**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**FORM 10-Q**

**(Mark One)**

 
| **x** | **Quarterly  report pursuant to Section 13 or 15(d) of the Securities Exchange  Act of 1934** |
|-------|---------------------------------------------------------------------------------------------------------|

 

**For thequarterly period ended March 31, 2008.**

 

**OR**

 
| **o** | **Transition  report pursuant to Section 13 or 15(d) of the Securities Exchange  Act of 1934** |
|-------|----------------------------------------------------------------------------------------------------------|

 

**For thetransition period from              to**

 

**Commissionfile number 000-51560**

 

**MathStar, Inc.**

(Exact name of registrantas specified in its charter)

 
| **Delaware**                                                  | ** ** | **41-1881957**      |
|---------------------------------------------------------------|------------|---------------------|
| (State or other  jurisdiction of                              |       | (I.R.S. Employer    |
| incorporation or  organization)                               |       | Identification No.) |
|                                                          |       |                |
| **19075  NW Tanasbourne, Suite 200, Hillsboro,  Oregon** | ** ** | **97124**           |
| (Address of principal  executive offices)                     |       | (Zip  Code)    |

 

**(503)726-5500**

(Registrant’s telephonenumber, including area code)

 

**N/A**

(Former name, formeraddress, and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant: (1) hasfiled all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days.  x  Yes    o  No

 

Indicate by check mark whetherthe registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See definitions of “largeaccelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2of the Exchange Act. (Check one):

 
| Large accelerated filer o                     |   | Accelerated filer x         |
|-----------------------------------------------|--------|----------------------------------|
|                                          |   |                             |
| Non-accelerated filer o                       |   | Smaller reporting company o |
| (Do not check if a smaller reporting company) |   |                             |

 

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act).  o  Yes    x  No

 

Shares outstanding of theRegistrant’s common stock:

 
| **Class**                      | ** ** | **Outstanding at April 30,  2008** |
|--------------------------------|------------|---------------------------------------------------|
| Common stock, $0.01 par  value |       | 45,906,890                                        |

 

 

----

 
| PART I  FINANCIAL INFORMATION |     | 1                                                                                           |
|-----------------------------------------|----------|---------------------------------------------------------------------------------------------|
|                                    |     |                                                                                        |
|                                    | Item 1.  | Consolidated Financial Statements  (Unaudited)                                              | 1 |
|                                    |     | Condensed Balance Sheets as  of December 31, 2007 and March 31, 2008              | 1 |
|                                    |     | Condensed Statements of  Operations for the Three Months Ended March 31, 2007 and 2008 | 2 |
|                                    |     | Condensed Statements of Cash  Flows for the Three Months Ended March 31, 2007 and 2008 | 3 |
|                                    |     | Notes to Condensed  Consolidated Financial Statements                                       | 4 |
|                                    |     |                                                                                        |   |
|                                    | Item 2   | Management’s  Discussion and Analysis of Financial Condition and Results of Operations | 9 |
|                                    | Item 3   | Quantitative  and Qualitative Disclosures about Market Risk                                 | 12 |
|                                    | Item 4   | Controls and  Procedures                                                                    | 12 |
|                                    |     |                                                                                        |
| PART II   OTHER INFORMATION   |     | 13                                                                                          |
|                                    | Item 1.  | Legal Proceedings                                                                           | 13 |
|                                    | Item 1A. | Risk Factors                                                                                | 13 |
|                                    | Item 2.  | Unregistered  Sales of Equity Securities and Use of Proceeds                                | 14 |
|                                    | Item 3.  | Defaults  Upon Senior Securities                                                            | 14 |
|                                    | Item 4.  | Submission  of Matters to a Vote of Security Holders                                        | 14 |
|                                    | Item 5.  | Other Information                                                                           | 14 |
|                                    | Item 6.  | Exhibits                                                                                    | 14 |
|                                    |     |                                                                                        |
| Signatures                              |     | 15                                                                                          |
|                                         |          |                                                                                             |  |  |

 

----

 

**Part I**

**FinancialInformation**

 

**Item1.  Financial Statements**

 

**MathStar, Inc.**

**CondensedConsolidated Balance Sheets**

**(Unaudited)**

**(in thousands, except per sharedata)**

 
| ** **                                                                                                                                                                 | ** ** | **December 31,  2007** | ** ** | **March 31,  2008** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------|------------|--------------------------|------------|
| ** **                                                                                                                                                                 | ** ** | ** **                  | ** ** | ** **               | ** ** |
| **Assets**                                                                                                                                                                 |       |                        |       |                     |       |
| Current assets                                                                                                                                                             |       |                        |       |                     |       |
| Cash and cash equivalents                                                                                                                                                  |       | $                           | 4,339      |                     | $          | 3,021 |   |
| Restricted cash                                                                                                                                                            |       | 107                         |       | 109                      |       |
| Investments in marketable  securities – short term                                                                                                                    |       | 22,200                      |       | 20,568                   |       |
| Accounts receivable                                                                                                                                                        |       | 271                         |       | 106                      |       |
| Inventory                                                                                                                                                                  |       | 623                         |       | 883                      |       |
| Prepaid expenses and other  current assets                                                                                                                                 |       | 1,326                       |       | 1,056                    |       |
| Total current assets                                                                                                                                                       |       | 28,866                      |       | 25,743                   |       |
| Property and equipment,  net                                                                                                                                               |       | 557                         |       | 533                      |       |
| Investments in marketable  securities – long term                                                                                                                     |       | 2,599                       |       | —                   |       |
| Other assets                                                                                                                                                               |       | 435                         |       | 380                      |       |
| Total assets                                                                                                                                                               |       | $                           | 32,457     |                     | $          | 26,656 |   |
|                                                                                                                                                                       |       |                        |       |                     |       |
| **Liabilities and  Stockholders’ Equity**                                                                                                                             |       |                        |       |                     |       |
| Current liabilities                                                                                                                                                        |       |                        |       |                     |       |
| Accounts payable                                                                                                                                                           |       | $                           | 930        |                     | $          | 670 |   |
| Deferred revenue                                                                                                                                                           |       | 162                         |       | 33                       |       |
| Accrued expenses                                                                                                                                                           |       | 1,416                       |       | 1,356                    |       |
| Total current liabilities                                                                                                                                                  |       | 2,508                       |       | 2,059                    |       |
| Other long term  liabilities                                                                                                                                               |       | 453                         |       | 453                      |       |
| Total liabilities                                                                                                                                                          |       | 2,961                       |       | 2,512                    |       |
|                                                                                                                                                                       |       |                        |       |                     |       |
| 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; 45,907 and 45,907 shares issued and  outstanding at December 31, 2007 and March 31, 2008, respectively |       | 459                         |       | 459                      |       |
| Additional paid-in capital                                                                                                                                                 |       | 155,539                     |       | 155,673                  |       |
| Accumulated deficit                                                                                                                                                        |       | (126,502                    | )          | (131,895                 | )          |
| Accumulated other  comprehensive loss                                                                                                                                      |       | —                      |       | (93                      | )          |
| Total stockholders’ equity                                                                                                                                            |       | 29,496                      |       | 24,144                   |       |
|                                                                                                                                                                       |       |                        |       |                     |       |
| Total liabilities and  stockholders’ equity                                                                                                                           |       | $                           | 32,457     |                     | $          | 26,656 |   |

