SUNNYVALE, Calif., Feb 15, 2006 (BUSINESS WIRE) — Monolithic System Technology, Inc. (MoSys),
(Nasdaq:MOSY), the industry’s leading provider of high-density
system-on-chip (SoC) embedded memory, today reported financial results
for its fourth quarter and fiscal year ended December 31, 2005.

Fourth Quarter Results

Total net revenue in the fourth quarter was $2.4 million, as
compared to $1.2 million in the fourth quarter of 2004 and $4.1
million in the third quarter of 2005. Total revenue for the quarter
was in line with the Company’s updated guidance of $2.3 million to
$2.5 million, for which the forecast was adjusted due to the deferral
of more than $1.0 million in revenue associated with fourth quarter
licenses of the Company’s new 1T-SRAM(R) CLASSIC Macros.

Total revenue for the fourth quarter included licensing revenue of
$1.3 million and royalty revenue of $1.1 million. This compares to
licensing revenue of $118,000 and royalty revenue of $1.1 million in
the fourth quarter of 2004 and licensing revenue of $3.2 million and
royalty revenue of $897,000 in the prior quarter. During the quarter,
we recorded licensing revenue from 15 different chip development
projects, compared to 16 projects in the previous quarter. We recorded
royalty revenue from 17 different licensees as compared to 15
licensees in the previous quarter. The increased number of royalty
payers comes as additional licensees have moved from the development
phase to the production phase.

The gross margin percentage in the fourth quarter of 2005 was 90
percent, increasing from 55 percent in the fourth quarter of 2004 and
84 percent in the third quarter of 2005.

Total operating expenses for the fourth quarter were $4.1 million,
which included approximately $340,000 of legal expenses related to the
UniRam litigation.

Under generally accepted accounting principles (GAAP), the
operating loss for the fourth quarter of 2005 was $1.9 million, as
compared to an operating loss of $3.0 million in the same period in
2004 and an operating loss of $618,000 in the prior quarter. Fourth
quarter net loss was $1.1 million, or ($0.04) per share, compared to a
net loss of $2.4 million, or ($0.08) per share, in the same period
last year and a net income of $50,000, or $0.00 per share, in the
previous quarter.

Our cash, cash equivalents and both long and short-term
investments totaled approximately $86.0 million as of December 31,
2005. With respect to our balance sheet, we had positive net cash flow
from operating activities of approximately $1.0 million in the fourth
quarter of 2005 due to higher cash collection.

Fiscal 2005 Results

For fiscal year 2005, net revenue was $12.3 million compared to
$10.8 million in fiscal 2004. Net loss in 2005 was $3.0 million, or
($0.10) per share, as compared to the net loss of $1.9 million, or
($0.06) per share, reported in 2004. Included in 2004 results was the
termination fee associated with the aborted acquisition and subsequent
litigation with Synopsys, net of expenses and income tax, of $4.6
million.

“Although the revenue deferral impacted our actual results for the
fourth quarter, we are pleased with the strength in overall bookings,
the increase in new projects within the consumer multimedia and
cellular handset market segments and the achievement of positive cash
flow,” commented Chet Silvestri, Chief Executive Officer of MoSys.
“The majority of fourth quarter bookings were for our new family of
CLASSIC Macros, which began initial shipments during the quarter.”

The Company’s CLASSIC memory macros are silicon-proven,
off-the-shelf, high-density solutions offering customers rapid memory
block integration into their SoC designs. These macros are
pre-configured and for targeted applications require minimal
additional customization. They are targeted for high volume consumer
products that require larger embedded memory to support device
enhancements, such as higher resolution cameras and high quality audio
and video capabilities.

“The complexity of portable consumer devices continues to
increase, which poses significant challenges for our customers in
terms of density, speed, power consumption and performance,” continued
Silvestri. “As evidenced by the increased bookings experienced in the
fourth quarter, our CLASSIC Macros offer superior embedded memory
subsystems to address these challenges.”

“Additionally, we are very pleased to close 2005 with a
year-over-year growth rate of 14 percent. 2005 was a year of
rebuilding for MoSys in the areas of sales and marketing organization,
new product development and target markets expansion. We continue to
have strong relationships with our established customers, such as NEC
and Fujitsu, and are pleased to have secured new major customers, such
as LG Electronics and YAMAHA, in the consumer electronics market. As
we further benefit from our enhanced sales and marketing efforts, we
expect to deepen our penetration into the high volume, high growth
consumer applications market in the U.S., Asia and Europe.
Furthermore, we continue to make strategic investments in research and
development in order to develop macros for additional memory types
such as dual port memories, which will broaden our CLASSIC Macro
family. We look forward to making announcements of additional
achievements in the coming quarters,” concluded Mr. Silvestri.

Business Outlook

Chet Silvestri, Chief Executive Officer will update the business
outlook and give guidance for the first quarter of 2006 during their
financial results conference call at 2:15 p.m. PT on Wednesday,
February 15, 2006.

