Intrinsyc Reports 2008 Third Quarter Financial Results

• Press Release
• Source: Intrinsyc Software International, Inc.
• On 7:30 am EST, Friday November 14, 2008

VANCOUVER, BRITISH COLUMBIA--(MARKET WIRE)--Nov 14, 2008 -- Intrinsyc Software International, Inc. (Toronto:ICS.TO - News), a global wireless software solutions provider, today announced its financial results for the third quarter ended September 30, 2008, 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, 2008 and the three-month period ended August 31, 2007. As previously announced, Intrinsyc changed its fiscal year-end from August 31 to December 31.

The Company reported third quarter revenue of $7.9 million as compared to $5.6 million for the period ended June 30, 2008 and $4.3 million in the period ended August 31, 2007. The year-over-year revenue improvement of 84 percent was primarily attributable to the addition of navigation software revenues from the acquisition of assets of Destinator Technologies Inc., combined with consistent revenue generation from the Company's wireless engineering services. Total revenue attributable to the Company's software solutions increased to 38 percent of revenues, including software licensing, maintenance/support and software-related services, as compared to 23 percent and 15 percent in the respective comparative quarters.

Gross margin was 61 percent in the third quarter of 2008, up from 47 percent in the three months ended June 30, 2008. When compared to the three months ended August 31, 2007, the total gross profit of $4.8 million increased by 127 percent, while gross margin of 61 percent was higher than the 49 percent achieved in that period based on the increased revenue from the Company's software offerings, which has higher margins than engineering services.

"We increased revenue in the past quarter significantly over the prior periods, which is attributable to strong performance by our engineering services business, in addition to revenue generated by our Destinator® acquisition. We also commenced generating Soleus® royalty revenue from MiTAC and SiRF during this period," commented Tracy Rees, Interim Chief Executive Officer of Intrinsyc. "While we continue to focus our efforts on accelerating execution, we have taken and will continue to take important steps to preserve cash and better align our business with the current economic environment and the ramping of Soleus and Destinator. Included in these efforts are initiatives to streamline our organizational structure, deliver operating efficiencies, reduce costs and further our efforts towards profitability."

Loss before interest, amortization, stock-based compensation expense and income tax ("EBITDA") for the three months ended September 30, 2008 was $3.9 million, compared to $3.9 million in the three month period ended June 30, 2008, and $3.7 million for the three months ended August 31, 2007. Total operating expenses, excluding amortization and stock-based compensation, for the three months ended September 30, 2008 were $8.7 million, compared to $6.5 million in the three months ended June 30, 2008 and $5.7 million for the three months ended August 31, 2007. See further discussion on EBITDA under the heading, "Supplemental Information", later in this press release.

Cash at the end of the third quarter was $19.7 million, compared to $30.0 million as of June 30, 2008.

Financial Outlook

The Company expects revenues for its fiscal year ending December 31, 2008 to be slightly lower than the range of $26 million to $29 million provided previously due to the impact of the challenging macroeconomic conditions. Gross margin is expected to be consistent with prior guidance of 49 percent to 55 percent, with revenue attributable to software of 28 percent to 33 percent of total revenues for this period. Due to the current economic environment resulting in reduced visibility regarding the timing of execution of sales opportunities, the Company is not able to provide additional financial outlook at this time.

Recent Business Highlights

- Announced the appointment of Tracy Rees as Interim Chief Executive Officer and Philip Ladouceur as Chairman following the departure of Glenda Dorchak as Chairman, Chief Executive Officer and Director of the Company.

- Signed a Soleus license agreement with GPS Technologies Company, Ltd. (GPS-E), a leading manufacturer of personal navigation devices (PNDs) located in Hong Kong, China.

- Announced Soleus design win with existing Soleus licensee whereby Soleus customer is acting as ODM for deployment of a connected PND by its customer in the European market.

- Launched Motorola A1600 MING in China, a consumer phone which uses Destinator navigation software.

- Released GPS phone development platform by SiRF that combines the Soleus software platform and SiRF's location technology chipset to enable OEMs and ODMs to deliver connected consumer navigation handhelds.