 

The accompanying notesare an integral part of these financial statements.

 

1

----

 

**MathStar, Inc.**

**CondensedConsolidated Statements of Operations**

**(Unaudited)**

**(inthousands, except per share data)**

 
| ** **                                             | ** ** | **Three Months Ended  March 31,** | ** ** |
|--------------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                             | ** ** | **2007**                                         | ** ** | **2008** | ** ** |
| ** **                                             | ** ** | ** **                                       | ** ** | ** ** | ** ** |
| Revenue                                                |       | $                                                | 92         |   | $ | 226 |   |
| Cost of sales                                          |       | 69                                               |       | 291 |   |
| Gross profit (loss)                                    |       | 23                                               |       | (65 | ) |
| Operating expenses:                                    |       |                                             |       |   |   |
| Research and development                               |       | 3,125                                            |       | 3,552 |   |
| Selling, general and  administrative                   |       | 2,462                                            |       | 2,093 |   |
|                                                   |       | 5,587                                            |       | 5,645 |   |
| Operating loss                                         |       | (5,564                                           | )          | (5,710 | ) |
| Interest income                                        |       | 119                                              |       | 280 |   |
|                                                   |       |                                             |       |   |   |
| Other income, net                                      |       | (2                                               | )          | 37 |   |
|                                                   |       |                                             |       |   |   |
| Net loss                                               |       | $                                                | (5,447     | ) | $ | (5,393 | ) |
|                                                   |       |                                             |       |   |   |
| Basic and diluted loss per  share                      |       | $                                                | (0.26      | ) | $ | (0.12 | ) |
| Weighted average basic and  diluted shares outstanding |       | 20,897                                           |       | 45,907 |   |

 

The accompanying notesare an integral part of these financial statements.

 

2

----

 

**MathStar, Inc.**

**CondensedConsolidated Statements of Cash Flows**

**(Unaudited)**

**(inthousands)**

 
| ** **                                                                  | ** ** | **Three Months Ended  March 31,** | ** ** |
|-----------------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                                                  | ** ** | **2007**                                         | ** ** | **2008** | ** ** |
| ** **                                                                  | ** ** | ** **                                       | ** ** | ** ** | ** ** |
| **Cash flows from  operating activities**                                   |       |                                             |       |   |   |
| Net loss                                                                    |       | $                                                | (5,447     | ) | $ | (5,393 | ) |
| Adjustments to reconcile  net loss to net cash used in operating activities |       |                                             |       |   |   |
| Depreciation and  amortization                                              |       | 41                                               |       | 57 |   |
| Amortization of discount  on held-to-maturity securities                    |       |                                             |       | 16 |   |
| Non-cash changes in  inventory reserves                                     |       |                                             |       | 225 |   |
| Stock-based compensation                                                    |       | 8                                                |       | 134 |   |
| Gain on sale of marketable  securities                                      |       |                                             |       | (42 | ) |
| Foreign currency  remeasurement                                             |       |                                             |       | 3 |   |
| Change in operating assets  and liabilities                                 |       |                                             |       |   |   |
| Accounts receivable                                                         |       | (47                                              | )          | 165 |   |
| Inventory                                                                   |       | (61                                              | )          | (485 | ) |
| Prepaid expenses and other  assets                                          |       | 286                                              |       | 320 |   |
| Accounts payable                                                            |       | (1,008                                           | )          | (260 | ) |
| Deferred revenue                                                            |       | 25                                               |       | (129 | ) |
| Accrued expenses                                                            |       | (118                                             | )          | (60 | ) |
| Net cash used in operating  activities                                      |       | (6,321                                           | )          | (5,449 | ) |
| **Cash flows from  investing activities**                                   |       |                                             |       |   |   |
|                                                                        |       |                                             |       |   |   |
| Purchase of property and  equipment                                         |       | (68                                              | )          | (28 | ) |
| Proceeds from sale of  held-to-maturity securities                          |       |                                             |       | 7,170 |   |
| Proceeds from sale of  available-for-sale securities                        |       |                                             |       | 2,610 |   |
| Purchase of  held-to-maturity securities                                    |       |                                             |       | (2,931 | ) |
| Purchase of  available-for-sale securities                                  |       |                                             |       | (2,685 | ) |
| Restricted cash                                                             |       | (1                                               | )          | (2 | ) |
| Net cash used in investing  activities                                      |       | (69                                              | )          | 4,134 |   |
| **Cash flows from  financing activities**                                   |       |                                             |       |   |   |
|                                                                        |       |                                             |       |   |   |
| Proceeds from exercise of  warrants, net of costs                           |       | 21                                               |       | — |   |
| Proceeds from exercise of  stock options                                    |       | 9                                                |       | — |   |
| Net cash provided by  financing activities                                  |       | 30                                               |       | — |   |
| Effect of exchange rate  changes on cash                                    |       |                                             |       | (3 | ) |
| Net decrease in cash and  cash equivalents                                  |       | (6,360                                           | )          | (1,318 | ) |
| **Cash and cash  equivalents**                                              |       |                                             |       |   |   |
| Beginning of period                                                         |       | 12,891                                           |       | 4,339 |   |
| End of period                                                               |       | $                                                | 6,531      |   | $ | 3,021 |   |

 

The accompanying notesare an integral part of these financial statements.

