Intrinsyc Software International, Inc. (TSX:ICS), a leading provider of software
solutions for mobile devices, today announced its financial results for the
second quarter ended June 30, 2010, 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
March 31, 2010 and the three-month period ended June 30, 2009.
Revenue for the quarter was approximately $3.0 million compared to approximately
$3.5 million in the previous quarter and compared to approximately $4.9 million
in the three months ended June 30, 2009. The overall gross margin was 50%
compared to 60% in the previous quarter and compared to 56% in the three months
ended June 30, 2009. While revenue for the quarter represents a sequential
decline of 14% from the previous quarter, revenue and margins were impacted by a
significant transaction in the period that deviated from the Company's historic
business model for service engagements in which revenue is recognized as
services are performed. Rather, the Company was compensated at a lower initial
margin for services and will receive royalty revenue as the customer sells the
product developed.
During the quarter, Intrinsyc assisted an original design manufacturer in the
development of an Android tablet device that is planned by the customer to be
launched in the third quarter of 2010. Much of the revenue from this project
should be recognized in the second half of 2010 in the form of a royalty payment
per device for licensed Intrinsyc intellectual property.
Total operating expenses, excluding amortization, stock-based compensation,
Technology Partnerships Canada ("TPC") funding investment, restructuring
charges, and loss/(gain) on disposal of equipment, for the three months ended
June 30, 2010 were approximately $1.5 million representing a decrease of 25
percent and 37 percent from approximately $2.0 million and $2.4 million in the
quarter ended March 31, 2010 and the quarter ended June 30, 2009, respectively.
Earnings before interest, amortization, stock-based compensation expense,
restructuring, loss/(gain) on disposal of equipment, foreign exchange
loss/(gain), TPC funding investment, and income tax ("EBITDA") for the three
months ended June 30, 2010 was $11,012 compared to EBITDA of $102,994 for the
three months ended March 31, 2010 and $310,242 for the three months ended June
30, 2009. Cash and cash equivalents were $10.3 million with net working capital
of $10.9 million as of June 30, 2010 compared to cash and cash equivalents of
$11.7 million with net working capital of $11.3 million as of December 31, 2009.
The Company reported revenue of approximately $6.5 million for the six-month
period ended June 30, 2010 as compared to approximately $9.3 million for the six
month period ended June 30, 2009. Total revenue attributable to the Company's
software solutions decreased to 39 percent of revenues, including software
licensing, maintenance/support and software-related services, as compared to 41
percent in the respective comparative period. Gross margin was 56 percent for
the six month period ended June 30, 2010, up from 52 percent in the six months
ended June 30, 2009.
Total operating expenses, excluding amortization, stock-based compensation, TPC
funding investment, restructuring charges, and loss/(gain) on disposal of
equipment, for the six months ended June 30, 2010 were approximately $3.5
million, compared to approximately $5.7 million for the six months ended June
30, 2009. EBITDA for the six months ended June 30, 2010 was $114,006 compared to
($880,160) for the six months ended June 30, 2009.
Technology Partnerships Canada ("TPC") Funding Agreement Termination
The Company, on August 10, 2010, entered into an agreement to terminate its TPC
funding agreement. This termination agreement requires an amount of CDN$350,000
to be paid by the Company over a three year period as full settlement of all
amounts owing under the TPC funding agreement, inclusive of current and future
royalty payments and future obligations as well as the elimination of the
disputed claim of CDN $929,183.
"Terminating the TPC funding agreement is beneficial for the Company as this
eliminates all current and future royalty payable and future obligations, as
well as the elimination of the disputed claim," stated Tracy Rees, President and
Chief Executive Officer.
Business Highlights
-- Signed four new Destinator(R) licensees: Nanovision, for an in-dash
navigation system in an electric automobile from Coda Automotive, SP by
Design, Rydeen Mobile Electronics, and Echomaster for use in personal
navigation devices.
-- Signed an engineering services and software license agreement (SLA) for
RapidRIL(TM) with Tattu Mobile to support the development of an Android
Tablet device.
-- Launched Destinator 9 application for the Apple iPhone(TM) in Western
Europe, Australia and New Zealand.
-- Launched Destinator 9 application for the Apple iPhone which will be
sold under the brand, Apontador Navegador(TM), by Apontador.
-- Announced a partnership to integrate GyPSii's award-winning social media
and contextual advertising/coupon functionality into the globally
acclaimed Destinator navigation application for smart phones. The
combination of the two heralds a first for the mobile navigation segment
with the full integration of social media features into a mobile turn-
by-turn navigation application.
-- Announced a partnership with MIPS technology to bring 3.5G functionality
to the MIPS architecture. The companies are porting Intrinsyc's RapidRIL
software to the MIPS architecture in order to accelerate mobile SoC
development for MIPS licensees around the globe.
-- Established user interface (UI) and Application Center of Excellence,
based in Beijing, China will support Original Equipment Manufacturer
(OEM) and Original Design Manufacturer (ODM) customers with development
of innovative UIs and applications with Microsoft(R) Silverlight 4.
