108,288,585 $9,750,619 ($106,218,167) $ 514,748 $ 12,335,785 Net loss for the period - - (320,632) - (320,632) Stock-based compens- ation - 39,987 - - 39,987 Translation of foreign operations into U.S. dollars - - - 240,163 240,163 ---------------------------------------------------------------------------- Balance, March 31, 2012 $108,288,585 $9,790,606 ($106,538,799) $ 754,911 $ 12,295,303 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Balance, January 1, 2011 $108,288,585 $9,566,250 ($106,037,676) $ 794,984 $ 12,612,143 Net loss for the period - - (100,238) - (100,238) Stock-based compens- ation - 27,050 - - 27,050 Translation of foreign operations into U.S. dollars - - - 323,982 323,982 ---------------------------------------------------------------------------- Balance, March 31, 2011 $108,288,585 $9,593,300 ($106,137,914) $1,118,966 $ 12,862,937 ---------------------------------------------------------------------------- INTRINSYC SOFTWARE INTERNATIONAL, INC. Interim Condensed Consolidated Statements of Cash Flows (Unaudited and Expressed in U.S. Dollars) ---------------------------------------------------------------------------- Three months ended Three months ended For the March 31, 2012 March 31, 2011 ---------------------------------------------------------------------------- Cash provided by (used in): Operating Activities Net loss for the period ($ 320,632) ($ 100,238) Adjustments to reconcile net loss to net cash flows: Amortization - 155,244 Depreciation 25,989 53,684 Non-cash interest 3,735 4,934 Stock-based compensation 39,987 27,050 ---------------------------------------------------------------------------- (250,921) 140,674 ---------------------------------------------------------------------------- Working capital adjustments: Trade and other receivables (118,345) 588,468 Inventory (31,046) 8,650 Prepaid expenses 90,771 23,433 Trade and other payables 178,668 (183,563) Deferred revenue (129,498) (126,576) ---------------------------------------------------------------------------- (9,450) 310,412 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Cash provided by (used in) operating activities (260,371) 451,086 ---------------------------------------------------------------------------- Investing Activities Purchase of short-term investments (2,916,346) (3,967,507) Purchase of equipment (3,210) - ---------------------------------------------------------------------------- Cash used in investing activities (2,919,556) (3,967,507) ---------------------------------------------------------------------------- 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 172,262 229,394 ---------------------------------------------------------------------------- Decrease in cash and cash equivalents (3,007,665) (3,294,917) Cash and cash equivalents, beginning of period 9,382,653 11,152,439 ---------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 6,374,988 $ 7,857,522 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

(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.

(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.

(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.

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


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