 

3

----

 

**MathStar, Inc.**

**Notes to ConsolidatedFinancial Statements**

**(in thousands, except per share data)**

 

**1.****            ****Basis of Presentation and Going Concern**

 

Theaccompanying interim condensed consolidated financial statements of MathStar, Inc.(“MathStar” or the “Company”) have been prepared in conformity with UnitedStates (U.S.) generally accepted accounting principles, consistent in allmaterial respects with those applied in the Company’s Annual Report on Form 10-Kfiled with the Securities and Exchange Commission (“SEC”) on March 14,2008. The year-end condensed consolidated balance sheet was  derived fromaudited financial statements, but does not include all disclosure required byaccounting principles generally accepted in the United States of America (U.S.GAAP). The preparation of financial statements in conformity with U.S. GAAPrequires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities and the disclosure of contingent assets andliabilities at the date of the financial statements and the reported amounts ofrevenues and expenses during the reporting period. Actual results could differfrom those estimates.

 

Theinterim financial information is unaudited, but it reflects all normaladjustments that are, in the opinion of management, necessary to provide a fairstatement of results for the interim periods presented. The interim financialresults are not necessarily indicative of results to be expected in futureinterim or annual periods. The interim financial statements should be read inconjunction with the financial statements in the Company’s Annual Report on Form 10-Kfiled with the Securities and Exchange Commission on March 14, 2008.

 

Theaccompanying financial statements have been prepared on a basis which assumesthat the Company will continue as a going concern and which contemplates therealization of assets and the satisfaction of liabilities and commitments inthe normal course of business. The Company has a limited operating history andhas incurred losses and negative cash flows from operations since inception.The Company expects to incur additional losses in 2008 but believes it hassufficient resources to meet future requirements through at least March 2009.Should revenue not materialize as forecasted, we may be required to raiseadditional capital in order to continue development and operations. There canbe no assurance that such capital will be available at a reasonable cost to theCompany or at all.

** **

**2.****            ****New AccountingPronouncements**

 

InSeptember 2006, the Financial Accounting Standards Board, or “FASB”,issued FASB Statement No. 157, “Fair Value Measurements” (SFAS 157) whichdefines fair value, establishes a framework for measuring fair value ingenerally accepted accounting principles and expands disclosures about fairvalue measurements. SFAS 157 is effective for financial statements issued forfiscal years beginning after November 15, 2007 and interim periods withinthose fiscal years. In February 2008, the FASB issued FSP FAS 157-2 “PartialDeferral of the Effective Date of Statement 157” (FSP 157-2). FSP 157-2 delaysthe effective date of SFAS 157 for non-financial assets and liabilities thatare not measured or disclosed on a recurring basis to fiscal years beginningafter November 15, 2008. The adoption of this accounting pronouncement didnot have a material effect on the Company’s consolidated financial statementsfor financial assets and liabilities and any other assets and liabilitiescarried at fair value though we expanded the disclosure requirements to complywith SFAS 157.  The Company is currently in the process of evaluatingthe impact of adopting this pronouncement for other non-financial assets orliabilities.

 

SFAS157 defines fair value as the price that would be received to sell an asset orpaid to transfer a liability in an orderly transaction between marketparticipants at the measurement date (exit price). SFAS 157 classifies theinputs used to measure fair value into the following hierarchy:

 
| Level  1 |   | Unadjusted  quoted prices in active markets for identical assets or liabilities                                                                                                                                                                                                |
|----------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |   |                                                                                                                                                                                                                                                                           |
| Level  2 |   | Unadjusted  quoted prices in active markets for similar assets or liabilities, or  unadjusted quoted prices for identical or similar assets or liabilities in  markets that are not active, or inputs other than quoted prices that are  observable for the asset or liability |
|     |   |                                                                                                                                                                                                                                                                           |
| Level  3 |   | Unobservable  inputs for the asset or liability                                                                                                                                                                                                                                |

 

Weendeavor to utilize the best available information in measuring fair value.Financial assets and liabilities are classified in their entirety based on thelowest level of input that is significant to the fair value measurement.

 

InFebruary 2007, the FASB issued SFAS No. 159, “The fair value option for Financial Assets and Liabilities—includingAmendment*of FAS No. 115”.*SFASNo. 159 gives companies the option of recording certain financial assetsand liabilities at fair value. SFAS No. 159 was effective for the Companycommencing January 1, 2008. The Company’s adoption of SFAS No. 159did not have an impact on the financial statements as the Company did not electto record eligible items at fair value.

 

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” and SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements”.  These standards aim to improve, simplify and converge internationally the accounting for business combinations and the reporting of noncontrolling interests in consolidated financial statements.  The provisions of SFAS No. 141(R) and SFAS No. 160 apply to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 31, 2008.  The Company does not expect the provisions of SFAS No. 141(R) and SFAS No. 160 will have an effect on its consolidated financial position and results of operations.

 

**3.****            ****SelectedBalance Sheet Information**

** **

**Restricted Cash**

 

TheCompany has pledged collateral to secure the balances on Company issued creditcards. The Company cannot use the restricted cash in the normal course ofbusiness until the credit cards are cancelled or the bank releases the funds.The credit cards are issued to certain Company employees for the purpose oftravel and Company related purchases. The amount pledged as collateral amountedto $109 on March 31, 2008 compared to $107 on December 31, 2007.

