Q4 2007 Q & A

This Q&A document may contain forward-looking statements, including statements about future events or the future financial and operational performance of Insightful Corporation.  Please see the section below entitled “Note About Forward-Looking Statements.”

ANSWERS TO SELECTED INQUIRIES RECEIVED
BEFORE FEBRUARY 22, 2008

Q:  What are the annualized cost savings as a result of the 30 person cut plus any other expense cuts?

A:  The net decrease in annualized costs directly from reducing our headcount (from 152 at September 30 to 119 at December 31) is approximately $5 million.  However, keep in mind that the headcount reduction occurred throughout the quarter and, therefore, it is not appropriate to try to estimate our annualized costs going forward by subtracting one fourth of $5 million from our fourth quarter costs. 

In the fourth quarter of 2007, our rent costs for our facility in Seattle were approximately $170,000.  When and if we are able to obtain a sublease tenant for our excess leased space, we expect to realize quarterly savings of approximately $77,000, assuming we are able to charge a lease rate equal to what we are paying. This assumption may not be accurate. 

Q:  What is the expected impact of the hiring of Bob Fitzgerald on product and sales strategies?

A:  As we said on the conference call, we believe that Bob Fitzgerald’s joining us as vice president of worldwide field operations will help to drive a unified worldwide sales and operations function, which should help us better sell to the large multi-national companies who are our customers and prospects in life sciences, financial services and other industries. We also believe that having Bob on board will enable us to do a better job of attracting and retaining sales talent.
 
Q:  With the lower cost structure what is the approximate break even revenue rate per quarter?  

A:  We aren’t giving guidance on our expected cost levels.  The answer above can help give an idea of the type of reductions in costs we made.

Q:  Could you please tell stockholders approximately how much is to be saved in the expense account for 2008, and what is the approximate break even sales amount?

A:  See answers above.

Q:  Do you have an ability to cut costs further assuming the US economy stays in a protracted recession? When you would you decide to adjust? 

A:  We review our overall cost structure, including hiring and personnel plan,s on an ongoing basis to determine whether it remains appropriate in light of then-current circumstances.  If not, we would adjust our level of spending up or down. 

Q:  What happened to the two other releases in 2008, Solvency II that was to be a very big deal and the new "Financial" release in October/November 2008?

A:  We believe this stockholder meant 2007, but even so, we do not know where his dates came from. We are currently delivering financial risk modeling and risk aggregation solutions (which can address, among other things, Solvency II-related issues) as custom-built, professional services-led projects for our financial services customers.  The extent to which we develop and release these custom-delivered solutions (and custom-delivered life sciences solutions such as Insightful Clinical Reporting) as more packaged solutions will depend on the overall market demand we see for them.  For example, in December, we began shipping Insightful Clinical Graphics (iCG), which is a packaged, licensable software solution built on top of the S-PLUS 8.0 platform, in response to sufficient market demand from our life sciences customers for packaged software that would allow statistical graphics to be defined, applied and repurposed in a variety of functional areas (such drug discovery, development and marketing) through an easy point-and-click interface and in multiple formats and graph types.

Q:  Why was Fusion Viewer given away free, with the lack of sales one would think that management would want to maximize all products.

A:  FusionViewer, which is medical imaging software, was not in our core target market – we have focused our resources on data analysis and not on image analysis.  We felt that FusionViewer did not represent a significant enough market or strategic opportunity and so we chose to release it for non-commercial use rather than diverting resources to developing it beyond a research project.

Q:  As shareholder in the Insightful co., can you let me known if the Insightful has any partnerships with other enterprise software companies, where Insightful may sell the companies software products on behalf of its investors.  

A:  We answered this question in the conference call. Insightful has partnerships with a few enterprise software companies such as Pharsight, a provider of software to the life sciences industry that sells our S-PLUS product.  We receive a minimal amount of revenue through this channel each quarter.  We also sell through distributors in Asia.  Asian partnerships represent in the neighborhood of 5% of our revenue.  We also have partnerships with companies to sell their products – for example, we sell S+NuOpt, which incorporates third-party optimization software. NuOpt was developed by the company that distributes our products in Japan.

Note About Forward-Looking Statements:

This Q&A document may contain forward-looking statements, including statements about future events or the future financial and operational performance of Insightful Corporation. Forward-looking statements include, but are not limited to, statements about our future financial results, the anticipated financial benefit of our cost reduction measures, the expected benefits of our products and solutions, the anticipated performance and contribution of our new worldwide vice president of field operations, and the anticipated development of our products and solutions. Words such as “will,” “expects,” “believe,” “plan,” “anticipate,” and similar expressions are intended to identify forward-looking statements, but their absence does not necessarily mean that the statement is not forward-looking. Forward-looking statements are based on the judgment and opinions of management at the time the statements are made. These statements are not guarantees of future performance, and inaccurate assumptions and known and unknown risks and uncertainties can affect their accuracy. Actual results could differ materially from those expressed or implied by the forward-looking statements for a number of reasons, including, but not limited to, the risk that we may not achieve growth at all or of the size or at the rate we anticipate, the risk that we do not realize the benefits we anticipate from our investments in research and development, the risk that we do not realize the expected benefits of our cost reduction measures or that the anticipated negative effects of our cost reduction measures on research and development programs are greater than or different than those we anticipate, the risks associated with recruiting and retaining qualified personnel, the risk that we will be unable to develop our new products and solutions as we expect, and the risk that our new products and solutions do not perform as expected or achieve market acceptance.. More detailed information regarding these and other factors that could affect our actual results is set forth in our filings with the Securities and Exchange Commission, including our latest quarterly report on Form 10-QSB. You should not unduly rely on these forward-looking statements, which apply only as of the date this document was posted. We undertake no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of anticipated events.

Questions may be edited for clarity and to remove numerical quantifications of our financial results that are incorrect and/or misleading.  To the extent that questions we receive contain other factual misstatements, we will attempt to address those misstatements in our response.