SUNNYVALE, Calif.–(BUSINESS WIRE)–Oct. 30, 2008–MoSys, Inc.,
(NASDAQ: MOSY), a leading provider of high-density system-on-chip
(SoC) memory and analog/mixed-signal intellectual property (IP), today
reported financial results for its third quarter ended September 30,
2008.

Recent Highlights

  • Reported total revenue of $4.1 million, a 27 percent increase
    over the previous quarter
  • Completed the quarter with cash and investments of $72.1
    million
  • Authorized and commenced repurchases under a $5 million stock
    repurchase plan

Management Commentary

Commenting on the quarter’s results, Len Perham, MoSys’ President
and Chief Executive Officer, stated, “During the third quarter, we
recorded sequential increases in both license and royalty revenue.
License revenue was driven in part by the delivery of three
application specific system macro solutions to customers for our
Dual-Port Display Driver IC (DDI) technology. We believe there is a
significant opportunity for embedded 1T-SRAM technology in DDIs for
the small-to-medium sized LCD market, where applications, such as
advanced mobile handsets, require higher memory density, lower costs
and reduced power consumption. Traction with our DDI customers is
strong, and we expect this trend to continue.”

“Additionally, royalty revenue increased during the quarter,
primarily due to further ramping with a major foundry partner at the
90nm process node. This foundry partner develops and markets memory
macro solutions based on our patented embedded 1T-SRAM technology. We
recently completed the verification of our 1T-SRAM technology at Level
III and IV on TSMC’s 90nm general purpose eDRAM process. The
achievement of this milestone further demonstrates the
manufacturability, functionality and reliability of our proprietary IP
at the 90nm process node and positions MoSys well for scaling to more
advanced nodes in the near future.”

Mr. Perham concluded, “Looking forward, we remain focused on
strategic product and technology development to address the design
challenges of our customers and foundry partners. Additionally, we are
executing on our sales initiatives to secure additional license
agreements, but our near term visibility into the timing is limited.
We are continuing to take the steps necessary to position the company
for future growth in spite of the uncertain economic times we are
dealing with at present.”

Third Quarter Results

Total net revenue for the third quarter of 2008 was $4.1 million.
By comparison, revenue was $3.2 million for the second quarter of 2008
and $4.0 million for the third quarter of 2007.

Third quarter total revenue included licensing revenue of $1.2
million, compared with $0.7 million for the second quarter of 2008 and
$1.5 million for the third quarter of 2007. Royalty revenue for the
third quarter was $2.9 million, which includes royalties associated
with the Nintendo Wii game console. By comparison, revenue was $2.5
million for the previous quarter and $2.4 million for the third
quarter of 2007.

Gross margin as determined in accordance with U.S. Generally
Accepted Accounting Principles (GAAP) was 79 percent, compared with 74
percent for the second quarter of 2008 and 83 percent for the third
quarter of 2007.

Total operating expenses on a GAAP basis for the second quarter
were $6.8 million, compared with $7.5 million in the previous quarter
and $7.3 million for the third quarter of 2007.

GAAP net loss for the quarter was $3.2 million, or ($0.10) per
share, including stock-based compensation expense of $1.0 million and
intangible asset amortization charges of $0.2 million. This compares
with a net loss of $4.6 million, or ($0.14) per share, for the second
quarter of 2008 and a net loss of $2.8 million, or ($0.09) per share,
for the third quarter of 2007.

The net loss on a non-GAAP basis for the third quarter was $2.1
million, or ($0.06) per share, excluding total stock-based
compensation and amortization charges. A reconciliation of GAAP to
non-GAAP results is provided in the financial statement tables
following the text of this press release.

Earnings per share for the quarter on both a GAAP and non-GAAP
basis were computed using 31.8 million shares.

Cash, cash equivalents and both long and short-term investments
totaled $72.1 million as of September 30, 2008, compared to $74.6
million as of June 30, 2008.

