SUNNYVALE, Calif., Apr 28, 2010 (BUSINESS WIRE) –MoSys, Inc., (NASDAQ: MOSY), a leading provider of differentiated,
high-density memory and high-speed interface (I/O) intellectual property
(IP), today reported financial results for the first quarter ended March
31, 2010.

First Quarter Highlights

  • Reported total revenue of $3.6 million, an increase of 38 percent over
    the first quarter of 2009;
  • Reported licensing revenue of $1.5 million, an increase of 195 percent
    over the first quarter of 2009;
  • Ended the quarter with total cash and investments of approximately
    $34.0 million;
  • Announced development of the Bandwidth Engine(TM) family of integrated
    circuits (ICs), and expansion of business model to include fabless IC
    sales; and
  • Acquired MagnaLynx, Inc., a developer of high-speed, low-power serial
    chip-to-chip communications technology.

Management Commentary

“During the first quarter, we announced the expansion of our business
model to include plans for the Bandwidth Engine family of ICs,”
commented Len Perham, President and Chief Executive Officer of MoSys.
“In addition to being a world-class IP provider, MoSys is developing
high-performance ICs that combine our patented 1T-SRAM(R)
high-density embedded memory and ultra high-speed 10 Gigabit per second
SerDes with computational capability. We believe the Bandwidth Engine
represents a breakthrough solution for developers of next-generation
networking systems and high-performance computing applications. At the
end of the quarter, we also announced the acquisition of MagnaLynx,
which expands our engineering expertise in high-performance, low-power
serial chip-to-chip communications and complements our Bandwidth Engine
and next-generation IP product roadmap.”

Mr. Perham continued, “Also, during the quarter, we announced a major
technology agreement with ROHM for use of our 1T-SRAM in its
next-generation IC designs. Revenue from the ROHM project along with our
ongoing serial interface and memory IP projects drove license revenue to
the highest level since the second quarter of 2007. With several
projects in the early stages of development, we expect license revenue
to ramp throughout 2010 as additional delivery milestones are achieved.”

“Overall, we made significant progress on our strategic initiatives in
the first quarter of 2010 and remain focused on positioning the Company
for future growth by expanding our business model, market opportunities
and product roadmap. In the coming quarters, we expect to further the
development of our Bandwidth Engine family of ICs, while capitalizing on
our serial interface and embedded memory IP in the networking, consumer
and high performance computing markets,” concluded Mr. Perham.

First Quarter Results

Total net revenue for the first quarter of 2010 was $3.6 million,
compared with $3.5 million reported for the fourth quarter of 2009 and
$2.6 million in the first quarter of 2009.

First quarter 2010 total revenue included licensing revenue of $1.5
million, compared with $1.3 million for the previous quarter and $0.5
million for the first quarter of 2009. The increase in first quarter
license revenue was primarily due to ongoing serial interface IP
projects, early stage revenue from two new license agreements signed in
the previous quarter and increased revenue from the 1T-SRAM technology
agreement with ROHM. First quarter 2010 royalty revenue was $2.0
million, compared with $2.2 million for the previous quarter and $2.0
million for the first quarter of 2009. The sequential decrease in
royalty revenue was due to decreased royalties from consumer products
containing 1T-SRAM embedded memory.

Gross margin for the first quarter of 2010 was 78 percent, compared with
80 percent for the fourth quarter of 2009 and 87 percent for the first
quarter of 2009.

Total operating expenses on a GAAP basis for the first quarter of 2010
were $8.6 million, compared with $8.2 million for the previous quarter
and $6.6 million for the first quarter of 2009. First quarter 2010
operating expenses included $0.6 million of amortization of intangible
assets, $0.7 million in acquisition-related contingent compensation and
transaction costs, and $0.6 million of stock-based compensation expense.

GAAP net loss for the first quarter of 2010 was $5.7 million, or ($0.18)
per share, compared with a net loss of $4.9 million, or ($0.16) per
share, for the previous quarter and a net loss of $4.2 million or
($0.13) per share for the first quarter of 2009. The non-GAAP net loss
for the first quarter of 2010 was $3.7 million, or ($0.12) per share,
which excludes acquisition-related charges and stock-based compensation
expense. A reconciliation of GAAP results to non-GAAP results is
provided in the financial statement tables following the text of this
press release.

Cash and investments totaled $33.9 million as of March 31, 2010,
compared with approximately $40.4 million as of December 31, 2009. The
sequential decrease in cash and investments included cash used in
operations, as well as $2.3 million in cash payments related to the
acquisition of MagnaLynx.

