FYI:
Letter to Shareholders, from Intrinsyc CEO, Mr. Derek Spratt.
April 30, 1998
Presidents Message to Intrinsyc Shareholders
- Our evolving business model
- Update on the Letter of Intent (LOI) with Annasoft
Dear Shareholder,
It has been 2 months since I last wrote to you and talked about our strategy of shifting from a pure software development organization to a full fledged marketing oriented enterprise with growth being fueled by acquisitions. As you know, that process has started with the signing of our letter of intent to merge with Annasoft, as reported by us on March 31st, and it continues with our new corporate mission statement which provides the focus for our company moving forward. Simply stated:
We engineer embedded Windows solutions, and
We get our customers to market in record time
Both phrases impart a sense of quality, urgency, and a customer based, total solutions focus that lets our target audience know what we truly stand for.
Our dynamic business model is tracking the sea-change that our industry is currently experiencing. The days of the early adopters are coming to a close and now Windows CE is becoming part of the mainstream world of embedded computing. We are now putting in place significant structural changes that are re-aligning our operations towards 2 key focal points:
(1) Grouping our software development tools, component libraries and
services into an extended Windows CE Jumpstart Program that guarantees our customers out-of-the-box success with Windows CE in record time, and
(2) Grouping our existing communications technologies (Rainbow, DeviceCOM and WinFT) together with additional components, tools and services to provide a comprehensive offering of embedded Windows Intelligent Connectivity Solutions that provides powerful embedded Internet connectivity for our customers products.
The motivation behind these key focal points is straight forward: once our customers are up and running with Windows CE in their product lines by using our Windows CE Jumpstart Program, they will want to connect their products into the world of the embedded Internet via our Intelligent Connectivity Solutions. Its a simple story and a one which is framed in terms of customer needs with a clear value proposition. Simplicity in our marketing message is the key to our eventual success.
Another way we have orchestrated internal change has been in the refinement of our sales process. Every company starts with sales suspects and then moves towards prospects and finally customers. But we are going the extra distance and are converting customers to clients again, an emphasis on relationships and an emphasis on providing comprehensive solutions to our customers continuing business needs, not just one-time sales of technology to them.
Letter of Intent with Annasoft
Its important for Intrinsyc investors to fully understand the process and dynamics of the merger that we have embarked on with Annasoft. First and foremost, I must emphasize that the LOI Intrinsyc and Annasoft have signed is non-binding, and therefore, until a definitive agreement has been completed, and its is subsequently approved by the Exchange and shareholders, there is no certainty that the merger will become a reality.
We are currently in no-mans land until the agreement is completed
regarding the issuance of news releases about Annasoft related business. Annasoft will be acting as our primary marketing channel for our products from this point forward, but until the merger is completed, Annasoft will be issuing its own news releases over the news wire. They will be distributed on Intrinsycs email broadcast list as a service to our shareholders and will also be available on Annasofts web site at annasoft.com.
The process we are following involves the following steps:
1. Negotiate and sign the LOI with the basic valuation formula and
structural business issues defined completed and announced on Mar 31/98
2. Complete formal 3 year audits of Annasoft by KPMG in process
3. Complete formal fairness opinion letter to the Exchange and
Shareholders, requires completion of audits in process
4. Complete formal agreement and sign in process
5. Complete information circular materials (prospectus level disclosure on the merger) and mail out to shareholders, call an EGM 30 days hence
6. Hold EGM and seek shareholder approval
7. Final closing, business begins as a U.S. based merged entity
As you can see, this is a complex process, and one which also involves a lot of behind the scenes paperwork, the creation of a new U.S. based company, dealing with taxation issues, etc. its a multi-month process and a very costly one at that, both in terms of cash outlays and management time and effort. But it will be well worth it.
While this process moves forward (and its been going well up to now),
Annasoft and Intrinsyc are walking a tight-rope re. integrating certain aspects of its businesses together while preserving the necessary independence that is required while the deal is not yet complete. In essence, neither company has that much to risk by co-marketing and refining product development priorities as Annasoft has been a strategic marketing partner of Intrinsycs since Sept/97 anyway. This pre-emptive arrangement to work as one in the interim period is important so we can collectively achieve our aggressive business goals that we have set out for ourselves for the remainder of 1998.
Summary
We continue to execute our business strategy as set forth in our annual report, AGM and subsequent Letters from the President. Our path forward may be aggressive with certain aspects of risk associated with it, but we are indeed achieving our goals and were confident that we will remain on track. Thank you again for your support.
Sincerely,
Intrinsyc Software, Inc.
Derek W. Spratt
President & CEO
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