Recently, the Company announced that its board of directors has
authorized the Company to purchase up to $5 million of its common
stock over the next 12 months. Repurchases will be conducted from time
to time, subject to market conditions and other factors such as a
determination that the Company believes the repurchase will be
beneficial to stockholders. These repurchases may be commenced or
suspended at any time or from time to time without prior notice.

Third Quarter Financial Results Webcast / Conference Call

MoSys will host a conference call and webcast with investors today
at 1:30 p.m. Pacific time (4:30 p.m. Eastern time) to discuss the
third quarter 2008 financial results and the business outlook.
Investors and other interested parties may access the call by dialing
1-888-680-0865 in the U.S. (617-213-4853 outside of the U.S.), and
entering the pass code 83033684 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 http://www.mosys.com. A telephone replay will be
available for two business days following the call at 888-286-8010 in
the U.S. (617-801-6888 outside of the U.S.), pass code of 84985199.

One may also pre-register their attendance for the conference
call, which will enable immediate entry into the call. To pre-register
and secure your unique PIN please go to:
https://www.theconferencingservice.com/prereg/key.process?key=
PMGW6ARAX (Due to its length, this URL may need to be copied/pasted
into your Internet browser’s address field.)

Use of Non-GAAP Financial Measures

To supplement MoSys’ consolidated financial statements presented
in accordance with GAAP (U.S. Generally Accepted Accounting
Principles), MoSys uses non-GAAP financial measures that exclude from
the income statement the effects of stock-based compensation and the
effects of certain charges related to acquired intangible assets and
other acquisition-related charges from its acquisition of the
analog/mixed-signal design teams and related design know-how from
Atmel Corporation and LDIC in 2007. 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 immediately 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 October 30, 2008, 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 1T-SRAM, 1T-FLASH and
analog/mixed-signal technologies, the Company’s execution and results,
improving operational efficiencies, growth of the business 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, customer acceptance of our proprietary
technologies for 1T-SRAM, 1T-FLASH and analog/mixed-signal, the timing
and nature of the license agreements to be entered into with our
customers and their 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,
ease of manufacturing and yields of devices incorporating our
proprietary technologies, our ability to enhance our existing
proprietary technologies and develop new technologies, the 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, 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 reports on forms 10-Q and 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.

Founded in 1991, MoSys (NASDAQ: MOSY), develops, markets and
licenses innovative embedded memory and analog/mixed-signal
intellectual property (IP) technologies for advanced SoCs used in a
variety of home entertainment, mobile consumer, networking and storage
applications. MoSys’ patented 1T-SRAM and 1T-FLASH technologies offer
a combination of high density, low power consumption, high speed and
low cost unmatched by other available memory technologies. MoSys’
advanced analog/mixed-signal technologies include a highly integrated
Blu-ray DVD front-end and Gigabit Ethernet. MoSys’ embedded memory IP
has been included in more than 160 million devices demonstrating
silicon-proven manufacturability in a wide range of 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.

MoSys and 1T-SRAM are registered trademarks of MoSys, Inc.
1T-FLASH(TM) is a trademark of MoSys, Inc.

                             MOSYS, INC.
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
         (In thousands, except per share amounts; unaudited)

                                Three Months Ended  Nine Months Ended
                                   September 30,      September 30,
                                  2008      2007      2008      2007
                                --------- --------- --------- --------

Net Revenue
 Licensing                      $  1,198  $  1,548  $  2,297  $ 4,865
 Royalty                           2,856     2,421     7,769    6,570
                                --------- --------- --------- --------
  Total net revenue                4,054     3,969    10,066   11,435

Cost of Net Revenue
 Licensing                           845       670     2,158    1,912
                                --------- --------- --------- --------
  Total cost of net revenue          845       670     2,158    1,912

Gross Profit                       3,209     3,299     7,908    9,523

Operating Expenses
 Research and development          3,978     3,241    12,421    7,420
 Selling, general and
  administrative                   2,641     2,945     8,923    8,350
 In-process research and
  development                          -       966         -      966
 Amortization of acquired
  intangible assets                  197       197       591      197
                                --------- --------- --------- --------
  Total operating expenses         6,816     7,349    21,935   16,933

