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Intrinsyc Reports Third Quarter 2009 Financial Results

Increased revenue from navigation software business with prudent cost management for positive EBITDA (November 12, 2009)

VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 11/12/09 -- Intrinsyc Software International, Inc. (TSX: ICS), a leading provider of software solutions for mobile devices, today announced its financial results for the third quarter ended September 30, 2009, 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 June 30, 2009 and the three-month period ended September 30, 2008.

The Company reported second quarter revenue of $4.4 million as compared to $4.9 million for the three months ended June 30, 2009 and $7.9 million in the three months ended September 30, 2008. Total revenue attributable to the Company's software solutions was 44 percent of revenues, including software licensing, maintenance/support and software-related services, as compared to 43 percent and 37 percent in the respective comparative quarters. Gross margin was 59 percent in the third quarter of 2009 representing an increase from 56 percent in the three months ended June 30, 2009 and a decrease from 61 percent in the three months ended September 30, 2008.

Total operating expenses, excluding amortization, TPC royalty, stock-based compensation and loss on disposal of equipment, for the three months ended September 30, 2009 were $2.3 million representing a decrease of 4 percent and 74 percent from the $2.4 million and $8.9 million in the preceding quarter ended June 30, 2009 and the three months ended September 30, 2008, respectively. Earnings before interest, amortization, stock-based compensation expense, restructuring, loss (gain) on disposal of equipment, foreign exchange loss (gain), TPC royalty, extraordinary expenses (income) and income tax ("EBITDA") for the three months ended September 30, 2009 was $271,763 compared to EBITDA of $310,242 for the three months ended June 30, 2009 and EBITDA of ($4.1 million) for the three months ended September 30, 2008. Cash and cash equivalents were $11.1 million with net working capital of $11.0 million as of September 30, 2009 compared to cash and cash equivalents of $12.4 million with net working capital of $10.7 million as of December 31, 2008.

"The achievement of positive EBITDA for the past two quarters during very challenging macro economic conditions is a major milestone for Intrinsyc resulting from continued increased operating efficiency. While we continue to experience challenges to revenue growth, we look forward to substantial improvement from expanded distribution of our feature-rich Destinator navigation software through new versions to be released in Q4 for iPhone, Android, Microsoft and other industry application stores. Our relationship with LG Electronics will also build revenue incrementally as they launch new smartphones and expand into new regions around the world," stated Tracy Rees, President and Chief Executive Officer.


The Company reported revenue of $13.6 million for the nine-month period ended September 30, 2009 as compared to $19.0 million for the nine month period ended September 30, 2008. Total revenue attributable to the Company's software solutions increased to 43 percent of revenues, including software licensing, maintenance/support and software-related services, as compared to 27 percent in the respective comparative period. Gross margin was 55 percent for the nine-month period ended September 30, 2009, up from 52 percent in the nine months ended September 30, 2008.

Total operating expenses, excluding amortization, TPC royalty, stock-based compensation and loss on disposal of equipment, for the nine months ended September 30, 2009 were $8.0 million, compared to $21.4 million for the nine months ended September 30, 2008. EBITDA for the nine months ended September 30, 2009 was ($608,000) compared to ($11.5 million) for the nine months ended September 30, 2008.

Business Highlights

During the third quarter the Company continued the execution of its strategy to support the Android operation system and announced additional customer wins for Destinator and Device Development Solutions:

- LG Electronics (LG), a worldwide technology and design leader in mobile communications, has begun shipping Destinator 9 on select smartphones.

- Hong Kong-based GPS Technologies Company, Ltd. (GPS-E) began shipping a connected PND (cPND) running on the Soleus® Transit software platform. In November 2008, GPS-E licensed Soleus Transit, a turnkey software platform optimized for the development of connected personal navigation devices. Soleus Transit allows device makers to add compelling features that enable innovative and differentiated devices while significantly reducing development time and costs.

