SUNNYVALE, Calif.–(BUSINESS WIRE)–May 9, 2005–Monolithic System
Technology, Inc. (MoSys), (Nasdaq:MOSY) today reported financial
results for its first quarter ended March 31, 2005.

Highlights

  • Renewed development and licensing relationship with NEC
    Electronics to include 1T-SRAM(R) technology in high volume
    semiconductor devices on
    NEC’s 90nm process
  • Extended licensing relationship with Fujitsu Limited to
    incorporate 1T-SRAM-Q(R) technology into high volume devices
    for portable consumer applications manufactured on 90nm
    process

  • Recorded royalty revenue from four new licensees
  • Achieved volume production in Hudson Soft Co., Ltd.’s video
    game controller manufactured on UMC’s 130nm process

Financial Results

Total net revenue for the first quarter of 2005 was $2.7 million,
compared to the $1.2 million reported in the previous quarter and $4.5
million in first quarter of 2004. Total net revenue consisted of $1.2
million from licensing, $1.5 million in royalties and approximately
$4,000 in product revenue. Licensing revenue for the quarter increased
significantly from the $118,000 reported in the fourth quarter of
2004, but decreased from the $3.0 million that was reported in the
same period a year ago. First quarter royalty revenues were favorably
impacted by the inclusion of royalties from four new licensees,
increasing from $1.1 million reported in the fourth quarter of 2004
and from $1.4 million in the same period last year. The minimal
product revenue reflects the Company’s strategic move away from
discrete product sales.

The gross margin percentage in the first quarter of 2005 was 83%,
compared to 55% in the fourth quarter of 2004 and 88% in the first
quarter of 2004. Net loss for the quarter was $1.4 million, or ($0.04)
per share, compared to a net loss of $521,000, or ($0.02) per share,
in the same period last year and a net loss of $2.4 million, or
($0.08) per share, in the previous quarter.

“We are very pleased with the progress made during the first
quarter of 2005,” commented Mark Voll, Interim Chief Executive Officer
and Chief Financial Officer of MoSys. “We recorded the second largest
total value of new contracts in the Company’s history, which included
the extension of our partnership with NEC and extending our
technology license with Fujitsu for ASIC/SOC designs for high-volume
portable consumer applications. Both NEC and Fujitsu will be
incorporating MoSys’ technology into devices utilizing their advanced
90nm process generations.”

Mr. Voll commented further, “We are committed to more effectively
implementing our strategic initiatives aimed at increasing the use of
1T-SRAM technologies with both existing and new customers. Our target
markets continue to expand due to the increasing requirements for
cost-effective, high-density, embedded memory content in SOCs, and we
are actively addressing a number of exciting new opportunities.”

Business Outlook

MoSys’ Interim Chief Executive Officer and Chief Financial
Officer, Mark Voll will update the business outlook and give guidance
for the second quarter of 2005 during their earnings conference call
at 2:15 P.M. (PT) on Monday, May 9, 2005.

Financial Results Web cast

MoSys’ Interim Chief Executive Officer and Chief Financial
Officer, Mark Voll will host a conference call to further discuss the
financial results and business outlook at 2:15 P.M. (PT) on Monday,
May 9, 2005.

First Quarter 2005 Financial Results Web Cast/Conference Call

The MoSys live audio web cast and conference call to discuss the
first quarter financial results begins at 2:15 P.M. (PT) on Monday,
May 9, 2005. Investors and other interested parties may listen to the
live audio Web cast by visiting the investor relation’s section of the
MoSys Web site at http://www.mosys.com. A replay of the conference
call will be available for 48 hours beginning at 5 P.M. (PT). The
replay number is 1-888-286-8010 with a pass code of 71688568. A web
cast replay will also be available on the company’s website.

ABOUT MOSYS

Founded in 1991, MoSys (Nasdaq:MOSY), develops, licenses and
markets innovative memory technologies for semiconductors. MoSys’
patented 1T-SRAM technologies offer a combination of high density, low
power consumption, high speed and low cost unmatched by other
available memory technologies. The single transistor bit cell used in
1T-SRAM memory results in the technology achieving much higher density
than traditional four or six transistor SRAMs while using the same
standard logic manufacturing processes. 1T-SRAM technologies also
offer the familiar, refresh-free interface and high performance for
random address access cycles associated with traditional SRAMs. In
addition, these technologies can reduce operating power consumption by
a factor of four compared with traditional SRAM technology,
contributing to making them ideal for embedding large memories in
System on Chip (SoC) designs. MoSys’ licensees have shipped more than
80 million chips incorporating 1T-SRAM embedded memory technologies,
demonstrating excellent manufacturability in a wide range of silicon
processes and applications. MoSys is headquartered at 1020 Stewart
Drive, Sunnyvale, California 94085. More information is available on
MoSys’ website at http://www.mosys.com.