- Announced product launch of "Cronos" smartphone by Shanghai RagenTek Communication Technology Co. Ltd., in China, which is based on the complete software/hardware platform from Intrinsyc and SiRF.

- Signed design win with Motorola for two new PNDs (MOTONAV TN20 and MOTONAV TN30) in the United States with Motorola's MOTONAV which is based on a custom version of Destinator navigation software.

- Announced design win with Supa Technologies for personal navigation products based on Destinator version 8, to be sold through leading North American office supply retailers.

- Signed a multi-year agreement establishing a sales relationship with NAVTEQ, a global leader in premium-quality digital map data.

- Announced Soleus Transit, which addresses the connected PND market and combines Soleus with Destinator for a complete connected PND solution.

- Announced the launch of RapidRIL(TM), a proprietary radio interface layer technology for rapid Windows Mobile telephony development, delivered with Intrinsyc's engineering services engagement for customer, InterDigital, Inc.

Conference call

Consolidated unaudited financial statements are attached and a conference call to discuss these results will be held at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time), today. To listen to the conference call live by telephone, dial +1-866-400-2280 toll free for participants in North America, and +1-416-850-9143 for Toronto area and international participants, approximately 10 minutes before the start time. A telephone playback will be available for three business days, beginning approximately two hours after the call. To listen to the telephone replay please dial +1-866-245-6755 toll free, and for international callers, dial +1-416-915-1035. Enter access code 984490.

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. 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 Company's ability to continue to earn the revenue from Destinator products after the acquisition, and to integrate the acquired business into its own operations; the need to develop, integrate and deploy software solutions to meet our customer's requirements; the possibility of development or deployment difficulties or delays; the dependence on our customer's satisfaction; the timing of entering into significant contracts; our customers' continued commitment to the deployment of our solutions; the risks involved in developing integrated software solutions and integrating them with third-party products and services; the performance of the global economy and growth in software industry sales; market acceptance of the Company's products and services; customer and industry analyst perception of the Company and its technology vision and future prospects; the success of certain business combinations engaged in by the Company or by its competitors; political unrest or acts of war; possible disruptive effects of organizational or personnel changes; technological change, new products and standards; risks related to acquisitions and international expansion; reliance on large customers; concentration of sales; international operations and sales; management of growth and expansion; 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 including but not limited to 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, 2007.

In drawing a conclusion or making a forecast or projection set out in the forward-looking information, the Company takes into account the following material factors and assumptions in addition to the above factors: the Company's ability to execute on its business plan; the acceptance of the Company's products and services by its customers; the timing of execution of outstanding or potential customer contracts by the Company; the sales opportunities available to the Company; the Company's subjective assessment of the likelihood of success of a sales lead or opportunity; the Company's historic ability to generate sales leads or opportunities; and that sales will be completed at or above the Company's estimated margins. This list is not exhaustive of the factors that may affect our 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 provides wireless software solutions that enable next-generation handheld products, including mobile handsets, smart phones, and converged devices. The company's software products include the Soleus(TM) software platform for consumer device development and the recently acquired Destinator® GPS/navigation technologies. Combined with award winning engineering services and years of systems integration expertise, these solutions help device makers, service providers, and silicon vendors deliver compelling wireless products with faster time-to-market and improved development cost. Intrinsyc is a Microsoft® Windows Embedded Gold Partner and a winner of Windows Embedded Excellence Awards in 2007 and 2008, a Symbian Competence Center and Symbian Platinum Partner. Intrinsyc is publicly traded (Toronto:ICS.TO - News) and headquartered in Vancouver, Canada, with offices in China, Israel, Taiwan, U.K., and the United States. www.intrinsyc.com.

© 2008 Intrinsyc Software International, Inc. All rights reserved.

Intrinsyc, Soleus, Destinator and their respective logos are trademarks, registered and otherwise, of Intrinsyc Software International, Inc. in Canada, European Union, Taiwan, United States of America and other jurisdictions. Other products and services mentioned in this document are identified by the trademarks or service marks of their respective companies or organizations.

