Revenue was on target at $4.5 million, a 42% increase from $3.2 million for the same period in fiscal 2002, and a 12% decrease from the previous quarter revenue of $5.1 million. The net loss for the quarter was $1.2 million ($0.03 per share) compared to $326 thousand ($0.01 per share) for the same period last year and $384 thousand ($0.01 per share) for the previous quarter ended August 31, 2002.

    The 43% gross margin on sales remained unchanged from the previous quarter and was down from 64% in the first quarter of Fiscal 2002. As at November 30, 2002, the Company had cash and cash equivalents of $8.9 million, a decrease of 4% from $9.2 million for the end of the previous quarter. The Company finished the quarter with working capital of $11.4 million compared to $13.1 million as at August 31, 2002.

    "This quarter we met our revenue guidance and finished the quarter in strong financial shape, with a good cash position, no long term bank debt, and healthy working capital," stated Chuck Leighton, Intrinsyc's Chief Financial Officer. "Our loss this quarter was associated with the development and launch of two new products, CerfWorks and the MicroPDA, and with one-time costs associated with discontinuing non-core operations to reduce our annual operating expenses by $1.2 million. We are working hard to manage our overhead in a difficult economy while we remain on target for growing revenues in Fiscal 2003."

    "We made significant strategic investments this quarter in developing new products and strengthening partner relationships that will help to solidify Intrinsyc's leadership position as an end-to-end solution provider in the specialized, intelligent devices market," said Neil McDonnell, Intrinsyc's President and Chief Executive Officer. "We are laying the foundation for long-term success and shareholder value by executing against our strategic business plan and aggressively controlling operating costs. I remain confident and excited about the long-term potential for our industry segment and continued growth for Intrinsyc," added McDonnell.

    First Quarter Highlights

    Achieved Revenues of $4.5 million - Despite a slow economy and a challenging technology market, targeted revenues were met.

    Awarded Microsoft(R) Windows(R) Embedded Partner of the Year - For the second year in a row Intrinsyc received Microsoft Windows Embedded Partner of the Year award. This recognition acknowledges Intrinsyc's expertise and strength in its market and our collaborative partnership with Microsoft.

    Developed the MicroPDA in collaboration with Intel - This world class development platform for wireless handheld devices was taken from concept to completion in record time - just 4 months. Units shipped to the first customers, including Microsoft, in late November.

    Signed multiple contracts in key vertical markets - Leading global companies in targeted markets including consumer electronics, telematics, and mobile telephony purchased our intelligent device solutions for the development of next generation products.

    Further strengthened the Board of Directors - Building on the strategy of attracting key US technology experts to the Board, Moiz Beguwala, a senior executive at Conexant Systems, was added as a Director. This quarter Ron Erickson, former CEO of eCharge, was also appointed Chairman of the Board. Four of the Company's six Directors are now independent of management.

    CerfWorks deployed by Philips Electronics - Intrinsyc's new device management software suite, CerfWorks, became commercially available and was deployed by its first customer, Philips Electronics.

    A summary of the financials is attached. There will be a conference call to discuss these results on January 15, 2003 at 2:00 p.m. PST. Analysts, investment professionals, shareholders, members of the media and other interested parties wishing to participate may call 1.888.799.1348 (toll free) five minutes prior to the scheduled time. Or, you may listen to a live audio Webcast of the conference call at http://www.intrinsyc.com/conferencecalls.

    For those unable to participate, a replay of the conference call will be available from 4:00 p.m. PST on January 15, 2003 to 4:00 p.m. PST on January 29, 2003. The replay number is 1.800.633.8625 and the pass code for callers is 21089352. The call will also be archived at http://www.intrinsyc.com/conferencecalls.

    About Intrinsyc

    Recognized by Deloitte & Touche as one of the fastest growing technology companies in North America, Intrinsyc provides unique software and hardware solutions that enable companies to cost-effectively create, network and manage a wide range of consumer and industrial devices. By leveraging Intrinsyc's products and expertise, customers make better decisions, improve productivity, and reduce time-to-market. Intrinsyc is a rapidly expanding, public company with global customers such as Microsoft, Intel, Philips, Siemens, General Electric, Ford, and BEA Systems. To find out more about Intrinsyc, visit www.intrinsyc.com.

    Forward Looking Statement

    This press release may contain forward-looking statements that involve risks and uncertainties. These forward-looking statements relate to, among other things, plans and timing for the introduction or enhancement of our services and products, statements about future market conditions, supply and demand conditions, and other expectations, intentions and plans contained in this press release that are not historical fact. Our expectations regarding future revenues depend upon our ability to develop and supply products, which we do not produce today and that meet defined specifications. When used in this press release, the words "plan," "expect," "believe," and similar expressions generally identify forward-looking statements. These statements reflect our current expectations. They are subject to a number of risks and uncertainties, including, but not limited to, changes in technology and changes in the pervasive computing market. In light of the many risks and uncertainties surrounding the pervasive computing market, you should understand that we couldn't assure you that the forward-looking statements contained in this press release will be realized.

    Intrinsyc is a registered trademark of Intrinsyc Software, Inc. All other trademarks are registered trademarks of the respective owners, and are hereby acknowledged.