 Loss from operations             (3,607)   (4,050)  (14,027)  (7,410)

 Other income/expenses               391     1,209     2,026    3,505
                                --------- --------- --------- --------
  Loss before income taxes        (3,216)   (2,841)  (12,001)  (3,905)

 Benefit (provision) for income
  taxes                              (22)       18      (111)     (33)
                                --------- --------- --------- --------

Net loss                        $ (3,238) $ (2,823) $(12,112) $(3,938)
                                ========= ========= ========= ========

Net loss per share
 Basic and diluted                ($0.10)   ($0.09)   ($0.38)  ($0.12)

Shares used in computing net
 loss per share
 Basic and diluted                31,777    32,274    31,719   31,950
                             MOSYS, INC.
  Reconciliation of GAAP to Non-GAAP Net Loss and Net Loss Per Share
         (In thousands, except per share amounts; unaudited)


                                    Three Months    Nine Months Ended
                                        Ended
                                    September 30,     September 30,
                                    2008     2007     2008      2007
                                  -------- -------- --------- --------

 GAAP net loss                    $(3,238) $(2,823) $(12,112) $(3,938)
  Stock-based compensation
   expense
  -Cost of net revenue                111       95       342      317
  -Research and development           207      270       936      799
  -Selling, general and
    administrative                    660      529     2,299    1,458
                                  -------- -------- --------- --------
   Total stock-based compensation
    expense                           978      894     3,577    2,574

  In-process research and
   development                          -      966         -      966
  Amortization of acquired
   intangible assets                  197      197       591      197
                                  -------- -------- --------- --------

 Non-GAAP net loss                $(2,063) $  (766) $ (7,944) $  (201)
                                  ======== ======== ========= ========

 GAAP net loss per share           ($0.10)  ($0.09)   ($0.38)  ($0.12)
  Reconciling items
  -Stock-based compensation
    expense                          0.03     0.03      0.11     0.07
  -In-process research and
    development                         -     0.03         -     0.03
  -Amortization of acquired
    intangible assets                0.01     0.01      0.02     0.01
                                  -------- -------- --------- --------

 Non-GAAP net loss per share:
  Basic and diluted                ($0.06)  ($0.02)   ($0.25)  ($0.01)
                                  ======== ======== ========= ========

 Shares used in computing non-
  GAAP net loss per share
  Basic                            31,777   32,274    31,719   31,950
  Diluted                          31,777   32,274    31,719   31,950
                             MOSYS, INC.
                CONDENSED CONSOLIDATED BALANCE SHEETS
                      (in thousands, unaudited)

                                           September 30, December 31,
                                               2008          2007
                                           ------------- -------------

Assets
 Current assets:
  Cash, cash equivalents and investments   $      56,153 $      64,961
  Accounts receivable, net                           550           895
  Unbilled contract receivables                      287           518
  Prepaid expenses and other assets                1,927         2,393
                                           ------------- -------------
   Total current assets                           58,917        68,767

 Long-term investments                            15,958        13,693
 Property and equipment, net                       1,219         1,396
 Goodwill                                         12,326        12,326
 Intangible assets, net                            1,575         2,166
 Other assets                                        239           449
                                           ------------- -------------
   Total assets                            $      90,234 $      98,797
                                           ============= =============


Liabilities and Stockholders' Equity
 Current liabilities:
  Accounts payable                         $         149 $         146
  Accrued expenses and other liabilities           2,486         2,158
  Deferred revenue                                   682           201
                                           ------------- -------------
   Total current liabilities                       3,317         2,505

 Stockholders' equity                             86,917        96,292

                                           ------------- -------------
   Total liabilities and stockholders'
    equity                                 $      90,234 $      98,797
                                           ============= =============

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

SOURCE: MoSys, Inc.