- A leading producer of DC power systems selected the Intrinsyc Device Development Solutions group to design and implement a User Interface (UI) system based on Microsoft Windows® Embedded CE 6.0. The dynamic UI system is being developed for advanced digital controllers for DC power system monitoring and control. The new UI will allow users of these products to access a management website from a broad range of web browsers and display screens, ranging from XVGA desktop to QVGA mobile.

- Announced the appointment of Howard "Skip" Speaks to the Board of Directors effective August 11, 2009.

- Entered into a worldwide Value Added Reseller (VAR) agreement with Entrek Software, Inc., makers of CodeSnitch, an automated code-debugging tool for Windows Embedded CE and Windows Mobile.

- Entered into a worldwide Value Added Reseller (VAR) agreement with Kryos, makers of the Velocity Mobile Platform, a leading integrated development environment specifically designed for building enterprise applications that run on BlackBerry® smartphones.

- Launched industry's only commercial-grade, open market solution for developing radio interface layer (RIL) software for Android mobile phones. Intrinsyc RapidRIL(TM), a proven 3G radio control interface product, has been adapted to the Infineon XMM(TM) platforms and X-Gold families of mobile device baseband processors supporting GSM/GPRS, EDGE, and WCDMA/HSPA technologies.

- Announced the expansion of solutions and expertise in Silverlight for Windows Embedded user interface framework to help customers bring highly differentiated devices based Windows Embedded CE 6.0 R3, to market faster.

Conference call

The Company released its fiscal third quarter 2009 financial results on Thursday, November 12, 2009 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 for the third quarter 2009. 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 [email protected] 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, 2008. 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 and embedded devices with faster time-to-market, higher quality, and differentiating innovation. Our customers and partners rely on our award-winning device development solutions and our industry-leading navigation software and LBS solutions. We globally support our customers with solutions that span all major mobile operating systems and platforms, including Windows Embedded CE and Windows Mobile, Linux, Android, and Symbian. Intrinsyc is publicly traded (TSX: ICS) and headquartered in Vancouver, Canada, with offices in China, Israel, Taiwan, U.K. and the United States. www.intrinsyc.com.