"We are pleased to have sustained positive operations despite reduced revenue
during the quarter," stated Tracy Rees, President and Chief Executive Officer.
"Intrinsyc is also making progress in signing agreements with recurring revenue
models that should enhance future revenue and bottom line results."
Conference call
The Company will release its fiscal second quarter 2010 financial results on
Thursday, August 12, 2010 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, 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 devices faster with higher quality,
and differentiating innovation. We help our customers deliver compelling
products using our unmatched expertise with the leading OS platforms including
Android, Apple, Blackberry, Linux, Symbian, Windows CE and Windows Phone.
Intrinsyc delivers Destinator, the most feature rich navigation application with
the best integration for leading smart phones, including from OEMs like Motorola
and LG Electronics. Destinator is also available through leading application
stores and Intrinsyc's own navigation store www.destinatornavstore.com.
Intrinsyc is publicly traded (TSX:ICS) and headquartered in Vancouver, Canada,
with offices in China and the United States. www.intrinsyc.com
INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Balance Sheets
---------------------------------------------------------------------------
As at June 30, 2010 December 31, 2009
---------------------------------------------------------------------------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 10,250,513 $ 11,710,227
Accounts receivable 3,113,704 3,401,467
Inventory 25,775 14,269
Prepaid expenses - current 148,263 313,528
---------------------------------------------------------------------------
Total current assets 13,538,255 15,439,491
Restricted cash - 95,147
Prepaid expenses 42,685 47,063
Equipment 599,821 735,807
Intangible assets 3,394,315 3,880,481
---------------------------------------------------------------------------
Total assets $ 17,575,076 $ 20,197,989
---------------------------------------------------------------------------
---------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued
liabilities $ 2,065,982 $ 3,574,134
Current portion of long-term
payable to Technology
Partnerships Canada 70,449 -
Capital lease obligation - current 38,033 45,179
Deferred revenue 424,378 526,169
---------------------------------------------------------------------------
Total current liabilities 2,598,842 4,145,482
Long-term payable to Technology
Partnerships Canada 226,293 -
Long-term capital lease obligation - 7,388
---------------------------------------------------------------------------
Total liabilities 2,825,135 4,152,870
---------------------------------------------------------------------------
Shareholders' equity
Share capital 108,288,585 108,288,585
Warrants and underwriters' options 270,046 4,029,953
Contributed surplus 9,106,916 5,230,217
Accumulated other comprehensive
(loss) income 1,891,656 2,068,103
Deficit (104,807,262) (103,571,739)
---------------------------------------------------------------------------
Total shareholders' equity 14,749,941 16,045,119
---------------------------------------------------------------------------
Total liabilities and shareholders'
equity $ 17,575,076 $ 20,197,989
---------------------------------------------------------------------------
---------------------------------------------------------------------------
INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of Operations and Deficit
(Unaudited and expressed in U.S. dollars)
---------------------------------------------------------------------------
Three Three Six Six
months months months months
ended June ended June ended June ended June
For the 30, 2010 30, 2009 30, 2010 30, 2009
---------------------------------------------------------------------------
Revenues $ 3,024,458 $ 4,874,621 $ 6,531,455 $ 9,275,428
Cost of sales 1,497,857 2,144,748 2,888,723 4,425,363
---------------------------------------------------------------------------
1,526,601 2,729,873 3,642,732 4,850,065
---------------------------------------------------------------------------
Expenses
Sales and
marketing 399,111 744,602 1,014,332 1,888,517
Research and
development 638,852 1,140,993 1,479,787 2,504,082
Administration 477,626 534,036 1,034,607 1,337,626
Amortization 290,889 339,417 579,745 658,746
Stock-based
compensation 58,747 108,871 116,792 193,379
Technology
Partnerships
Canada Funding
Investment 282,077 143,135 287,192 278,069
Restructuring - - 485,478 -
Loss (gain) on
disposal of
equipment - 199,793 (2,150) 220,345
---------------------------------------------------------------------------
2,147,302 3,210,847 4,995,783 7,080,764
---------------------------------------------------------------------------
Loss before
other expense
(earnings) and
income taxes 620,701 480,974 1,353,051 2,230,699
Other expense
(earnings)
Foreign exchange
(gain) loss (229,798) 310,261 (31,503) 197,078
Interest expense
(income) (10,194) 3,898 (16,796) (33,931)
---------------------------------------------------------------------------
Loss before income
taxes 380,709 795,133 1,304,752 2,393,846
Income tax recovery
Current (71,183) (86,463) (69,229) (60,714)
---------------------------------------------------------------------------
Net loss for the
period 309,526 708,670 1,235,523 2,333,132
Deficit, beginning
of period 104,497,736 102,266,096 103,571,739 100,641,634
---------------------------------------------------------------------------
Deficit, end of
period $104,807,262 $102,974,766 $104,807,262 $102,974,766
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Loss per share
(basic and
diluted) $ 0.00 $ 0.01 $ 0.01 $ 0.02
