Intrinsyc Reports 2011 Fourth Quarter and Full-Year Financial Results

VANCOUVER, BRITISH COLUMBIA -- (MARKET WIRE) -- Mar 21, 2012 -- Intrinsyc Software International, Inc. (TSX: ICS) ("Intrinsyc" or the "Company"), developer of intelligent connected devices, today announced its financial results for the fourth quarter and full year ended December 31, 2011, 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 and twelve months ended December 31, 2010, also in accordance with IFRS.

"We are pleased with achievement of positive EBITDA for our second consecutive year," said Tracy Rees, President and Chief Executive Officer. "In 2011, the Company continued to focus on operational efficiency and the stabilization of the company, resulting in improvements in the company's working capital and other balance sheet measures. In the fourth quarter of 2011, we began a progressive series of investments in new solutions that will provide the company with new and scalable sources of revenue."

Q4 2011 Comparative Results

The Company reported revenue of approximately $2.6 million for the three months ended December 31, 2011 as compared to approximately $2.9 million for the three months ended December 31, 2010. The decrease in revenue is primarily attributable to the decrease in revenues of the Company's Device Development Solutions. Total revenue attributable to the Company's Software Solutions was 26 percent of revenues, compared to 17 percent in the comparative quarter with revenue attributable to the Company's Device Development Solutions decreasing to 74 percent in the three months ended December 31, 2011 from 82 percent in the prior year period. Overall, gross margin(1) was 46 percent in the fourth quarter of 2011 representing a decrease from 63 percent in the three months ended December 31, 2010.

Total expenses (excluding other operating expenses)(2) for the three months ended December 31, 2011 were approximately $1.2 million representing a decrease of 27 percent from the approximately $1.6 million for the three months ended December 31, 2010.

EBITDA(3) for the three months ended December 31, 2011 was $399 compared to EBITDA of $243,902 for the three months ended December 31, 2010.

Fiscal 2011 Comparative Results

The Company reported revenue of approximately $10.3 million for the year ended December 31, 2011 as compared to approximately $12.7 million for the year ended December 31, 2010. Total revenue attributable to the Company's Software Solutions decreased to 29 percent of revenues, including software licensing, maintenance/support and software-related services, as compared to 31 percent in the respective comparative period. Gross margin was 52 percent for the year ended December 31, 2011, a decrease from 57 percent in the year ended December 31, 2010.

Total operating expenses (excluding other operating expenses) for the year ended December 31, 2011 were approximately $4.6 million, compared to approximately $6.9 million for the year ended December 31, 2010. EBITDA for the year ended December 31, 2011 was $718,432 compared to $420,619 for the year ended December 31, 2010.

Working capital(4) as of December 31, 2011 was approximately $11.9 million (which included cash and cash equivalents of approximately $9.4 million and short-term investments of approximately $2.7 million). This is compared to net working capital of approximately $11.6 million as of December 31, 2011 (which included cash and cash equivalents of approximately $11.2 million).

Business Highlights

Notable developments and achievements during the quarter include the following:


--  In collaboration with a leading communications technology vendor,
    Ubiquisys, the Company began development of WiFi Wake-up, an innovative
    combination of handset and small cell applications. WiFi Wake-up
    switches on WiFi as the user enters a 3G/LTE/WiFi small cell hotspot and
    logs into the hotspot's secure WiFi network. When the user then leaves
    the hotspot, the WiFi is turned-off. This provides a compelling new tool
    for operators to maximize data offload by integrating carrier WiFi with
    small cell base stations, and optimizes power management on the user's
    mobile handset. A provisional patent was filed and WiFi Wake-up was
    announced and demonstrated at Mobile World Congress in February 2012.

--  Began development of the OPEN-6 Design & Production Platform. The OPEN-6
    Design and Production Platform leverages the latest high performance
    multi-core design from Freescale, the i.MX 6 series, based upon the
    ARM® Cortex™ A9 architecture. 

--  Initiated development of an Advanced Metering Infrastructure module
    prototype for integration in smart meters. Advanced Metering
    Infrastructure (AMI) are systems that measure, collect and analyze
    energy usage, and provide two-way communication with metering devices
    such as electricity meters. This enables more efficient utilization of
    energy resources, greater control over energy consumption by consumers,
    and new business models for utility companies.

--  Signed two (2) new customer projects for product development services
    with industry leading device makers and technology suppliers.including a
    material agreement worth 10% or more of projected revenues over the next
    12 months. This agreement to provide engineering services for Android
    platforms with an industry leading semiconductor company is expected to
    exceed $2 million in revenue in fiscal 2012.

--  Opened an engineering center in San Diego, California. In addition to
    product development services for the world's leading OEM companies
    developing wireless devices, the San Diego location will become the
    center for new product initiatives related to development of M2M
    (Machine-to-Machine) solutions.

Conference call

The Company will release its fiscal fourth quarter and full-year 2011 financial results on Wednesday, March 21, 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 Email Contact prior to the call.

Non-GAAP 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.

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, 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.

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