INTRINSYC SOFTWARE INTERNATIONAL, INC. Consolidated Balance Sheets (Unaudited and expressed in U.S. dollars) --------------------------------------------------------------------------- As at September 30, 2009 December 31, 2008 --------------------------------------------------------------------------- (Unaudited) ASSETS Current assets Cash and cash equivalents $ 11,069,324 $ 12,391,452 Restricted cash - 207,755 Accounts receivable 4,327,660 6,083,190 Inventory 27,889 14,649 Prepaid expenses - current 377,692 523,916 --------------------------------------------------------------------------- Total current assets 15,802,565 19,220,962 Restricted cash 93,397 - Prepaid expenses 46,550 18,998 Equipment 874,288 1,567,464 Intangible assets 3,967,084 4,034,000 --------------------------------------------------------------------------- Total assets $ 20,783,884 $ 24,841,424 --------------------------------------------------------------------------- --------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable and accrued liabilities $ 4,161,795 $ 7,727,497 Capital lease obligation - current 43,949 82,911 Deferred revenue 584,519 754,301 --------------------------------------------------------------------------- Total current liabilities 4,790,263 8,564,709 Long-term capital lease obligation 14,400 39,483 --------------------------------------------------------------------------- Total liabilities 4,804,663 8,604,192 --------------------------------------------------------------------------- Shareholders' equity Share capital 108,288,585 108,288,133 Warrants and underwriters' options 4,047,763 4,489,508 Contributed surplus 5,063,451 4,260,625 Accumulated other comprehensive income (loss) 1,769,931 (159,400) Deficit (103,190,509) (100,641,634) --------------------------------------------------------------------------- Total shareholders' equity 15,979,221 16,237,232 --------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 20,783,884 $ 24,841,424 --------------------------------------------------------------------------- --------------------------------------------------------------------------- INTRINSYC SOFTWARE INTERNATIONAL, INC. Consolidated Statements of Operations and Deficit (Unaudited and expressed in U.S. dollars) --------------------------------------------------------------------------- Three Three Nine Nine months months months months ended ended ended ended September September September September For the 30, 2009 30, 2008 30, 2009 30, 2008 --------------------------------------------------------------------------- Revenues $4,355,340 $7,870,120 $ 13,630,768 $ 18,991,671 Cost of sales 1,770,971 3,093,209 6,196,334 9,068,735 --------------------------------------------------------------------------- 2,584,369 4,776,911 7,434,434 9,922,936 --------------------------------------------------------------------------- Expenses Sales and marketing 750,233 2,317,495 2,638,750 5,968,344 Research and development 939,057 4,096,978 3,443,139 9,338,451 Administration 623,317 2,466,342 1,960,943 6,081,949 Amortization 305,797 737,487 964,543 1,160,191 Stock-based compensation 167,903 279,626 361,282 847,252 Technology Partnerships Canada Funding Investment 63,986 117,064 342,055 299,165 Loss (gain) on disposal of equipment (39,810) - 180,535 - --------------------------------------------------------------------------- 2,810,483 10,014,992 9,891,247 23,695,352 --------------------------------------------------------------------------- Loss before other expense (earnings) and income taxes 226,114 5,238,081 2,456,813 13,772,416 Other expense (earnings) Foreign exchange loss (gain) 304,694 (311,606) 501,772 (473,495) Interest expense (income) (12,904) (126,044) (46,835) (552,410) Extraordinary expenses (income) (166,171) - (166,171) - Restructuring - 814,668 - 814,668 --------------------------------------------------------------------------- Loss before income taxes 351,733 5,615,099 2,745,579 13,561,179 Income tax expense (recovery) Current (135,990) 114,536 (196,704) 292,929 Future - 6,486 - (29,921) --------------------------------------------------------------------------- (135,990) 121,022 (196,704) 263,008 --------------------------------------------------------------------------- Net loss for the period 215,743 5,736,121 2,548,875 13,824,187 Deficit, beginning of period 102,974,766 69,869,818 100,641,634 61,781,752 --------------------------------------------------------------------------- Deficit, end of period 103,190,509 75,605,939 103,190,509 75,605,939 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Loss per share (basic and diluted) $0.00 $0.04 $0.02 $0.09 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Weighted average number of shares outstanding 163,259,025 160,928,816 163,256,969 147,861,766 --------------------------------------------------------------------------- --------------------------------------------------------------------------- INTRINSYC SOFTWARE INTERNATIONAL, INC. Consolidated Statements of Comprehensive Loss (Unaudited and expressed in U.S. dollars) --------------------------------------------------------------------------- Three Three Nine Nine months months months months ended ended ended ended September September September September For the 30, 2009 30, 2008 30, 2009 30, 2008 --------------------------------------------------------------------------- Net loss for the period ($ 215,743) ($5,736,121) ($2,548,875) ($ 13,824,187) Other comprehensive gain (loss): Unrealized gains (losses) on