Achieved Record Quarter of New Design Wins

SANTA CLARA, Calif.–(BUSINESS WIRE)–Nov. 4, 2015–
MoSys,
Inc.
(NASDAQ: MOSY), a leader in semiconductor solutions that enable
fast, intelligent data access for network and communications systems,
today reported financial results for the third quarter ended September
30, 2015
.

Third Quarter and Recent Developments

  • Achieved record number of quarterly design wins, including additional
    wins with an existing Tier One customer and multiple new design wins
    with both new and existing Bandwidth Engine® and LineSpeed™ customers;
  • Taped out Bandwidth Engine® 3 and announced the first three devices in
    this new product family;
  • Introduced the new LineSpeed Flex 100G PHY product family; and
  • Ended the quarter with total cash and investments of $25.5 million.

Management Commentary

“The third quarter was our best design win quarter to date, primarily
driven by our Bandwidth Engine products,” commented Len Perham,
president and CEO of MoSys. “These additional design wins with both new
and existing customers expand the number of applications we serve, while
broadening our customer base and increasing the scope of our market
penetration. We now anticipate that we will exceed our corporate goal to
double design wins year over year.

“Our product portfolio is also increasing. We taped out Bandwidth Engine
3 in the quarter and recently announced the first three ICs in this new
product family, including the MSRZ30 designed for use with the EZchip
NPS-400 network processor. We also introduced a new family of LineSpeed
Flex 100G PHY ICs comprised of five new devices and have customer
engagements in process.”

Mr. Perham concluded, “In summary, during the quarter, we achieved
further progress by broadening our customer base, significantly
increasing our design win count and introducing new products that will
expand our market opportunities. The design wins secured in 2012 and
2013 have begun to ramp into early production volumes. While production
ramp rates can vary, we anticipate this upward trend will continue as we
move into 2016. We remain encouraged by the total number of design wins
secured in the quarter, as well as the high level of activity in our
sales funnel. With a broader range of applications benefiting from our
high-performance products and solutions, we are well positioned to
achieve additional progress going forward.”

Third Quarter Results

Total net revenue for the third quarter of 2015 was $1.0 million,
consistent with the previous quarter and compared with $1.1 million
reported in the third quarter of 2014.

Third quarter 2015 total revenue included product revenue of $0.6
million
as compared with $0.5 million in the second quarter of 2015 and
$0.4 million in the year ago period. Royalty and other revenue for the
third quarter of 2015 was $0.5 million, consistent with the previous
quarter and compared with $0.7 million in the third quarter of 2014.

Gross margin for the third quarter of 2015 was 22 percent, compared with
43 percent in the second quarter of 2015 and 61 percent for the third
quarter of 2014. The sequential decrease in gross margin was due
primarily to a $0.2 million reserve recorded in the quarter to cost of
goods sold for slow-moving Bandwidth Engine 1 inventory.

Total operating expenses on a GAAP basis for the third quarter of 2015
were $10.3 million, compared with $7.3 million in the previous quarter
and $9.2 million for the third quarter of 2014. The sequential increase
in operating expenses was primarily due to tape-out expenses for
Bandwidth Engine 3 and LineSpeed products. The Company does not expect
to incur additional tape-out expenses in 2015, but may incur additional
tape-out expenses in 2016. Third quarter 2015 operating expenses
included $0.8 million in amortization of intangible assets and
stock-based compensation expense.

GAAP net loss for the third quarter of 2015 was $10.1 million, or
($0.15) per share, compared with a net loss of $6.9 million, or ($0.11)
per share, in the previous quarter and a net loss of $8.5 million, or
($0.17) per share, for the third quarter of 2014. Non-GAAP net loss for
the third quarter of 2015 was $9.3 million, or ($0.14) per share, which
excludes amortization of intangible assets and stock-based compensation
expense. Earnings per share for the third quarter of 2015 were computed
using approximately 65.3 million weighted shares on a GAAP and non-GAAP
basis. A reconciliation of GAAP results to non-GAAP results is provided
in the financial statement tables following the text of this press
release.

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 third
quarter financial results. Investors and other interested parties may
access the call by dialing 1-855-779-0042 in the U.S.
(+1-631-485-4856 outside of the U.S.), and entering the pass code 60387256
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 1-855-859-2056 in the U.S. (+1-404-537-3406 outside of the
U.S.), pass code of 60387256.

