Revenues of 120,000; $40 Million Follow-On Offering Completed HILLSBORO, Ore., Aug. 7 /PRNewswire-FirstCall/ -- MathStar, Inc. (NASDAQ: MATH), a fabless semiconductor company specializing in high-performance programmable logic, today announced results for its second quarter of 2007, ended June 30, 2007. Revenues in the second quarter were $120,000, compared with $10,000 in the same period last year. Net loss per share was $0.19 in the second quarter of 2007, compared with $0.31 per share in the same quarter a year ago. "In the second quarter, we successfully completed a follow-on offering of 25 million shares of common stock, which netted the company $36.5 million," said Doug Pihl, president and chief executive officer. "We believe that the funds raised are sufficient to get us to cash flow breakeven," he said. The company reported second quarter gross margins of 55 percent. Research and development expenses decreased $593,000 or 19 percent to $2.6 million, down from the $3.2 million reported in the same quarter a year ago. The decrease was a result of reductions in engineering material, lower design tools costs, lower contracted services and lower administrative costs. The decrease was partially offset by the increase in employee related expenses. For the quarter ended June 30, 2007, selling, general and administrative expenses decreased $241,000 or 10 percent to $2.1 million, compared with $2.3 million in the same period a year ago. The decrease was a result of lower non-cash charges related to restricted stock issued in earlier periods offset by increased employee recurring charges. The company will present a full business update during a conference call today, Tuesday, Aug. 7, at 1:30 p.m. PDT. To listen to the call, please dial (303) 262-2075 or (800) 218-0713 (toll free). A replay of the call will be available on the company's website at http://www.mathstar.com/. About MathStar, Inc. MathStar is a fabless semiconductor company offering best-in-class, high performance programmable logic solutions. MathStar's Field Programmable Object Array (FPOA) can process arithmetic and logic operations at clock rates at 1 gigahertz, which is up to four times faster than even the most advanced FPGA architectures in many applications. MathStar's Arrix family of FPOAs are high- performance programmable solutions that enable customers in the machine vision, high-performance video, medical imaging, security & surveillance and military markets to rapidly and cost effectively innovate and differentiate their products. FPOAs are available now and are supported by development tools, IP libraries, application notes and technical documentation. For more information, please visit http://www.mathstar.com/. Statements in this press release, other than historical information, may be "forward-looking" in nature within the meaning of Section 21E the Private Securities Litigation Reform Act of 1995 and are subject to various risks, uncertainties and assumptions. These statements are based on management's current expectations, estimates and projections about MathStar and its industry and include, but are not limited to, those set forth in the section of MathStar's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 14, 2007 under the heading "Risk Factors." MathStar undertakes no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release. MathStar, Inc. Condensed Balance Sheets (Unaudited) December 31, June 30, 2006 2007 (In Thousands,) Assets Current assets Cash and cash equivalents $12,891 $38,583 Restricted cash 103 105 Accounts receivable 14 131 Inventory 610 736 Prepaid expenses and other current assets 1,231 750 Total current assets 14,849 40,305 Property and equipment, net 487 461 Other assets 278 444 Total assets $15,614 $41,210 Liabilities and Stockholders' Equity Current liabilities Accounts payable $1,791 $993 Deferred revenue - Net -- 139 Accrued expenses 1,206 999 Total liabilities 2,997 2,131 Commitments and contingencies Stockholders' equity Preferred stock, $0.01 par value; 10,000 shares authorized; no shares issued and outstanding -- -- Common stock, $0.01 par value; 90,000 shares authorized; 20,922 and 45,907 shares issued and outstanding at December 31, 2006 and June 30, 2007, respectively 209 459 Additional paid-in capital 118,545 154,759 Accumulated deficit (106,137) (116,139) Total stockholders' equity 12,617 39,079 Total liabilities and stockholders' equity $15,614 $41,210 MathStar, Inc. Condensed Statements of Operations (Unaudited) (in thousands except for per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2006 2007 2006 2007 Revenue $10 $120 $18 $212 Cost of goods sold 5 54 6 123 Gross margin 5 66 12 89 Operating expenses: Research and development 3,200 2,607 6,026 5,732 Selling, general and administrative 2,348 2,107 4,551 4,569 5,548 4,714 10,577 10,301 Operating loss (5,543) (4,648) (10,565) (10,212) Interest income 160 107 350 226 Other income/(loss), net -- (14) -- (16) Net loss $(5,383) $(4,555) $(10,215) $(10,002) Basic and diluted net loss per share $(0.31) $(0.19) $(0.60) $(0.44) Weighted average basic and diluted shares outstanding 17,104 24,135 17,037 22,525 DATASOURCE: MathStar, Inc. CONTACT: Alexis Pascal of Stapleton Communications, +1-650-470-4209, for MathStar, Inc. Web site: http://www.mathstar.com/

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