Fourth Quarter 2005 Financial Results Webcast/ Conference Call

MoSys management will host a conference call and web cast with
investors today, February 15, at 2:15 p.m. Central time (5:15 p.m.
Eastern time) to discuss the fourth quarter financial results and the
business outlook going forward for the first quarter of 2006.
Investors and other interested parties may access the call by dialing
866-202-4683 in the U.S. (617-213-8846 outside of the U.S.), and
entering the passcode 18742101 at least 10 minutes prior to the start
of the call. In addition, an audio web cast will be available through
the MoSys Web site at www.mosys.com. A replay will be available for 48
hours following the call at 888-286-8010 in the U.S. (617-801-6888
outside of the U.S.), passcode 13341841.

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 and embedded memory designs, 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.

About MoSys, Inc.

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 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 100 million chips
incorporating 1T-SRAM embedded memory technologies, demonstrating
excellent manufacturability in a wide range of silicon processes and
applications. MoSys is headquartered at 755 N. Mathilda Avenue,
Sunnyvale, California 94085. More information is available on MoSys’
website at http://www.mosys.com.

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

                             Three Months Ended    Twelve Months Ended
                                December 31,          December 31,
                               2005        2004       2005      2004
                            ---------- ----------- ---------- --------
                           (unaudited) (unaudited)
Net Revenue
  Product                          $-         $33        $10     $952
  Licensing                     1,339         118      7,725    4,544
  Royalty                       1,063       1,069      4,547    5,325
                            ---------- ----------- ---------- --------
     Total                      2,402       1,220     12,282   10,821
                            ---------- ----------- ---------- --------

Cost of Net Revenue
  Product                           -          25          -      655
  Licensing                       243         519      1,986    1,613
                            ---------- ----------- ---------- --------
     Total                        243         544      1,986    2,268
                            ---------- ----------- ---------- --------
Gross Profit                    2,159         676     10,296    8,553
                            ---------- ----------- ---------- --------

Operating Expenses
  Research and  development     1,557       1,728      5,839    8,096
  Selling, general and
   administrative               2,519       1,355      9,922   13,331
  Restructuring expenses            5         585        119      585
                            ---------- ----------- ---------- --------
    Total operating expenses    4,081       3,668     15,880   22,012
                            ---------- ----------- ---------- --------

  Loss from operations         (1,922)     (2,992)    (5,584) (13,459)
  Interest and other income       794         550      2,591   11,578
                            ---------- ----------- ---------- --------

  Loss before income taxes     (1,128)     (2,442)    (2,993)  (1,881)
  Income tax benefit
   (provision)                     44          31         11      (26)
                            ---------- ----------- ---------- --------

Net Loss                      $(1,084)    $(2,411)   $(2,982) $(1,907)
                            ========== =========== ========== ========

Net loss per share
  Basic                        ($0.04)     ($0.08)    ($0.10)  ($0.06)
                            ========== =========== ========== ========
  Diluted                      ($0.04)     ($0.08)    ($0.10)  ($0.06)
                            ========== =========== ========== ========

Shares used in computing
 net loss per share
         Basic                 30,698      30,296     30,534   30,750
         Diluted               30,698      30,296     30,534   30,750


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

                                            December 31, December 31,
                                               2005         2004
                                            ------------ ------------

Assets
Current Assets
  Cash, cash equivalents and short-term
   investments                                  $68,650      $62,349
  Accounts receivable - net                         638        1,996
  Unbilled contract receivable                      368           57
  Prepaid expenses and other assets               2,632        2,939
                                            ------------ ------------
      Total Current Assets                       72,288       67,341

  Long-term investments                          17,339       24,562
  Property and equipment - net                    1,121          685
  Goodwill                                       12,326       12,326
  Other Assets                                      563          539
                                            ------------ ------------
      Total Assets                             $103,637     $105,453
                                            ============ ============


Liabilities and Stockholders' Equity:
Current Liabilities:
  Accounts payable                                 $236         $120
  Accrued expenses and other liabilities          2,564        3,314
  Deferred revenue                                1,309        1,372
                                            ------------ ------------
  Total Current Liabilities                       4,109        4,806

   Long-term portion of restructuring
    liability                                       196          239

  Common stock, additional paid-in capital
   and others                                   100,166       98,260
  Retained earnings (Accumulated deficit)          (834)       2,148
                                            ------------ ------------
Total Stockholders' Equity                       99,332      100,408
                                            ------------ ------------

  Total Liabilities and Stockholders' Equity   $103,637     $105,453
                                            ============ ============

SOURCE: Monolithic System Technology, Inc.

MoSys, Sunnyvale
Chet Silvestri, 408-731-1811

chet@mosys.com

or
Shelton Investor Relations

Beverly Twing, 972-239-5119 x126
btwing@sheltongroup.com