Message to INTRINSYC Shareholders from company president
February 26, 1997
Message from the President to Intrinsyc Shareholders
Dear Shareholder,
I am writing this letter to bring you up to date on the current state of
affairs of our company.
As stated in our recent annual report, we anticipate the year ahead to be
one of dramatic transitions and growth for our company. We are continuing
to maintain a rapid pace in the development of leading edge technologies for
the emerging embedded Windows software market while substantially enhancing
our marketing, sales, and systems integration capabilities. Our target for
1998: to establish dominant market share while building strong revenue
growth.
Given these broad statements of our vision, I would like to take some time
to comment on specific business issues that may be of interest to you, the
shareholder:
Our Stock Performance
Since our IPO in 1996 we have continued to build shareholder value. The
Globe and Mail rated our company's stock the 2nd highest performer on the
VSE in 1997. This year our enhanced business model will drive us to new
levels of success, both in terms of industry recognition for our
intellectual property base, as well as expected achievements in the area of
significant technology licensing deals and the provision of other
value-added services to our customers. Of continuing importance will be the
enhancement of internal growth via further acquisitions. All of this should
result in continued strong shareholder value appreciation in 1998. As
President & CEO of the Company, this remains my top priority.
Last November our stock price peaked at $3.00 with much of the valuation
driven by the excitement of Intrinsyc having been invited into Microsoft's
booth at Comdex as one of 14 exceptional technology companies that they
chose to highlight. Expectation of forthcoming news was obviously high. So
when we did not announce any follow-up news that month our stock quickly
traded down to $1.70. Such dramatic volatility in the price of our stock
contrasted greatly with the wonderful reception our Company received at the
world's most important information technology event.
Recent stock performance seemed to have been tied to the near doubling of
our market float this week to 11.4 million shares as a result of our
February 26th 1997 financing in which the company raised $1.4 million by
issuing 3.6 million units (1 share and = a warrant) at $0.37 in the form of
a private placement with a 1 year hold period (reference: company insiders
and some close friends of the company did a majority of that financing).
Now, as we transition from one group of shareholders to another, different
shareholder expectations will continue to create improved market conditions
for our stock.
Current Financing and Cash Position
Intrinsyc has raised $1.2 million so far from its recently announced special
warrants financing. This has helped produce incoming cash totaling
approximately $2 million so far this year with a current burn rate of
approximately $200,000 per month. Clearly we are not in immediate need of
additional cash and are in fact in the best financial position we have ever
been in.
News
Since Comdex last November, there has been natural market speculation about
impending news. The Company has received numerous product inquiries and has
entered into some initial, modest, agreements. We continue to pursue current
sales leads and negotiate agreements for technology licensing and systems
integration services. I feel that we are tracking the market for embedded
Windows technologies well and will maintain our leadership position as this
embryonic market continues to develop.
The embedded Windows market is now just starting to take flight (reference
Bill Gates' Jan 10th key note address at the Consumer Electronics Show).
Most manufacturers project that they will start to ship new products based
on Windows CE technology near the end of the year. In the interim period,
they are purchasing value-added services from embedded systems technology
companies in the form of education, training, and subcontract development
services.
Intrinsyc was focused on pure technology development in 1997. Given our
desire for an expanded business model with more service related revenues
this year, Intrinsyc has made significant changes to the operational
structure of the Company which has resulted in a far larger marketing and
sales budget as well as new systems integration capabilities. Today, the
Windows CE market sees roughly $4 out of every $5 going to systems
integration and training services and Intrinsyc is now positioning itself to
capture these revenues.
Growth via Acquisitions
The world of information technology, specifically in relation to software,
is moving forward at an every increasing rate. Gone are the days when a
startup can grow all on its own and become the next Microsoft. Intrinsyc has
a very important advantage over potential competitors - it can grow via
acquisitions because it is a public company. Last year we acquired 3
technologies. This year we plan to increase the number of targeted
acquisitions - acquisitions which will be focused on further enhancing our
marketing and systems integration capabilities.
U.S. Stock Listing, U.S. Investors
Our public company future is in the U.S. - the world's largest and fastest
growing information technology market. Institutional investors in the U.S.
generally will not purchase stock in VSE listed companies - or even small
cap TSE listed companies. VSE has been a great place to initially list and
raise seed capital but now the Company must set its sights on obtaining a
senior U.S. stock exchange listing to raise the capital it needs for
accelerated growth and to provide the liquidity and corporate valuation that
it deserves.
Summary
Today Intrinsyc is financially stronger than it has ever been. Our
intellectual capital and intellectual property is highly regarded in the
industry. Our marketing timing is impeccable. Our business model is rapidly
evolving to meet the opportunities in today's market while preserving future
licensing opportunities. We will continue to grow aggressively.
Thank you for your interest, your patience, and your continued support.
Sincerely,
Intrinsyc Software, Inc.
Derek W. Spratt
President & CEO
-=-=-=-=-=-=-=-=-=-=-=-=-=-
Bill |