 

4

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**Investment Securities**

 
| ** **                        | ** ** | **December 31,  2007** | ** ** | **March 31,  2008** | ** ** |
|-----------------------------------|------------|-----------------------------|------------|--------------------------|------------|
| Short Term                        |       |                        |       |                     |       |
| Available-for-sale                |       |                        |       |                     |       |
| Municipal securities              |       | $                           | 2,605      |                     | $          | — |   |
| Auction preferred securities      |       |                        |       | 2,592                    |       |
| Held-to-maturity                  |       |                        |       |                     |       |
| Government securities             |       | 19,595                      |       | 15,073                   |       |
| Corporate bonds and notes         |       |                        |       | 2,903                    |       |
| Total short term investments      |       | 22,200                      |       | 20,568                   |       |
| ** **                        | ** ** | ** **                  | ** ** | ** **               | ** ** |
| Long Term – held-to-maturity |       |                        |       |                     |       |
| Corporate bonds and notes         |       | 2,599                       |       | —                   |       |
| ** **                        | ** ** | ** **                  | ** ** | ** **               | ** ** |
| Total investments                 |       | $                           | 24,799     |                     | $          | 20,568 |   |

 

Investmentsclassified as held-to-maturity have timed maturities to meet forecasted cashneeds, which range from April 2008 to February 2009 and are reportedat amortized cost, as the Company has the ability and intent to hold thesesecurities to maturity. Investments with maturities beyond one year areclassified as long-term investment securities.

 
| ** **         | ** ** | ** **  | ** ** | **Fair Value Measurement at Reporting Date  Using**          | ** ** |
|--------------------|------------|-------------|------------|---------------------------------------------------------------------------------------|------------|
| ** **         | ** ** | ** **  | ** ** | **Quoted Prices  in Active  Markets for  Identical Assets ** | ** ** | **Significant  Other  Observable  Inputs ** | ** ** | **Significant  Unobservable  Inputs ** | ** ** |
| **Description**    | ** ** | **3/31/08** | ** ** | **(Level 1)**                                                                    | ** ** | **(Level 2)** | ** ** | **(Level 3)** | ** ** |
| Available-for-sale |       |        |       |                                                                                  |       |   |   |   |   |
| Securities         |       | $           | 2,592      |                                                                                  | —     |   | — |   | $ | 2,592 |   |
| Total              |       | $           | 2,592      |                                                                                  | —     |   | — |   | $ | 2,592 |   |

 

Wehave auction preferred securities (APS), which are preferred equity instrumentsin a closed-end mutual fund that provide liquidity through an auction processconducted by an independent auction agent that resets the applicable dividendrate at pre-determined calendar intervals, generally every 28 days.  These instruments are senior equitysecurities that have a liquidation preference of $25,000 per share plus the amountof accumulated but unpaid dividends. Upon the liquidation, dissolution orwinding up of the fund, APS holders are entitled to receive their liquidationpreference before any distribution or payment is made to holders of the Fund’scommon shares. Dividends declared and payable on the APS have a priority overdividends on a Fund’s common shares. Outstanding APS may be redeemed at theoption of the fund upon giving notice to APS holders.

 

5

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TheCompany generally invests in these securities as part of its overall cashmanagement program. During the first quarter of 2008, the Company’s APS failedto auction due to sell orders exceeding buy orders.  The funds associated with failed auctionswill not be accessible until a successful auction occurs, the fund redeemsoutstanding APS or an active secondary market is created and a buyer isidentified outside of the auction process.

 

AtMarch 31, 2008, there was insufficient observable APS market informationavailable to determine the fair value of the Company’s investments in APS.Therefore, the Company estimated Level 3 fair values for these securities byincorporating assumptions that market participants would use in their estimatesof fair value. Despite the failed auctions, the Company’s APS continue to behighly rated by the rating agencies and furthermore the fund has announced aredemption of approximately two-thirds of the total outstanding APS shares at parplus accumulated but unpaid dividends, which is expected to take place on May27, 2008. Based upon this analysis, the Company adjusted the March 31,2008 carrying value of these securities downward to fair value by the amount of$93. The entire adjustment amount, which resulted from the limited liquidity ofthose investments, was considered temporary and was recorded in othercomprehensive income. The APS underlying this temporary adjustment amount wasclassified as current as of March 31, 2008 due to the pending redemptionand plan to utilize these funds in current operations.

 

Asfurther required by SFAS 157, provided below is a reconciliation of thebeginning and ending balances for each type of security valued using a Level 3valuation at March 31, 2008.

 
| ** **                                | ** ** | **Fair Value Measurement Using significant  Unobservable inputs (Level 3)** | ** ** |
|-------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------|------------|
| ** **                                | ** ** | **Action  Preferred  securities**                                                                              | ** ** |
| Beginning Balance                         |       | $                                                                                                              | —     |   |
| Total gains or losses realized/unrealized |       |                                                                                                           |       |
| included in earnings                      |       |                                                                                                           |       |
| included in comprehensive loss            |       | (93                                                                                                            | )          |
| Purchases, issuance and settlements       |       | 2,685                                                                                                          |       |
| Transfer in and / or out of level 3       |       |                                                                                                           |       |
| Ending Balance                            |       | $                                                                                                              | 2,592      |   |

 

**Inventory**

 
| ** **                                      | ** ** | **December 31,  2007** | ** ** | **March 31,  2008** | ** ** |
|-------------------------------------------------|------------|-----------------------------|------------|--------------------------|------------|
| Raw materials and sub assemblies                |       | $                           | 113        |                     | $          | 157 |   |
| Finished goods                                  |       | 717                         |       | 1,158                    |       |
|                                            |       | $                           | 830        |                     | $          | 1,315 |   |
| Less: reserve for excess and obsolete inventory |       | (207                        | )          | (432                     | )          |
| Total inventory, net                            |       | $                           | 623        |                     | $          | 883 |   |

 

6

----

 

**Prepaid and Other Current Assets**

 
| ** **                             | ** ** | **December 31,  2007** | ** ** | **March 31,  2008** | ** ** |
|----------------------------------------|------------|-----------------------------|------------|--------------------------|------------|
| Design licenses (short term)           |       | $                           | 729        |                     | $          | 562 |   |
| Interest receivable                    |       | 307                         |       | 223                      |       |
| Prepaid insurance                      |       | 189                         |       | 103                      |       |
| Prepaid rent                           |       | 33                          |       | 35                       |       |
| Other                                  |       | 68                          |       | 133                      |       |
| Total prepaid and other current assets |       | $                           | 1,326      |                     | $          | 1,056 |   |

** **

**Property and Equipment**

 
| ** **                        | ** ** | **December 31,  2007** | ** ** | **March 31,  2008** | ** ** |
|-----------------------------------|------------|-----------------------------|------------|--------------------------|------------|
| Computer equipment                |       | $                           | 144        |                     | $          | 144 |   |
| Purchased software                |       | 533                         |       | 541                      |       |
| Equipment                         |       | 207                         |       | 227                      |       |
| Furniture and fixtures            |       | 387                         |       | 387                      |       |
|                              |       | $                           | 1,271      |                     | $          | 1,299 |   |
| Less: Accumulated depreciation    |       | (714                        | )          | (766                     | )          |
| Total property and equipment, net |       | $                           | 557        |                     | $          | 533 |   |

 

Depreciationexpense was $41 and $52 for the three months ended March 31, 2007 and2008, respectively.

