Intrinsyc Software IPO for marketing and R&D

Intrinsyc Software International Inc. has issued a preliminary prospectus regarding plans to raise money that the company says will be used to fund sales, marketing and research and development. Canaccord Adams is lead underwriter, with Paradigm Capital Inc., Raymond James Ltd., and GMP Securities LP rounding out the syndicate for the offering. The company already trades on the TSX under the symbol ICS. It's not yet known how many shares will be sold and how much money Intrinsyc hopes to generate from the share offering. The Vancouver-based handset platform developer has created a new and less expensive way of building feature phones - cell phones that come equipped with broad functionality including digital imaging, MP3 players and other multimedia services. In an interview with Report on Wireless last February, the company said its Soleus platform can significantly reduce time-to-market for handset development from upwards of 18 months to between three and four months. Intrinsyc's platform uses a stripped-down version of Microsoft Corp.'s Windows Mobile operating system as a foundation for Soleus. With feature phones, or multi-purpose devices, growing in popularity in all parts of the world and the number of device shipments reaching all-time highs, handset makers are all trying to get their fair share of unit sales. This trend has put increasingly greater pressure of the likes of Nokia Corp., Motorola Inc., Samsung Electronics and others to get to market quicker with more feature-laden devices at a lower cost of production. "Management also believes that the handset manufacturers' business success requires, among other things, that they provide consumers with appealing, innovative designs, within an ever shrinking time-to-market framework, while simultaneously keeping their bill-of-material and engineering costs to a minimum," reads the preliminary prospectus, issued on April 10. "Industry analysts are reporting that existing software/hardware design paradigms of consumer handset devices are proving inadequate to meet these challenges." Intrinsyc has two lines of business: the wireless systems engineering business and mobility software. The latter developed Soleus, and the company believes this unit will generate the majority of its revenue in the future in the form of licensing agreements. Revenue from Soleus started this year following a licensing agreement announced on March 27. The identity of the device original equipment manufacturer (OEM) was not revealed in the news release, but this company plans to develop and market a personal navigation device using GPS technology and offering location-based services (LBS). Last year, Intrinsyc inked a software licensing deal with Wistron Corp., an original device manufacturer (ODM) producing information and communications technology products. The Vancouver firm has been marketing its products and services through teams based in Canada, the US, Taiwan and the United Kingdom, and the company believes these teams can help speed revenue growth. "Management believes that the recent expansion of regional sales operations to Taiwan and the United States allows the corporation to reach key markets and prospective customers that will accelerate revenue," reads the preliminary prospectus. "In 2007, the corporation has also implemented a strategy to partner with leading silicon vendors in order to seed the Soleus software platform on their computer chipsets enabling prospective OEMs to test and evaluate Soleus more easily."Intrinsyc cautions that its success in the market can't be guaranteed despite the apparent market opportunity. Among the many risk factors it highlights in its prospectus, the company notes that profits are not assured. As of February 28, 2007, the company has built up a $60.4 million deficit. As well, the breadth of customers is small with approximately 49% of revenue coming from its two largest customers as of the end of February 2007.

Intrinsyc Software IPO for marketing and R&D

News | 04/20/2007 12:46 pm EDT

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