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Weighted average
number of shares
outstanding 163,259,070 163,254,903 163,259,070 163,254,903
---------------------------------------------------------------------------
---------------------------------------------------------------------------
INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of Comprehensive Loss
(Unaudited and expressed in U.S. dollars)
---------------------------------------------------------------------------
Three Three Six Six
months months months months
ended June ended June ended June ended June
For the 30, 2010 30, 2009 30, 2010 30, 2009
---------------------------------------------------------------------------
Net loss for the
period ($ 309,526) ($708,670) ($1,235,523) ($2,333,132)
Other comprehensive
gain (loss):
Unrealized gains
(losses) on
translating
financial
statements from
functional currency
to reporting
currency (711,683) 1,194,857 (176,447) 657,824
---------------------------------------------------------------------------
Comprehensive income
(loss) ($1,021,209) $486,187 ($1,411,970) ($1,675,308)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of EBITDA and Loss
(Unaudited and expressed in U.S. dollars)
---------------------------------------------------------------------------
Three Three Six Six
months months months months
ended June ended June ended June ended June
For the 30, 2010 30, 2009 30, 2010 30, 2009
---------------------------------------------------------------------------
Revenues $3,024,458 $4,874,621 $6,531,455 $9,275,428
Cost of sales 1,497,857 2,144,748 2,888,723 4,425,363
---------------------------------------------------------------------------
1,526,601 2,729,873 3,642,732 4,850,065
---------------------------------------------------------------------------
Expenses
Sales and
marketing 399,111 744,602 1,014,332 1,888,517
Research and
development 638,852 1,140,993 1,479,787 2,504,082
Administration 477,626 534,036 1,034,607 1,337,626
---------------------------------------------------------------------------
1,515,589 2,419,631 3,528,726 5,730,225
---------------------------------------------------------------------------
EBITDA Income (Loss) 11,012 310,242 114,006 (880,160)
Amortization 290,889 339,417 579,745 658,746
Stock-based
compensation 58,747 108,871 116,792 193,379
Technology
Partnerships Canada
Funding Investment 282,077 143,135 287,192 278,069
Restructuring - - 485,478 -
Loss (gain) on
disposal of
equipment - 199,793 (2,150) 220,345
Foreign exchange
(gain) loss (229,798) 310,261 (31,503) 197,078
Interest expense
(income) (10,194) 3,898 (16,796) (33,931)
Income tax recovery
Current (71,183) (86,463) (69,229) (60,714)
---------------------------------------------------------------------------
320,538 1,018,912 1,349,529 1,452,972
---------------------------------------------------------------------------
Net loss for the
period under
Canadian GAAP ($ 309,526) ($ 708,670) ($1,235,523) ($2,333,132)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
INTRINSYC SOFTWARE INTERNATIONAL, INC.
Consolidated Statements of Cash Flows
(Unaudited and expressed in U.S. dollars)
---------------------------------------------------------------------------
Three Three Six Six
months months months months
ended June ended June ended June ended June
For the 30, 2010 30, 2009 30, 2010 30, 2009
---------------------------------------------------------------------------
OPERATING ACTIVITIES
Net loss for the
period ($ 309,526) ($ 708,670) ($ 1,235,523) ($ 2,333,132)
Items not involving
cash:
Amortization 290,889 339,417 579,745 658,746
Future income
taxes - (41,694) - (2,603)
Stock-based
compensation 58,747 108,871 116,792 193,379
Loss on disposal
of equipment - 199,793 - 220,345
Changes in non-cash
operating working
capital:
Accounts
receivable (842,175) 593,489 240,511 1,939,018
Inventory (18,958) - (12,178) 14,336
Prepaid expenses 117,153 48,000 170,253 227,909
Accounts payable
and accrued
liabilities (1,035,809) (1,457,154) (1,508,695) (3,116,015)
Current portion of
long-term payable
to Technology
Partnerships
Canada 72,936 - 72,936 -
Deferred revenue 1,555 (115,051) (97,291) (7,828)
---------------------------------------------------------------------------
Cash used in
operating
activities (1,665,188) (1,032,999) (1,673,450) (2,205,845)
---------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of
equipment - (3,075) - (25,941)
---------------------------------------------------------------------------
Cash used in
investing
activities - (3,075) - (25,941)
---------------------------------------------------------------------------
FINANCING ACTIVITIES
Repayment of capital
lease obligation (7,233) (9,596) (14,272) (63,318)
Long-term payable to
Technology
Partnerships Canada 234,282 - 234,282 -
Restricted cash 97,248 1,035 97,248 12,104
---------------------------------------------------------------------------
Cash provided by
(used in) financing
activities 324,297 (8,561) 317,258 (51,214)
---------------------------------------------------------------------------
Effect of exchange
rate changes on
cash and cash
equivalents (508,944) 904,620 (103,522) 495,622
---------------------------------------------------------------------------
Increase (decrease)
in cash and cash
equivalents (1,849,835) (140,015) (1,459,714) (1,787,378)
Cash and cash
equivalents,
beginning of period 12,100,348 10,744,089 11,710,227 12,391,452
---------------------------------------------------------------------------
Cash and cash
equivalents, end of
period $10,250,513 $10,604,074 $10,250,513 $10,604,074
---------------------------------------------------------------------------
---------------------------------------------------------------------------
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