 

INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of EBITDA and Loss
(Unaudited and expressed in U.S. dollars)

---------------------------------------------------------------------------

                     Three months ended                 Nine months ended
---------------------------------------------------------------------------
         September 30,     June 30,   August 31, September 30,    August 31,
                 2008         2008         2007          2008          2007
---------------------------------------------------------------------------

Revenues  $ 7,870,120  $ 5,566,017  $ 4,288,236  $ 18,991,671  $ 13,119,274
Cost of
 sales      3,093,209    2,956,178    2,183,970     9,068,735     6,549,316
---------------------------------------------------------------------------
---------------------------------------------------------------------------
            4,776,911    2,609,839    2,104,266     9,922,936     6,569,958


Sales and
 marketing  2,317,495    1,822,475    1,727,331     5,968,344     4,712,957
Research
 and
 develop-
 ment       4,096,978    2,694,824    2,642,128     9,338,451     8,079,799
General and
 admini-
 stration   2,466,342    1,794,631    1,199,420     6,081,949     3,658,937
Technology
 Partner-
 ships
 Canada
 Funding
 Investment   117,064      158,682      128,648       299,165       265,542
Foreign
 exchange
 loss (gain) (311,606)      52,604       58,035      (473,495)      340,067
---------------------------------------------------------------------------
---------------------------------------------------------------------------
EBITDA
 Loss      (3,909,362)  (3,913,377)  (3,651,296)  (11,291,478)  (10,487,344)

Amortiza-
 tion         737,487      210,896      213,350     1,160,191       575,923
Stock-based
 Compensa-
 tion         279,626      283,367      154,148       847,252       418,872
Interest
 income      (126,044)    (254,420)    (186,339)     (552,410)     (317,471)
Restructur-
 ing          814,668            -            -       814,668             -
Loss on
 disposal
 of
 equipment          -            -        2,457             -         2,457
Income tax
 expense
(recovery)
  Current     114,536      110,817       39,368       292,929       268,382
  Future        6,486      (12,852)      10,485       (29,921)      (40,110)
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Loss under
 Canadian
 GAAP     $(5,736,121) $(4,251,185) $(3,884,765) $(13,824,187) $(11,395,397)
---------------------------------------------------------------------------


INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Balance Sheets
(Expressed in U.S. dollars)

                                               September 30,   December 31,
                                                       2008           2007
--------------------------------------------------------------------------
                                                 (unaudited)
ASSETS
Current
Cash                                           $ 19,658,717   $ 12,153,601
Accounts receivable                               6,722,559      3,595,124
Inventory                                                 -        103,812
Prepaid expenses - current                          811,140        699,247
--------------------------------------------------------------------------
Total current assets                             27,192,416     16,551,784


Prepaid expenses                                    192,115        277,580
Equipment                                         2,588,861      1,410,663
Goodwill                                         14,845,937     14,314,345
Intangible assets                                12,947,841        136,874
--------------------------------------------------------------------------
Total assets                                   $ 57,767,170   $ 32,691,246
--------------------------------------------------------------------------
--------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities       $  7,604,789   $  3,368,653
Taxes payable                                     1,129,937        246,243
Capital lease obligation - Current                   62,692         15,885
Deferred revenue                                  1,041,703      1,174,587
--------------------------------------------------------------------------
Total current liabilities                         9,839,121      4,805,368

Long-term capital lease obligation                   94,984         27,442
Future income taxes                                  12,017        111,163
--------------------------------------------------------------------------
Total liabilities                                 9,946,122      4,943,973
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Shareholders' equity
Share capital                                   108,125,914     72,257,965
Warrants and underwriters' options                4,489,508      4,895,966
Contributed surplus                               4,046,119      3,152,145
Accumulated other comprehensive income            6,765,446      9,222,949
Deficit                                         (75,605,939)   (61,781,752)
--------------------------------------------------------------------------
Total shareholders' equity                       47,821,048     27,747,273
--------------------------------------------------------------------------
Total liabilities and shareholders' equity     $ 57,767,170   $ 32,691,246
--------------------------------------------------------------------------
--------------------------------------------------------------------------


INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of Operations, Loss and Deficit
(Unaudited and expressed in U.S. dollars)

                          Three months ended            Nine months ended
--------------------------------------------------------------------------
--------------------------------------------------------------------------
              September         June       August    September      August
                     30,          30,          31,          30,         31,
                   2008         2008         2007         2008        2007
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Revenue     $ 7,870,120  $ 5,566,017  $ 4,288,236 $ 18,991,671 $13,119,274
Cost of
 sales        3,093,209    2,956,178    2,183,970    9,068,735   6,549,316
--------------------------------------------------------------------------
              4,776,911    2,609,839    2,104,266    9,922,936   6,569,958
--------------------------------------------------------------------------

Expenses
 Sales and
  Marketing   2,317,495    1,822,475    1,727,331    5,968,344   4,712,957
 Research
  and
  development 4,096,978    2,694,824    2,642,128    9,338,451   8,079,799
 General
  and
  administra-
  tion        2,466,342    1,794,631    1,199,420    6,081,949   3,658,937
 Amortization   737,487      210,896      213,350    1,160,191     575,923
 Stock-based
  compensation  279,626      283,367      154,148      847,252     418,872
Technology
 Partnerships
 Canada
 Funding
 Investment     117,064      158,682      128,648      299,165     265,542
--------------------------------------------------------------------------
             10,014,992    6,964,875    6,065,025   23,695,352  17,712,030
--------------------------------------------------------------------------

Loss before
 other
 expense
 (income)
 and
 income
 taxes        5,238,081    4,355,036    3,960,759   13,772,416  11,142,072
Other
 expense
 (income)
  Foreign
   exchange
   loss (gain) (311,606)      52,604       58,035     (473,495)    340,067
  Interest
   income      (126,044)    (254,420)    (186,339)    (552,410)   (317,471)
  Loss on
   disposal
   of
   equipment          -            -        2,457            -       2,457
  Restructuring
   charges      814,668            -            -      814,668           -
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Loss
 before
 income
 taxes        5,615,099    4,153,220    3,834,912   13,561,179  11,167,125
Income
 tax
 expense
 (recovery)
  Current       114,536      110,817       39,368      292,929     268,382
  Future          6,486      (12,852)      10,485      (29,921)    (40,110)
--------------------------------------------------------------------------
                121,022       97,965       49,853      263,008     228,272
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Loss for the
 period       5,736,121    4,251,185    3,884,765  13,824,187   11,395,397

Deficit,
 beginning
 of period   69,869,818   65,618,633   50,549,876   61,781,752  43,039,244
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Deficit,
 end of
 period    $ 75,605,939 $ 69,869,818 $ 54,434,641 $ 75,605,939 $54,434,641
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Loss per
 share
(basic
 and
 diluted)        $ 0.04       $ 0.03       $ 0.03       $ 0.09       $ 0.09
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Weighted
 average
 number
 of shares
 outstand-
 ing        160,928,816  151,002,445  119,261,618  147,861,766 125,460,791
--------------------------------------------------------------------------


INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statement of Comprehensive Loss
(Unaudited and expressed in U.S. dollars)

                   Three months ended               Nine months ended
--------------------------------------------------------------------------
        September 30,     June 30,   August 31, September 30,    August 31,
                2008         2008         2007          2008          2007
--------------------------------------------------------------------------

Loss
 for
 the
 period  $(5,736,121) $(4,251,185) $(3,884,765) $(13,824,187) $(11,395,397)

Other
 compre-
 hensive
 gain
 (loss):

Unrealized
 gains
 (losses)
 on trans-
 lating
 financial
 statements
 from func-
 tional cur-
 rency to
 reporting
 currency (1,023,660)     389,183      438,346    (2,457,503)    2,072,372
--------------------------------------------------------------------------

Compre-
 hensive
 loss    $(6,759,781) $(3,862,002) $(3,446,419) $(16,281,690) $ (9,323,025)
--------------------------------------------------------------------------


INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of Cash Flows
(Unaudited and expressed in U.S. dollars)

                  Three months ended                 Nine months ended
--------------------------------------------------------------------------
        September 30,     June 30,   August 31, September 30,    August 31,
                2008         2008         2007          2008          2007
--------------------------------------------------------------------------

OPERATING
 ACTIVITIES
Loss for
 the
 period  $(5,736,121) $(4,251,185) $(3,884,765) $(13,824,187) $(11,395,397)
Items not
 involving
 cash
 Amort-
  ization    737,487      210,896      213,350     1,160,191       575,923
 Future
  income
  taxes        1,212      (13,351)       9,947       (33,093)      (43,614)
 Stock-
  based
  compen-
  sation     279,626      283,367      154,148       847,252       418,872
Changes
 in non-
 cash
 operating
 working
 capital
 Accounts
  receiv-
  able    (2,310,216)     972,849      (77,212)   (3,368,921)    1,645,362
 Inventory         -       52,034       69,671       102,443       122,564
 Prepaid
  expenses   529,778     (707,881)    (221,138)      (85,094)     (115,648)
 Accounts
  payable
  and acc-
  rued lia-
  bilities 3,037,999    1,186,593      407,119     4,473,239       447,568
 Taxes
  payable    800,148       75,182       17,609       831,671       227,883
 Deferred
  revenue   (155,982)     (46,037)     229,661       (74,970)       64,888
--------------------------------------------------------------------------
Cash used
 in oper-
 ating ac-
 tivities (2,816,069)  (2,237,533)  (3,081,610)   (9,971,469)   (8,051,599)
--------------------------------------------------------------------------

INVESTING
 ACTIVITIES
Purchase
 of equip-
 ment     (1,048,149)    (312,248)    (196,793)   (1,606,846)     (446,818)
Loan
 receiv-
 able      1,936,241   (1,998,562)           -       (62,321)            -
Deferred
 acquis-
 ition
 costs             -   (1,021,461)           -    (1,448,982)            -
Cash paid
 on acquis-
 ition of
 Destinator,
 net of
 cash
 acqui-
 red      (7,844,260)           -            -    (7,844,260)            -
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Cash used
 in inves-
 ting act-
 ivities  (6,956,168)  (3,332,271)    (196,793)  (10,962,409)     (446,818)
--------------------------------------------------------------------------

FINANCING
 ACTIVITIES
Issuance
of common
shares and
warrants           -       53,957    1,756,738    32,119,750    19,819,100
Share
 issuance
 costs             -            -     (145,682)   (2,186,676)   (1,748,688)
Repayment
 of capital
 lease
 obligation  (16,175)     (12,437)      (1,431)      (32,434)       (1,431)
--------------------------------------------------------------------------
Cash
 provided
 by finan-
 cing act-
 ivities     (16,175)      41,520    1,609,625    29,900,640    18,068,981
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Effect of
 exchange
 rate changes
 on cash
 and cash
 equiv-
 alents     (558,494)     287,105      257,192    (1,461,646)      986,666
--------------------------------------------------------------------------

Increase
 (dec-
 rease)
 in
 cash    (10,346,906)  (5,241,179)  (1,411,585)    7,505,116    10,557,230
Cash,
 begin-
 ning of
 period   30,005,623   35,246,802   19,996,639    12,153,601     8,027,823
--------------------------------------------------------------------------
Cash,
 end of
 period  $19,658,717  $30,005,623  $18,585,053  $ 19,658,717  $ 18,585,053
--------------------------------------------------------------------------
--------------------------------------------------------------------------

     Contacts:
     Intrinsyc Software International, Inc.
     George Reznik
     Chief Financial Officer
     (604) 678-3734
     Email: greznik@intrinsyc.com
     Website: http://www.intrinsyc.com
      
     Shelton Group Investor Relations
     Beverly Twing
     Investor Relations
     (972) 239-5119 ext.126
     Email: btwing@sheltongroup.com