1118037--3/31/2009--MATHSTAR

related topics

{stock, price, share}

{property, intellectual, protect}

{acquisition, growth, future}

{provision, law, control}

{tax, income, asset}

{system, service, information}

{control, financial, internal}

{condition, economic, financial}

{financial, litigation, operation}

We have limited revenue and a history of net losses. Our financial results and condition, and any strategic transactions we may enter into, are subject to a number of economic risks due to global adverse business, economic and market conditions. We are currently considering various strategic alternatives and may not be able to complete the one we decide to pursue, whose failure could result in increased expenses and/or a delay in finally completing the selected strategy, or pursuing and completing another alternative. We may need additional financing in the future, which may not be available to us on favorable terms or at all. If we need additional financing but do not obtain it when we need it or on terms that are favorable to us, our business would be adversely and materially affected. Because our FPOA chips are highly complex, they may contain defects or errors that are detected only after deployment in commercial applications, which would result in increased liability and expense. Our ability to sell or otherwise capitalize on our intellectual property depends on our ability to protect our intellectual property, and it may not be adequately protected. Our technology has no patent protection outside of the United States because we have no non-United States patents or patent applications, and we do not currently plan on applying for non-United States patents. This could result in the appropriation of our technology outside of the United States, which could have an adverse effect on our ability to sell or otherwise capitalize on our intellectual property. We are at risk of intellectual property infringement claims. As of December 31, 2008, we had $828,000 invested in auction preferred securities (APS). Since mid-February 2008, the auctions for these APS have been failing, which adversely affects their liquidity. If we must record impairment charges on the recorded value of these APS, recognize additional unrealized losses, or recognize a loss on the disposition of our APS, our financial condition would be adversely affected. The success of any strategic transaction we enter into would depend on the services and skills of our existing management. Our board of directors may issue and fix the terms of shares of our preferred stock without stockholder approval, which could adversely affect the voting power of holders of our common stock or any change in control of MathStar. We will not pay cash dividends on our common stock in the foreseeable future. Our common stock was delisted from The NASDAQ Stock Market, LLC, which adversely affects its liquidity. Our common stock is thinly traded, and our stock price may be volatile, which means that purchasers of our common stock could incur substantial losses. Our common stock is subject to the "penny stock" rules of the SEC, which could restrict trading in our common stock and thus its liquidity. If there are substantial sales of our common stock, our stock price could decline. The anti-takeover provisions of the Delaware General Corporation Law, or the DGCL, may delay or prevent transactions that are favorable to our stockholders. We may be at risk of shareholder litigation.

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1118037--3/31/2009--MATHSTAR_INC