 

7

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**Other Assets**

 
| ** **                                                                                                                          | ** ** | **December 31,  2007** | ** ** | **March 31,  2008** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------|------------|--------------------------|------------|
| Deposits                                                                                                                            |       | $                           | 36         |                     | $          | 34 |   |
| Design licenses (long-term)                                                                                                         |       | 347                         |       | 299                      |       |
| Capitalized IP, net of accumulated  amortization of $12 and $17 as of December 31, 2007 and March 31,  2008, respectively |       | 52                          |       | 47                       |       |
| Total other assets                                                                                                                  |       | $                           | 435        |                     | $          | 380 |   |

 

Amortization expense associated with capitalizedapplication software was $0 for the three months ended March 31, 2007 and$5 for the period ended March 31, 2008.

** **

**Accrued Expenses**

 
| ** **                | ** ** | **December 31,  2007** | ** ** | **March 31,  2008** | ** ** |
|---------------------------|------------|-----------------------------|------------|--------------------------|------------|
|                      |       |                        |       |                     |       |
| Accrued rent              |       | $                           | 48         |                     | $          | 49 |   |
| Accrued compensation      |       | 702                         |       | 609                      |       |
| Accrued professional fees |       | 161                         |       | 137                      |       |
| Accrued license contracts |       | 389                         |       | 486                      |       |
| Other                     |       | 116                         |       | 75                       |       |
| Total accrued expenses    |       | $                           | 1,416      |                     | $          | 1,356 |   |

 

**Stockholders’ Equity**

** **

**Comprehensive Income**

 
| ** **                               | ** ** | **March 31,  2007** | ** ** | **March 31,  2008** | ** ** |
|------------------------------------------|------------|--------------------------|------------|--------------------------|------------|
| Net loss                                 |       | $                        | (5,447     | )                        | $          | (5,393 | ) |
| Unrealized loss on marketable securities |       | —                   |       | (93                      | )          |
| Comprehensive loss                       |       | $                        | (5,447     | )                        | $          | (5,486 | ) |

 

 

8

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**Item 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

*This Quarterly Report on Form 10-Q containsforward-looking statements, which are being provided under the “safe harbor”protection of the Private Securities Litigation Reform Act of 1995.Forward-looking statements are generally written in the future tense and/or arepreceded by words such as “will,” “may,” “should,” “could,” “expect,” “suggest,”“believe,” “anticipate,” “intend,” “plan,” or other similar words.Forward-looking statements include statements regarding the commercial successof our new products; the growth prospects of the semiconductor industry andprogrammable logic market, including the field programmable object array (“FPOA”)and field programmable gate array (“FPGA”) product sub-segments;and trends in our future sales, including our opportunities for growth bydisplacing FPGAs, application-specific integrated circuits (“ASICs”) and othersemiconductor alternatives.*

* *

*Forward-looking statements are not guarantees of futureperformance and involve risks and uncertainties. The forward-looking statementscontained in this report are based on information that is currently availableto us and expectations and assumptions that we deem reasonable at the time thestatements were made. We do not undertake any obligation to update anyforward-looking statements in this report or in any of our othercommunications, except as required by law. All such forward-looking statementsshould be read as of the time the statements were made and with the recognitionthat these forward-looking statements may not be complete or accurate at alater date.*

 

*Many factors may cause actual results to differ materiallyfrom those expressed or implied by the forward-looking statements contained inthis report. These factors include, but are not limited to, those risksdescribed in our Annual Report on Form 10-K filed on March 14, 2008.*

** **

**Business Overview**

 

Weare a fabless semiconductor company engaged in the development, marketing andselling of our high-performance, programmable platform chips and design toolsrequired to program our chips. We have established a sales network anddistribution channel, sold and shipped production field programmable objectarray, or FPOA, chips, and provided a second release of our design tools tocustomers.  Current activities are focused on the sale of current productsand developing enhanced and follow-on products.

 

Oursales cycle begins when a prospective customer decides to introduce a newproduct or change or upgrade an existing product.  Generally, theprospective customer will do a survey of new and existing technology todetermine if there are technological advances that it needs to integrate intoits product lines. At this point, if there appears to be a fit, the prospectivecustomer will engage with us to determine if our FPOA can solve its productneeds.  Typically, one of our field application engineers (FAEs) will workwith the prospective customer’s engineers to create an application assessmentthat documents the advantages of using a FPOA in the customer’s product. At this point, the prospective customer will make a technology decision. If the decision is to use a FPOA, the customer will buy a FPOA evaluationsystem and a FPOA design software tools license from us to develop a prototypeof its application on our FPOA.  Once the customer has developed andtested its FPOA design, the customer will develop prototypes of its newproduct.  The customer will then sell prototypes or limited productionversions of its new product to its customers.  Assuming the customerachieves market acceptance, it will ramp its design in production and startpurchasing production quantities of FPOAs. Our sales cycle can be as short assix months and as long as 18 months, except in the case of themilitary/aerospace markets, in which the development cycle can be three to fiveyears.

 

Certaincustomers may want to utilize our FPOA technology but need an accelerated timeto market or do not have the trained FPOA expertise or internal resources todevelop their products while achieving time-to-market objectives.  In those cases we will partner with one ofour certified design centers, or CDC, to develop a turnkey solution for thecustomer and charge the customer nonrecurring engineering fees, or NRE, for thedevelopment. Once the initial design and prototypes have been developed, weturn the design over to the customer for long-term manufacturing.  At that point, we sell the production chipsutilized in the design.