Intrinsyc Software, Inc.
Consolidated Balance Sheets
(Unaudited)
--------------------------------------------------------------------
November 30, August 31,
2002 2002
--------------------------------------------------------------------
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents$ 8,855,587 $ 9,226,932
Funds held in trust 519,759 517,700
Accounts receivable 4,589,782 5,159,369
Other receivable 738,653 1,256,418
Inventory 1,014,906 753,155
Prepaid expenses 239,519 263,609
--------------------------------------------------------------------
15,958,206 17,177,183
Funds held in trust 522,531 520,461
Restricted cash 5,206,972 5,132,238
Capital assets 1,483,793 1,472,962
Goodwill 7,835,365 6,784,821
Other assets (note 7) 2,205,285 2,384,122
--------------------------------------------------------------------
$ 33,212,152 $ 33,471,787
--------------------------------------------------------------------
Liabilities and
Shareholders' Equity
Current liabilities:
Accounts payable and
accrued liabilities $ 3,888,491 $ 3,428,276
Deferred revenue 502,651 439,050
Future income taxes 179,600 179,600
--------------------------------------------------------------------
4,570,742 4,046,926
Future income taxes 481,984 535,633
Shareholders' equity:
Share capital (note 6(b)) 48,749,145 48,697,555
Shares to be issued (note 4) 371,596 -
Share purchase warrants 140,000 140,000
Cumulative translation
adjustment 41,184 28,910
Deficit (21,142,499) (19,977,237)
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28,159,426 28,889,228
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$ 33,212,152 $ 33,471,787
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Intrinsyc Software, Inc.
Consolidated Statements of Operations and Deficit
(Unaudited)
Three months ended November 30, 2002 and 2001
--------------------------------------------------------------------
2002 2001
--------------------------------------------------------------------
(Unaudited) (Unaudited)
Revenues $ 4,476,610 $ 3,147,669
Cost of
sales 2,538,828 1,124,097
--------------------------------------------------------------------
1,937,782 2,023,572
Expenses:
Administration 654,700 417,292
Marketing and sales 1,351,206 843,200
Research and development 1,308,875 905,764
Amortization 328,348 312,566
Less: Government assistance (510,000) -
--------------------------------------------------------------------
3,133,129 2,478,822
--------------------------------------------------------------------
Loss before interest income 1,195,347 455,250
Interest income 49,176 99,347
--------------------------------------------------------------------
Loss before income taxes 1,146,171 355,903
Income tax expense (recovery)
Current 72,741 -
Future (53,650) (30,000)
--------------------------------------------------------------------
19,091 (30,000)
--------------------------------------------------------------------
Loss for the period 1,165,262 325,903
Deficit, beginning of
period 19,977,237 16,202,283
--------------------------------------------------------------------
Deficit, end of period $21,142,499 $16,528,186
--------------------------------------------------------------------
Loss per share $ 0.03 $ 0.01
--------------------------------------------------------------------
Weighted average number
of shares outstanding 38,283,965 32,748,599
--------------------------------------------------------------------
Intrinsyc Software, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Three months ended November 30, 2002 and 2001
--------------------------------------------------------------------
2002 2001
--------------------------------------------------------------------
(Unaudited) (Unaudited)
Cash provided by (used in):
Operations:
Loss for the period $ (1,165,262) $ (325,903)
Items not involving cash:
Amortization 328,348 312,566
Foreign exchange 12,273 -
Future income taxes (53,650) (30,000)
Changes in non-cash
operating working capital:
Funds held in trust (current) (2,059) (6,566)
Accounts receivable 569,587 (245,102)
Other receivable 517,765 -
Prepaid expenses 24,090 37,520
Inventory (261,751) (111,795)
Accounts payable and
accrued liabilities (218,733) (589,801)
Deferred revenue 63,601 (533,115)
--------------------------------------------------------------------
(185,791) (1,492,196)
Investments:
Purchase of capital assets (160,340) (98,792)
Restricted cash (74,734) -
Funds held in trust (long-term)(2,070) (76,233)
--------------------------------------------------------------------
(237,144) (175,025)
Financing:
Issuance of common shares
for cash:
Options 51,590 193,225
Warrants - 690,000
Repayment of obligation
under capital lease - (13,778)
--------------------------------------------------------------------
51,590 869,447
--------------------------------------------------------------------
Decrease in cash and
cash equivalents (371,345) (797,774)
Cash and cash equivalents,
beginning of period 9,226,932 15,065,099
--------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 8,855,587 $ 14,267,325
--------------------------------------------------------------------
Supplementary information:
Interest paid $ 662 $ 830
Non-cash investing activities:
Contingent consideration
payable 1,050,544 -
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--30--CB/na* CONTACT: Intrinsyc Software, Inc. Chuck Leighton, 604/646-7968 604/801-6417 (Fax) Email: cleighton@intrinsyc.com or Intrinsyc Software, Inc. Leslie-Ann Drummond, 604/646-6957 604/ 801-6417 (Fax) Email: ldrummond@intrinsyc.com Website: www.intrinsyc.com KEYWORD: INTERNATIONAL CANADA INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS SOFTWARE EARNINGS CONFERENCE CALLS SOURCE: Intrinsyc Software Inc.