Business News

NeoMagic(R) Corporation Announces Wind-Down of Operations, Termination of Employees and a Cessation of Efforts to Raise Additional Capital Along with Other Matters

Thursday 25. September 2008 - NeoMagic Corporation (NASDAQ:NMGC) announced today a cessation of efforts to raise additional capital. As a result, NeoMagic is making efforts to wind-down its operations and has terminated employment for substantially all of its operational and engineering employees in all worldwide locations.

Beginning September 19, 2008, management, acting based upon a plan approved by the Board of Directors, eliminated 52 positions in the Company. At this time, the Company is unable to determine the amounts of one-time termination benefits, contract termination costs and other associated costs and expected cash flows associated with its wind-down activities.

The Company is taking action to maintain continuity of supply of its products to current customers. The Company also intends to take actions to realize the value from its remaining assets for the benefit of creditors. The Company does not currently anticipate that any proceeds will be available for distribution to its shareholders following payment of its liabilities.

On September 23, 2008, Brett Moyer, Carl Stork and David Tomasello, each independent directors of the Company, and in the case of Messrs. Moyer and Stork, members of the Company’s audit committee, notified the Company that they were resigning as directors of NeoMagic Corporation effective September 23, 2008.