Financial Results Webcast / Conference Call

MoSys will host a conference call and webcast with investors today at
2:00 p.m. Pacific time (5:00 p.m. Eastern time) to discuss the first
quarter 2010 financial results and the business outlook. Investors and
other interested parties may access the call by dialing 1-866-831-6270
in the U.S. (1-617-213-8858) outside of the U.S.), and entering the
pass code 26594017 at least 10 minutes prior to the start of the
call. In addition, an audio webcast will be available through the MoSys
Web site at https://dev-mosys-web-04-19.pantheonsite.io.
A telephone replay will be available for 2 business days following the
call at 888-286-8010 in the U.S. (617-801-6888 outside of the U.S.),
pass code of 81342952.

Use of Non-GAAP Financial Measures

To supplement MoSys’ consolidated financial statements presented in
accordance with GAAP, MoSys uses non-GAAP financial measures that
exclude from the income statement the effects of restructurings,
stock-based compensation and certain acquisition-related charges,
including amortization of acquired intangible assets, transaction costs
and contingent compensation charges. MoSys’ management believes that the
presentation of these non-GAAP financial measures is useful to investors
and other interested persons because they are one of the primary
indicators that MoSys’ management uses for planning and forecasting
future performance. MoSys believes that the presentation of non-GAAP
financial measures that exclude these items is useful to investors
because MoSys does not consider these charges part of the day-to-day
business or reflective of the core operational activities of the Company
that are within the control of management or that would be used to
evaluate management’s operating performance.

Investors are encouraged to review the reconciliation of these non-GAAP
financial measures to the comparable GAAP results, which is provided in
a table below the Condensed Consolidated Statements of Operations. The
non-GAAP financial measures disclosed by the Company should not be
considered a substitute for, or superior to, financial measures
calculated in accordance with GAAP, and the financial results calculated
in accordance with GAAP and reconciliations to those financial
statements should be carefully evaluated. The non-GAAP financial
measures used by the Company may be calculated differently from, and
therefore may not be comparable to, similarly titled measures used by
other companies. For additional information regarding these non-GAAP
financial measures, and management’s explanation of why it considers
such measures to be useful, refer to the Form 8-K dated April 28, 2010,
that the Company filed with the Securities and Exchange Commission.

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 embedded memory and interface
technologies, improving operational efficiencies, anticipated benefits
and performance expected from the Bandwidth Engine product, growth in
the size of the market addressed by the Company’s business and the
Company’s future markets and future business prospects.

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 the following:

  • customer acceptance of our proprietary embedded memory and interface
    technologies and ICs;
  • timing and nature of the license agreements to be entered into with
    our customers and their requests for our services under existing
    license agreements;
  • timing of customer acceptance of our work under such agreements;
  • level of commercial success of licensees’ products, ease of
    manufacturing and yields of devices incorporating our proprietary
    technologies;
  • our ability to enhance our existing proprietary technologies and
    develop new technologies;
  • difficulties and delays in the development, production, testing and
    marketing of the Bandwidth Engine ICs;
  • anticipated costs and technological risks of developing and bringing
    ICs to market;
  • willingness of our manufacturing partners to assist successfully with
    the fabrication of Bandwidth Engine ICs;
  • availability of quantities of ICs supplied by our manufacturing
    partners at a competitive cost;
  • our lack of recent experience as a fabless semiconductor company
    making and selling proprietary ICs;
  • level of intellectual property protection provided by our patents, the
    expenses and other consequences of litigation, including intellectual
    property infringement litigation, to which we may be or may become a
    party from time to time;
  • 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 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.

About MoSys, Inc.

MoSys, Inc. (NASDAQ: MOSY) develops serial chip-to-chip communications
solutions that deliver unparalleled bandwidth performance for next
generation networking systems and advanced system-on-chip (SoC) designs.
MoSys’ IP portfolio includes DDR3 PHYs and SerDes IP that support data
rates from 1 – 11 Gigabits per second (Gbps) across a variety of
standards. In addition, MoSys offers its flagship, patented 1T-SRAM(R)
and 1T-Flash(R) memory cores, which offer a combination of
high-density, low power consumption, high-speed and low cost advantages
for high-performance networking, computing, storage and
consumer/graphics applications. MoSys’ IP is production-proven in more
than 225 million devices. MoSys is headquartered in Sunnyvale,
California. More information is available on MoSys’ website at www.mosys.com.