FORWARD LOOKING STATEMENTS

This press release may contain forward-looking statements about
the Company including, without limitation, benefits and performance
expected from use of the Company’s 1T-SRAM technology.

Forward-looking statements are based on certain assumptions and
expectations of future events that are subject to risks and
uncertainties. Actual results and trends may differ materially from
historical results or those projected in any such forward-looking
statements depending on a variety of factors. These factors include
but are not limited to, customer acceptance of our 1T-SRAM
technologies, the timing and nature of customer requests for our
services under existing license agreements, the timing of customer
acceptance of our work under such agreements, the level of commercial
success of licensees’ products such as cell phone hand sets, ease of
manufacturing and yields of devices incorporating our 1T-SRAM, our
ability to enhance the 1T-SRAM technology or develop new technologies,
the level of intellectual property protection provided by our patents,
the vigor and growth of markets served by our licensees and customers
and operations of the Company and other risks identified in the
Company’s most recent annual report on Form 10-K filed with the
Securities and Exchange Commission, as well as other reports that
MoSys files from time to time with the Securities and Exchange
Commission. MoSys undertakes no obligation to update publicly any
forward-looking statement for any reason, except as required by law,
even as new information becomes available or other events occur in the
future.

1T-SRAM(R) is a MoSys trademark registered in the U.S. Patent and
Trademark Office. All other trade, product, or service names
referenced in this release may be trademarks or registered trademarks
of their respective holders.


                 MONOLITHIC  SYSTEM TECHNOLOGY, INC.
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (In thousands, except per share amounts)


                                               Three Months Ended
                                                    March 31,
                                                 2005        2004
                                             ----------- -----------
                                             (unaudited) (unaudited)
Net Revenue:
     Product                                         $4        $162
     Licensing                                    1,213       2,988
     Royalty                                      1,466       1,353
                                             ----------- -----------
            Total                                 2,683       4,503
                                             ----------- -----------

Cost of Net Revenue:
     Product                                          -         150
     Licensing                                      466         375
                                             ----------- -----------
            Total                                   466         525
                                             ----------- -----------
Gross Profit                                      2,217       3,978
                                             ----------- -----------

Operating Expenses:
     Research and  development                    1,603       2,226
     Selling, general and administrative          2,476       2,764
                                             ----------- -----------
            Total operating expenses              4,079       4,990
                                             ----------- -----------

     Loss from operations                        (1,862)     (1,012)
     Interest and other income                      513         361
                                             ----------- -----------

     Loss before income taxes                    (1,349)       (651)
     Benefit (provision) for income taxes           (20)        130
                                             ----------- -----------

Net loss                                        $(1,369)      $(521)
                                             =========== ===========

Net loss per share:
     Basic                                       ($0.04)     ($0.02)
                                             =========== ===========
     Diluted                                     ($0.04)     ($0.02)
                                             =========== ===========

Shares used in computing net loss per share:
     Basic                                       30,442      30,845
     Diluted                                     30,442      30,845


                  MONOLITHIC SYSTEM TECHNOLOGY, INC.
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                            (in thousands)


                                              March 31,  December 31,
                                                2005        2004
                                             ----------- ------------
                                             (unaudited)
Assets
Current Assets:
    Cash, cash equivalents and short-term
     investments                                $58,342      $62,349
    Accounts receivable - net                     2,410        1,996
    Unbilled contract receivable                      6           57
    Prepaid expenses and other assets             3,147        2,939
                                             ----------- ------------
            Total Current Assets                 63,905       67,341

    Long-term investments                        27,546       24,562
    Property and equipment - net                    598          685
    Goodwill                                     12,326       12,326
    Other Assets                                    542          539
                                             ----------- ------------
            Total Assets                       $104,917     $105,453
                                             =========== ============


Liabilities and Stockholders' Equity
Current Liabilities:
    Accounts payable                               $180         $120
    Accrued expenses and other liabilities        2,484        3,314
    Deferred revenue                              2,900        1,372
                                             ----------- ------------
    Total Current Liabilities                     5,564        4,806

     Long term portion of restructuring
      liability                                     219          239

    Common stock and additional paid in
     capital                                     98,355       98,260
    Retained earnings                               779        2,148
                                             ----------- ------------
Total Stockholders' Equity                       99,134      100,408
                                             ----------- ------------

    Total Liabilities and Stockholders'
     Equity                                    $104,917     $105,453
                                             =========== ============

CONTACT: MoSys, Sunnyvale
Mark Voll, 408-731-1846
markv@mosys.com
or
Shelton IR
Beverly Twing, 972-239-5119 x126
btwing@sheltongroup.com

SOURCE: Monolithic System Technology, Inc.