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 statement of operations the effects of stock-based
compensation and amortization of recorded intangible assets. 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’ management believes
that the presentation of non-GAAP financial measures that exclude these
items is useful to investors because management 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 November 4,
2015
, 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, anticipated benefits and
performance expected from our IC products 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:

  • achieving additional IC design wins;
  • commencing volume shipments of Bandwidth Engine ICs;
  • the timing of customer orders and product shipments;
  • our ability to enhance our existing proprietary technologies and
    develop new technologies;
  • achieving necessary acceptance and adoption of our IC architecture and
    interface protocols by potential customers and their suppliers;
  • difficulties and delays in the development, production, testing and
    marketing of our ICs;
  • reliance on our manufacturing partners to assist successfully with the
    fabrication of our 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 customers and our
    operations; and
  • raising additional capital to fund our ongoing cash requirements in
    2016; 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) is a fabless semiconductor company enabling
leading equipment manufacturers in the networking and communications
systems markets to address the continual increase in Internet users,
data and services. The company’s solutions deliver data path
connectivity, speed and intelligence while eliminating data access
bottlenecks on line cards and systems scaling from 100G to
multi-terabits per second. Engineered and built for high-reliability
carrier and enterprise applications, MoSys’ Bandwidth Engine® and
LineSpeed™ IC product families are based on the company’s patented
high-performance, high-density intelligent access and high-speed serial
interface technology, and utilize the company’s highly efficient
GigaChip® Interface. MoSys is headquartered in Santa Clara, California.
More information is available at www.mosys.com.

Bandwidth Engine, GigaChip and MoSys are registered trademarks of
MoSys, Inc. in the US and/or other countries. LineSpeed and the MoSys
logo are trademarks of MoSys, Inc. All other marks mentioned herein are
the property of their respective owners.

         
MOSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts; unaudited)
 
Three Months Ended Nine Months Ended
September 30, September 30,
  2015       2014     2015       2014  
 
Net Revenue
Product $ 565 $ 437 $ 1,288 $ 1,993
Royalty and other   457       716     1,504       2,241  
Total net revenue 1,022 1,153 2,792 4,234
 
Cost of Net Revenue
Product and other   793       447     1,593       2,046  
Total cost of net revenue 793 447 1,593 2,046
 
Gross Profit 229 706 1,199 2,188
 
Operating Expenses
Research and development 8,793 7,507 21,475 20,993
Selling, general and administrative   1,547       1,689     4,711       4,976  
Total operating expenses 10,340 9,196 26,186 25,969
 
Loss from operations (10,111 ) (8,490 ) (24,987 ) (23,781 )
 
Other income, net   19       30     71       115  
Loss before income taxes (10,092 ) (8,460 ) (24,916 ) (23,666 )
 
Income tax provision   13       23     60       65  
 
Net loss $ (10,105 )   $ (8,483 ) $ (24,976 )   $ (23,731 )
 
Net loss per share
Basic and diluted $ (0.15 ) ($0.17 ) ($0.41 ) ($0.48 )
 
Shares used in computing net loss per share
Basic and diluted 65,317 49,634 61,486 49,441
 
     
MOSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
 
September 30, December 31,
2015     2014
 
Assets
Current assets:
Cash, cash equivalents and investments $ 23,182 $ 23,549
Accounts receivable, net 426 177
Inventories 1,264 881
Prepaid expenses and other   1,369       887
Total current assets 26,241 25,494
 
Long-term investments 2,269 2,245
Property and equipment, net 860 854
Goodwill 23,134 23,134
Intangible assets, net 362 655
Other assets   394       244
Total assets $ 53,260     $ 52,626
 

Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable $ 378 $ 495
Accrued expenses and other   2,057       2,350
Total current liabilities 2,435 2,845
 
Long-term liabilities 249 241
 

Stockholders’ equity

50,576 49,540
       

Total liabilities and stockholders’ equity

$ 53,260     $ 52,626
 
         
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 Nine Months Ended
September 30, September 30,
  2015       2014     2015       2014  
 
GAAP net loss $ (10,105 ) $ (8,483 ) $ (24,976 ) $ (23,731 )
Stock-based compensation expense
-Research and development 590 786 2,151 2,653
-Selling, general and administrative   230       288     713       943  
Total stock-based compensation expense 820 1,074 2,864 3,596
 
Amortization of intangible assets   28       250     293       750  
 
Non-GAAP net loss $ (9,257 )   $ (7,159 ) $ (21,819 )   $ (19,385 )
 
GAAP net loss per share $ (0.15 ) $ (0.17 ) $ (0.41 ) $ (0.48 )
Reconciling items
-Stock-based compensation expense 0.01 0.02 0.05 0.07
-Amortization of intangible assets 0.01 0.01 0.02
           
Non-GAAP net loss per share: basic and diluted $ (0.14 )   $ (0.14 ) $ (0.35 )   $ (0.39 )
 
Shares used in computing non-GAAP net loss per share
Basic and diluted 65,317 49,634 61,486 49,441

Source: MoSys, Inc.

MoSys, Inc.
Jim Sullivan, +1-408-418-7500
CFO
jsullivan@mosys.com
or
Shelton
Group, Investor Relations
Beverly Twing, +1-214-272-0089
Sr.
Acct. Manager
btwing@sheltongroup.com