translating financial statements from functional currency to reporting currency 1,271,508 (1,023,660) 1,929,331 (2,457,503) --------------------------------------------------------------------------- Comprehensive income (loss) $1,055,765 ($6,759,781) ($ 619,544) ($ 16,281,690) --------------------------------------------------------------------------- --------------------------------------------------------------------------- INTRINSYC SOFTWARE INTERNATIONAL, INC. Consolidated Statements of EBITDA and Loss (Unaudited and expressed in U.S. dollars) --------------------------------------------------------------------------- Three Three Nine Nine months months months months ended ended ended ended September September September September For the 30, 2009 30, 2008 30, 2009 30, 2008 --------------------------------------------------------------------------- Revenues $ 4,355,340 $7,870,120 $ 13,630,768 $18,991,671 Cost of sales 1,770,971 3,093,209 6,196,334 9,068,735 --------------------------------------------------------------------------- 2,584,369 4,776,911 7,434,434 9,922,936 --------------------------------------------------------------------------- Expenses Sales and marketing 750,233 2,317,495 2,638,750 5,968,344 Research and development 939,057 4,096,978 3,443,139 9,338,451 Administration 623,317 2,466,342 1,960,943 6,081,949 --------------------------------------------------------------------------- 2,312,607 8,880,815 8,042,832 21,388,744 --------------------------------------------------------------------------- EBITDA Income (Loss) 271,762 (4,103,904) (608,398) (11,465,808) Amortization 305,797 737,487 964,543 1,160,191 Stock-based compensation 167,903 279,626 361,282 847,252 Technology Partnerships Canada Funding Investment 63,986 117,064 342,055 299,165 Foreign exchange loss (gain) 304,694 (311,606) 501,772 (473,495) Interest expense (income) (12,904) (126,044) (46,835) (552,410) Loss (gain) on disposal of equipment (39,810) - 180,535 - Extraordinary expenses (income) (166,171) - (166,171) - Restructuring - 814,668 - 814,668 Income tax expense (recovery) Current (135,990) 114,536 (196,704) 292,929 Future - 6,486 - (29,921) --------------------------------------------------------------------------- 487,505 1,632,217 1,940,477 2,358,379 --------------------------------------------------------------------------- Net loss for the period under Canadian GAAP ($215,743) ($5,736,121) ($2,548,875) ($13,824,187) --------------------------------------------------------------------------- INTRINSYC SOFTWARE INTERNATIONAL, INC. Consolidated Statements of Cash Flows (Expressed in U.S. dollars) --------------------------------------------------------------------------- Three Three Nine Nine months months months months ended ended ended ended September September September September For the 30, 2009 30, 2008 30, 2009 30, 2008 --------------------------------------------------------------------------- OPERATING ACTIVITIES Net loss for the period ($215,743) ($5,736,121) ($2,548,875) ($13,824,187) Items not involving cash: Amortization 305,797 737,487 964,543 1,160,191 Future income taxes - 1,212 (2,603) (33,093) Stock-based compensation 167,903 279,626 361,282 847,252 Loss on disposal of equipment - - 220,345 - Changes in non-cash operating working capital: Accounts receivable 377,622 (2,310,216) 2,316,640 (3,368,921) Inventory (27,603) - (13,267) 102,443 Prepaid expenses (67,382) 529,778 160,527 (85,094) Accounts payable and accrued liabilities (802,194) 3,838,147 (3,918,209) 5,304,910 Deferred revenue (270,003) (155,982) (277,831) (74,970) --------------------------------------------------------------------------- Cash used in operating activities ($531,603) ($2,816,069) ($2,737,448) ($9,971,469) --------------------------------------------------------------------------- INVESTING ACTIVITIES Purchase of equipment (32,658) (1,048,149) (58,599) (1,606,846) Loan receivable - 1,936,241 - (62,321) Deferred acquisition costs - - - (1,448,982) Cash paid on acquisition of Destinator, net of cash acquired - (7,844,260) - (7,844,260) --------------------------------------------------------------------------- Cash used in investing activities (32,658) (6,956,168) (58,599) (10,962,409) --------------------------------------------------------------------------- FINANCING ACTIVITIES Issuance of common shares and warrants 251 - 251 32,119,750 Share issuance costs - - - (2,186,676) Repayment of capital lease obligation (7,897) (16,175) (71,215) (32,434) Restricted cash 127,621 - 139,725 - --------------------------------------------------------------------------- Cash provided by financing activities 119,975 (16,175) 68,761 29,900,640 --------------------------------------------------------------------------- Effect of exchange rate changes on cash and cash equivalents 909,536 (558,494) 1,405,158 (1,461,646) --------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents 465,250 (10,346,906) (1,322,128) 7,505,116 Cash and cash equivalents, beginning of period 10,604,074 30,005,623 12,391,452 12,153,601 --------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 11,069,324 $ 19,658,717 $ 11,069,324 $19,658,717 --------------------------------------------------------------------------- ---------------------------------------------------------------------------

Contacts:
Intrinsyc Software International, Inc.
George Reznik
Chief Financial Officer
+1-604-678-3734
[email protected]
www.intrinsyc.com


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