 

Ourproduction FPOA is currently in inventory and for sale at our warehouse, aworldwide electronics component distributor and an e-commercedistributor.  Our revenues in 2008 will be primarily from sales ofproduction chips, evaluation systems, tools, NRE and applicationlicenses.  As more of our customers move their products into production, alarger percentage of our revenues will be from the sale of FPOAs.

** **

**Financial Operations Overview**

 

Werecognize revenue from the sale of products or services in the following fourgeneral areas: (1) production chips, (2) evaluation boards andlicenses, (3) application intellectual property, or IP, and (4) NREand other. Based on the type of product or service delivered, revenues arerecognized in accordance with Staff Accounting Bulletin (“SAB”) 104, *Revenue Recognition* (“SAB 104”); EmergingIssues Task Force (“EITF”) Issue No. 00-21 *Revenue Arrangements with Multiple Deliverables*; or, if ourarrangements contain software that is more than incidental to the product inaccordance with Statement of Position (“SOP”) 97-2, *Software Revenue Recognition*, as amended (“SOP 97-2”).

*** ***

***Research and Development***

 

Researchand development expenses represent costs incurred for designing and engineeringour FPOA chip and developing design tools and applications to enable customersto more easily program our chip. Research and development expenses consistprimarily of salaries and related costs of our engineering organization; feespaid to third party consultants associated with chip and applicationdevelopment; an allocation of facilities; and depreciation expenses. We expenseall research and development costs related to the development of our FPOAchips. Development of certain design tools and application IP includes softwareavailable for resale. Such research and development expenses are required to beexpensed until the technological feasibility of the software is established. 

 

9

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Weexpect to incur significant additional research and development costs as wedevelop more chips using our FPOA technology.

*** ***

***Selling, General and AdministrativeExpenses***

 

Selling,general and administrative expenses consist primarily of salaries and relatedcosts of our sales and marketing and administrative staff, commissions paid todirect sales staff and manufacturing representatives, general corporateactivities and an allocation of facilities and depreciation expenses. Weanticipate that our selling, general and administrative costs will increase asa result of increasing our sales and marketing and administrativestaff and commissions to support sales of FPOA chips in worldwide marketsand to support our growth and operation as a public company.

** **

**Recently issued Accounting Pronouncements**

 

SeeNote 2 of Notes to Financial Statements included in Part I, Item 1 of thisQuarterly Report on Form 10-Q.

** **

**Critical Accounting Policies**

 

There were no changes in critical accounting policies in the threemonths ended March 31, 2008.

** **

**Results of Operations**

*** ***

***Three MonthsEnded March 31, 2007 and 2008***

* *

*Revenue.*For the three months ended March 31, 2008, we generated revenue of$226,000 compared to $92,000 for the same period last year. Revenue for thethree months ended March 31, 2008 was from the sale of production FPOAchips. Revenue for the three months ended March 31, 2007 was from the saleof sample FPOA chips, development systems, licensed software and NRE fees.

* *

*Cost of Sales.*Cost of sales for the three months ended March 31, 2008 and 2007 were $291,000and $69,000, respectively. Costs of sales in the first quarter of 2008 includeexternal chip costs and a noncash charge of $243,000 for excess and obsoleteinventory comprised primarily of tool licenses that will expire prior to beingsold or renewed. The forecasted demand for tool licenses declined due to thechange in our business strategy to focus on a few customers at a system level. Costsof sales for the first quarter of 2007 include external chip and evaluationsystem manufacturing costs and the cost of third party software licenses.

* *

*Gross Margin.*Grossmargin for the three months ended March 31, 2008 was (29%) compared to 25%for the three months ended March 31, 2007. The $243,000 non-cash excessand obsolete charge had a (108%) impact on the gross margin percentage for thethree months ended March 31, 2008.

* *

*Research and Development.* For the three months ended March 31,2008, research and development expenses increased $427,000 or 14% to $3,552,000from $3,125,000 for the three months ended March 31, 2007. The increase isthe result of employee related expenses of $320,000 driven by adding sevenadditional employees, consulting and contractor expense of $154,000,development tool expense of $119,000 and charges for application IP developmentof $277,000 because technological feasibility had not been established on thedevelopment projects.  The increase wasoffset by lower engineering material of $129,000, building rent of $216,000resulting from the downsizing of our Minneapolis facility and $98,000 in otherrelated charges. Research and development expenses and the mix of thoseexpenses are heavily dependent on where we are in the development cycle of newtechnology. The three months ended March 31, 2008 was a period where finaldesign was being completed just prior to tape-out which is very labor anddesign tool dependent. In contrast, the three months ended March 31, 2007was a period following tape-out of the current production chip and requiredmore engineering material to validate the chip.

* *

*Selling, General and Administrative. *For the three months ended March 31,2008, selling, general and administrative expenses decreased $369,000 or 15% to$2,093,000, compared to $2,462,000 for the three months 

 

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endedMarch 31, 2007. The decrease was primarily the result of reducedconsulting and contractor fees of $73,000, employee related expenses net ofcommissions of $22,000, franchise tax fees of $61,000, recruiting fees of$100,000 and infrastructure and other charges of $113,000.  Our selling, general and administrativeinfrastructure is in place and any change will be driven by the costsassociated with promoting and selling our products.

* *

*Other Income (Expense).*For the three months ended March 31,2008, other income increased by $200,000 or 171% to $317,000 compared to $117,000for the three months ended March 31, 2007. The increase was the result of$161,000 in additional interest income on higher investment balances and $39,000in a gain resulting from the sale and reinvestment of investments held.

** **

**Liquidity and Capital Resources**

 

Ouradministrative and silicon engineering infrastructures are substantially inplace. We will continue to invest in sales, marketing and applicationengineering personnel to increase our presence in the market and sell our FPOAtechnology. Our first production FPOA chip is available for sale. Goingforward, our results of operations will depend upon how long it takes and howsuccessful we are in achieving market acceptance of our FPOA technology and thecosts incurred to develop future generations of our FPOA chips.