MoSys, 1T-SRAM and 1T-Flash are registered trademarks of MoSys, Inc.
The MoSys logo and Bandwidth Engine are trademarks of MoSys, Inc. All
other trademarks mentioned herein are the intellectual property of their
respective owners.

MOSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts; unaudited)
Three Months Ended
March 31,
2010

2009 (1)

Net Revenue
Licensing $ 1,547 $ 524
Royalty 2,003 2,042
Total net revenue 3,550 2,566
Cost of Net Revenue
Licensing 782 323
Total cost of net revenue 782 323
Gross Profit 2,768 2,243
Operating Expenses
Research and development 5,485 3,888
Selling, general and administrative 2,584 2,485
Acquisition-related costs 502
Restructuring charges 275
Total operating expenses 8,571 6,648
Loss from operations (5,803 ) (4,405 )
Other income, net 109 203
Loss before income taxes (5,694 ) (4,202 )
Provision for income taxes (32 ) (7 )
Net loss $ (5,726 ) $ (4,209 )
Net loss per share
Basic and diluted ($0.18 ) ($0.13 )
Shares used in computing net loss per share
Basic and diluted 31,262 31,322

(1) Financial statements have been revised to reflect immaterial
increases in stock-based compensation resulting from calculation
errors in the third-party stock administration software used by
the Company.

MOSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
March 31, December 31,
2010

2009 (1)

Assets
Current assets:
Cash, cash equivalents and investments $ 21,876 $ 31,338
Accounts receivable, net 1,589 739
Unbilled contract receivables 630 1,022
Prepaid expenses and other assets 3,045 3,235
Total current assets 27,140 36,334
Long-term investments 12,059 9,098
Property and equipment, net 1,472 1,561
Goodwill 23,134 22,787
Intangible assets, net 8,413 4,616
Other assets 1,263 1,147
Total assets $ 73,481 $ 75,543
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 485 $ 514
Accrued expenses and other liabilities 3,081 1,750
Accrued acquisition-related earn-out costs 7,146 5,659
Accrued restructuring liabilities 73 112
Deferred revenue 2,312 2,671
Total current liabilities 13,097 10,706
Long-term liabilities 615 136
Stockholders’ equity 59,769 64,701
Total liabilities and stockholders’ equity $ 73,481 $ 75,543

(1) Financial statement has been retroactively adjusted to reflect
a decrease in the fair value of the contractual obligations
assumed as part of the acquisition of Prism Circuits, Inc.

MOSYS, INC.
Reconciliation of GAAP to Non-GAAP Net Loss and Net Loss Per Share
(In thousands, except per share amounts; unaudited)
Three Months Ended
March 31,
2010

2009 (1)

GAAP net loss $ (5,726 ) $ (4,209 )
Stock-based compensation expense
-Cost of net revenue 82 35
-Research and development 319 233
-Selling, general and administrative 304 309
Total stock-based compensation expense 705 577
Restructuring charges (2) 275
Amortization of intangible assets (3) 643
Acquisition-related contingent compensation charges (4) 502
Acquisition-related transaction costs (5) 195
Non-GAAP net loss $ (3,681 ) $ (3,357 )
GAAP net loss per share ($0.18 ) ($0.13 )
Reconciling items
-Stock-based compensation expense 0.02 0.01
-Restructuring charges (2) 0.01
-Amortization of intangible assets (3) 0.02
-Acquisition-related contingent compensation charges (4) 0.01
-Acquisition-related transaction costs (5) 0.01
Non-GAAP net loss per share: Basic and diluted ($0.12 ) ($0.11 )
Shares used in computing non-GAAP net loss per share
Basic and diluted 31,262 31,322

(1) Amounts of stock-based compensation expense have been revised
from those reported or announced previously to reflect immaterial
increases in stock-based compensation resulting from calculation
errors in the third-party stock administration software used by
the Company.

(2) Charges related to the exit of the analog/mixed-signal product
lines.
(3) Non-cash charges for amortization of intangibles arising from
acquired assets.

(4) Contingent earn-out compensation charges arising from
acquisitions. Amounts included in research and development and
selling, general and administrative expenses are $488,000 and
$14,000, respectively.

(5) Charges primarily related to legal and accounting fees incurred
for the acquisition of MagnaLynx, Inc.
These charges are included in selling, general and administrative
expenses.

SOURCE: MoSys, Inc.

MoSys, Inc.
Jim Sullivan, CFO, +1 408-731-1800
jsullivan@mosys.com
or
Shelton Group, Investor Relations
Beverly Twing, Sr. Acct. Manager, +1 972-239-5119 ext. 126
btwing@sheltongroup.com