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Posts Tagged ‘Zachary McAdoo’

MathStar Inc (OTC:MATH) has taken the first steps to liquidation, announcing that it is preparing to sell its Field Programmable Object Array (FPOA) technology and intellectual property.

We started following MATH in December last year when it was trading at $0.68 because it was a net cash stock with a substantial stockholder lobbying management to liquidate. The stock is up 29.4% to $0.88 yesterday, giving it a market capitalization of $8.1M. We estimate MATH’s liquidation value still to be around 80% higher at $14.8M or $1.57 per share. That value is predominantly cash and short term investments and doesn’t take into account any further value that the sale of the FPOA technology and intellectual property may yield. Two activist investors, Mr. Salvatore Muoio of S. Muoio & Co. and Mr. Zachary McAdoo of The Zanett Group, have been urging MATH’s board to consider liquidation rather than a merger. MATH’s board seems to agree, twice rejecting unsolicited merger proposals, suspending the company’s operations and exploring “strategic alternatives, which could include merger, acquisition, increasing operations in another structure or liquidation.”

The company’s announcement of the sale of the technology and intellectual property is as follows:

COLORADO SPRINGS, Colorado – January 26, 2009 – Core Capital’s Electronics and Semiconductor Group (ESG), an investment banking firm with an electronics and semiconductor focus, announces that its client, MathStar, Inc. (OTC: MATH), has prepared its technology for purchase. MathStar, a fabless semiconductor company specializing in high-performance programmable logic, is finalizing its Field Programmable Object Array (FPOA) technology and intellectual property package for sale. Arrangements have been prepared to assist prospective buyers to evaluate the opportunity, including a webinar, a private “data room” web portal, and access to key creators of the technology.

MathStar began its sales efforts in early October 2008, when it signed with the Core Capital Electronics and Semiconductor Group to complete a strategic sale of MathStar’s technology and intellectual property.

[Disclosure: We do not presently have a holding in MATH. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.]

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A new investor has filed a 13D notice in relation to MathStar Inc (OTC:MATH).

When we started following MATH, it had a market capitalization of just $6.2M based on its December 16, 2008 close of $0.68. We estimated its liquidating value to be more than 120% higher at $14.4M or $1.57 per share. The value in liquidation was predominantly cash and short term investments in the amount of $14.8M. The board had largely suspended the company’s operations and was in the process of evaluating its “strategic alternatives, which could include merger, acquisition, increasing operations in another structure or liquidation.”  MATH had twice rejected unsolicited merger proposals and Salvatore Muoio of S. Muoio & Co. LLC had been urging MATH’s board to consider liquidation rather than a merger.

Mr. Zachary McAdoo on behalf of The Zanett Group – the new investor entering the fray at MATH – filed its 13D notice on December 30, 2008 and attached the following letter to the company:

December 30, 2008

Douglas Pihl
Chairman of the Board
Mathstar, Inc.
19075 NW Tanabourne, Suite 200
Hillsboro, OR 97124

Dear Mr. Pihl,

I am writing to express my opinion as a shareholder that we strongly urge the
Board to liquidate Mathstar, Inc. rather than acquire another company.

Sincerely,

Zachary McAdoo, CFA

Short, sweet and to the point. Hopefully management can hear the drum beats calling for liquidation.

MATH is up around 18% since we started following it, but it’s still trading at half its liquidating value and a little more than half its net cash backing, so we’re maintaining our position.

[Disclosure: We do not presently have a holding in MATH. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.]

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