 

Ourfuture capital requirements will depend on many factors, including our salesgrowth, market acceptance of our existing and new FPOA chips, the amount andtiming of our research and development expenditures, the timing of ourintroduction of new chips, the expansion of our sales and marketing efforts andworking capital needs. Our long-term financing requirements continue to bedriven by our ability to penetrate the market with our FPOA chip technology andgenerate significant revenue to cover operations and future productdevelopment. We believe we have sufficient cash and other resources to meetoperating needs through at least the first quarter of 2009.  If we are not able to generate significantrevenues, we may need to raise funds through the issuance of debt or equitysecurities, these securities may have rights senior to those currentlyassociated with our common stock, and they could contain covenants that wouldrestrict our operations. If we are unable to obtain additional financing orsuccessfully market our products on a timely basis, we would have to slow ourproduct development and marketing efforts and may be unable to continue ouroperations.

 

AtMarch 31, 2008, we held $2.6 million of investments comprised of auctionpreferred securities (APS). All of our APS are AAA rated by one of the majorcredit rating agencies.  Since mid-February 2008,we have experience failed auctions for our entire APS portfolio, resulting inour inability to sell these securities. A failed auction results in a lack of liquidity in the securities butdoes not signify a default by the issuer. Upon an auction failure, the interest rates on the APS do not reset at amarket rate but instead reset based on a formula contained in the APS, whichgenerally is higher than the current market rate.  If we need to access these funds, we will notbe able to do so without the possible loss of principal or until a futureauction for these investments is successful, they are redeemed by the issuer orthey mature. The issuer of our APS has announced a redemption of approximatelytwo-thirds of the total outstanding APS held by the issuer, which is expectedto take place on May 27, 2008.  Wedo not believe we need access to these funds for operational purposes for theforeseeable future.

 

Weclassified our APS as available-for-sale, which resulted in the $93,000adjustment to the carrying value of our APS to mark them to fair value, whichwas recorded in other comprehensive loss.  If uncertainties in the credit and capital markets continue, if thesemarkets further deteriorate, or if we no longer have the ability to hold theseinvestments, we may be required to recognize impairment charges or additionallosses on our APS or a loss on their disposition, any of which could have anadverse effect on our financial condition and results of operations.

 

***Net Cash Used inOperating Activities***

 

Netcash used in operating activities was $5,449,000 and $6,321,000 for the threemonths ended March 31, 2008 and 2007, respectively. Net cash used foroperating activities for the three months ended March 31, 2007 and 2008was to fund our on-going research and development activities and our selling,general and administrative costs.

 

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***Net Cash Provided(Used) by Investing Activities***

 

Net cash provided byinvesting activities for the three months ended March 31, 2008 was$4,134,000. Cash used in investing activities for the three months ended March 31,2007 was $69,000 for the purchase of capital equipment. Net cash provided byinvesting activities for the three months ended March 31, 2008 was fromthe proceeds from the sale of investments $4,162,000 offset by $28,000 used topurchase capital equipment.

 

***Net Cash Providedby Financing Activities***

 

Net cash provided byfinancing activities was $0 and $30,000 for the three months ended March 31,2008 and 2007, respectively. For the three months ended March 31, 2007,the cash provided by financing activities was from proceeds from the exerciseof options and warrants.

 

**Off-Balance Sheet Arrangements**

 

We do not have anyrelationships with unconsolidated entities or financial partnerships, such asentities often referred to as structured finance or special purpose entities,which would have been established for the purpose of facilitating off-balancesheet arrangements or other contractually narrow or limited purposes. Inaddition, we do not engage in trading activities involving non-exchange tradedcontracts. As such, we are not materially exposed to any financing, liquidity,market or credit risk that could arise if we had engaged in theserelationships.

 

**Item 3.Quantitative and Qualitative Disclosures about Market Risk**

 

Our exposure to marketrisk is confined to our cash equivalents and investments. We have invested inhigh-quality financial instruments, primarily money market funds, federalagency notes and asset-backed securities, which we believe are subject tolimited credit risks. Our investments are matched to forecasted cash needs suchthat investments will not be sold prior to maturity and expose us losses due tointerest rate changes.  Included in ourinvestments are APS. These auctions have historically provided a liquid marketfor these securities as investors could readily sell their investments atauction. With the liquidity issues experienced in global credit and capitalmarkets, the APS held by the Company have experienced failed auctions,beginning on February 19, 2008, as the amount of securities submitted forsale has exceeded the amount of purchase orders making the liquidity of thesecurities questionable. Despite the failed auctions, the Company’s APScontinue to be highly rated by the rating agencies and furthermore the fund hasannounced a redemption of approximately two-thirds of the total outstanding APSshares at par plus accumulated but unpaid dividends, which is expected to takeplace on May 27, 2008. We believe we will have full redemption of all APS atpar. Should we not be able to redeem all APS it could have a negative effect onour liquidity and operation.

 

**Item 4.Controls and Procedures**

 

*Evaluation of Disclosure Controlsand Procedures*

 

During the fiscal periodcovered by this report, the Company’s management, with the participation of theChief Executive Officer and Chief Financial Officer, completed an evaluation ofthe effectiveness of the design and operation of the Company’s disclosurecontrols and procedures, as defined in Rules 13a-15(e) and 15d-15(e) ofthe Securities Exchange Act of 1934 (“Exchange Act”). Based upon thisevaluation, the Company’s Chief Executive Officer and Chief Financial Officerhas concluded that, as of the end of the fiscal period covered by this report,the Company’s disclosure controls and procedures were effective to ensure thatinformation required to be disclosed by the Company in reports that it files orsubmits under the Exchange Act is recorded, processed, summarized and reportedwithin the time periods specified by the rules and forms of the Securitiesand Exchange Commission and that such information is accumulated andcommunicated to management, including the Chief Executive Officer and ChiefFinancial Officer, as appropriate, to allow timely decisions regarding requireddisclosures.

 

*Changes in Internal Control OverFinancial Reporting*

 

There were no changes inthe Company’s internal control over financial reporting during the fiscalquarter covered by this report that have materially affected, or are reasonablylikely to materially affect, the Company’s internal control over financialreporting.

 

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**Part II**

**OtherInformation**

 

**Item 1.  Legal Proceedings**

 

We are currently not a party to any legal proceedings.

 

**Item1A.   Risk Factors**

 

The semiconductor industry is characterized by rapidtechnological change, intense competition and cyclical market patterns whichcontribute to create factors that may affect our future operating results. Therisk factors are described in the section entitled “Risk Factors” beginning on page 4of our Annual Report on Form 10-K filed with the Securities and ExchangeCommission on March 14, 2008. Other information included in this QuarterlyReport on Form 10-Q also should be carefully considered. The risks anduncertainties described in our Annual Report are not the only risks the Companyfaces. Additional risks and uncertainties not presently known to the Company orthat the Company’s management currently deems immaterial also may impair itsbusiness operations. If any of the risks described were to occur, our business,financial condition, operating results and cash flows could be materiallyadversely affected.

 

The following updates the section entitled “RiskFactors” included in our Annual Report on Form 10-K for the year ended December 31,2007:

 

**As of March 31, 2008, we had $2.6 millioninvested in auction preferred securities (APS). Since mid-February 2008, the auctions for these APS have beenfailing, which adversely affects their liquidity.  In the three months ended March 31,2008, we classified our APS as available-for-sale, which resulted in a $93,000adjustment to the carrying value of our APS to mark them to fair value, with acorresponding $93,000 other comprehensive loss. If we must record impairment charges on the recorded value of these APS,recognize additional losses, or recognize a loss on the disposition of our APS,our financial condition would be adversely affected.  In addition, the lack of liquidity in the APScould adversely affect the availability of cash and thus adversely affect ouroperations.**

 

At March 31, 2008, we held $2.6 million ofinvestments comprised of APS.  Liquidityfor these securities has been provided by an auction process that resets theapplicable interest rate every 28 days. Since mid-February 2008, a substantial number of auctions havefailed.  In the case of a failed auction,with respect to the APS held by us, the APS is deemed not currentlyliquid.  In the case of funds invested byus in APS which are the subject of a failed auction, we may not be able toaccess the funds in the near term without a loss of principal unless a futureauction on these investments is successful or the issuer calls the securitypursuant to a mandatory tender or redemption prior to maturity.  We classified our APS as available-for-sale,which resulted in a $93,000 adjustment to the carrying value of our APS to markthem to fair value, with a corresponding $93,000 other comprehensive loss. Theissuer of our ARS has announced a redemption of approximately two-thirds of thetotal outstanding APS shares at par plus accumulated but unpaid dividends,which is expected to take place on May 27, 2008.  However, we cannot predict whether thisredemption will occur as announced by the issuer or at all or that any futureauctions related to our APS will be successful. If uncertainties in the credit and capital markets continue, if thesemarkets further deteriorate, or if we no longer have the ability to hold theseinvestments, we may be required to recognize impairment charges or additional losseson our APS or a loss on their disposition, any of which could have an adverseeffect on our financial condition and results of operations. We do not believewe need access to these funds for operational purposes for the foreseeablefuture.  However, the lack of liquidityin the APS could adversely affect the availability of cash and thus adverselyaffect our operations.

 

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**Item 2.Unregistered Sales of Equity Securities and Use of Proceeds**

 

None.

 

**Item3.    Defaults Upon Senior Securities**

 

None.

 

**Item4.    Submission of Matters to a Vote of Security Holders.**

 

None.

 

**Item5.    Other Information**

 

As reported in a Current Report on Form 8-K wefiled with the Securities and Exchange Commission on March 20, 2008, JamesW. Cruckshank, the Chief Financial Officer and Vice President, Administrationand Secretary for MathStar, Inc., resigned from these positions effective March 31,2008. Douglas M. Pihl became Chief Financial Officer in addition to his dutiesas Chief Executive Officer. John M. Jennings was promoted to Chief AccountingOfficer.

 

**Item6.    Exhibits**

 

The exhibits are described on the Exhibit Indexto this Quarterly Report on Form 10-Q.

 

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**SIGNATURES**

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized.

 
|                    | MathStar, Inc. |
|-------------------------|---------------------|
|                    | (Registrant)        |
|                    |                |
|                    |                |
| Date: May 10, 2008 | By:                 | /s/Douglas M. Pihl |
|                    |                | Douglas M. Pihl |
|                    |                | Chief Executive Officer and Chief Financial  Officer |

 

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**EXHIBITINDEX**

 
| **Exhibit No.** | ** ** | **Description of Exhibit**                                                                                                                                                                                                                                                                                                          | ** ** | ** ** |
|----------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|
| ** **           | ** ** | ** **                                                                                                                                                                                                                                                                                                                                    | ** ** | ** ** |
|  3.1            |       | Certificate of Incorporation of MathStar, Inc.  (incorporated by reference to Exhibit 3.1 to the Registration Statement  on Form S-1 filed by MathStar, Inc. with the Securities and  Exchange Commission (“SEC”) on August 3, 2005 (File No. 333-127164)  (the “Registration Statement”)). |       |       |
|                 |       |                                                                                                                                                                                                                                                                                                                                          |       |       |
|  3.2            |       | By-laws of MathStar, Inc. (incorporated by  reference to Exhibit 3.2 to the Registration Statement).                                                                                                                                                                                                                                |       |       |
|                 |       |                                                                                                                                                                                                                                                                                                                                          |       |       |
|  4.1            |       | Form of common stock certificate of  MathStar, Inc. (incorporated by reference to Exhibit 4.1 to the  Registration Statement).                                                                                                                                                                                                 |       |       |
|                 |       |                                                                                                                                                                                                                                                                                                                                          |       |       |
| 31.1                 |       | Certification of Chief Executive Officer pursuant to  Rules 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934  (filed herewith electronically).                                                                                                                                                                         |       |       |
|                 |       |                                                                                                                                                                                                                                                                                                                                          |       |       |
| 31.2                 |       | Certification of Chief Financial Officer pursuant to  Rules 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934  (filed herewith electronically).                                                                                                                                                                         |       |       |
|                 |       |                                                                                                                                                                                                                                                                                                                                          |       |       |
| 32.1                 |       | Section 1350 Certification of Chief Executive  Officer (filed herewith electronically).                                                                                                                                                                                                                                                  |       |       |
|                 |       |                                                                                                                                                                                                                                                                                                                                          |       |       |
| 32.2                 |       | Section 1350 Certification of Chief Financial  Officer (filed herewith electronically).                                                                                                                                                                                                                                                  |       |       |

 

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