NeoMagic Corporation to Evaluate Strategic Alternatives and Temporarily Suspend Filing Financial Statements with the SEC

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NeoMagic’s strategic plan focuses on development of USB 3.0 based semiconductors, specifically UFD (flash drive) and SSD (solid state drive) controllers; will evaluate all strategic alternatives regarding the future of the company.

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The Company and its Board of Directors believe that these products have excellent growth potential.

NeoMagic Corporation (NMGC.PK), the pioneer of embedded memory and logic technology, announced today that it will evaluate all strategic alternatives regarding the future of the Company. It had previously announced a new plan for the Company’s future growth, which it will continue to review and evaluate. The strategic plan focuses on development of a new suite of products, specifically for the USB 3.0 markets.

NeoMagic’s strategic plan focuses on development of USB 3.0 based semiconductors, specifically UFD (flash drive) and SSD (solid state drive) controllers. The Company and its Board of Directors believe that these products have excellent growth potential. The overall market for USB flash drives continues to grow rapidly in SuperSpeed segments. According to In-Stat, adoption of SuperSpeed USB peripherals in significant numbers will begin in 2012 when it is widely integrated into core logic of PCs. In-Stat predicts that SuperSpeed UFDs will grow from 30 million units in 2011 to 225 million units in 2014.

The Company continues to focus on raising funds to develop these new products and on exploring new strategic relationships.

The Company issued an 8-K today stating that it will temporarily suspend filing of its financial results as required under the Securities Exchange Act of 1934, as amended. Currently, the Company has chosen to use its limited resources for the continued operations of the Company and fundraising efforts rather than the expenses required to have its independent registered public accounting firm audit its financial statements in order to file financial statements with the Securities and Exchange Commission. The Company plans to continue to provide updates during this period.

The Company recently provided an update on its current performance, which it is reiterating today:
NeoMagic’s gross product revenue increased between fourth quarter fiscal year 2011, ended January 30th and first quarter fiscal year 2012, ending May 1st. The Company expects revenue to continue to increase between first quarter fiscal year 2012 and the second quarter of the same fiscal year, as full shipments to its primary customer resumed in April 2011.

About NeoMagic
NeoMagic designs and delivers consumer electronic device solutions with semiconductors and software offering exciting new product functionality for Video, TV, Imaging, Graphics, and Audio. We provide low cost, innovative multimedia chip technology for tomorrow's entertainment and communication needs. Our capabilities give our partners and their customers’ high quality answers to excite and enhance the consumer's lifestyle. For more information, visit http://www.neomagic.com.

Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve significant risks and uncertainties. Such statements may include, without limitation, statements with respect to the Company’s plans, objectives, projections, expectations and intentions and other statements identified by words such as “projects,” “may,” “could,” “would,” “should,” “believes,” “expects,” “anticipates,” “estimates,”“intends,” “plans,” or similar expressions. These statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties, including those detailed from time-to-time in the Company’s filings with the Securities and Exchange Commission, including our Form 10-K for the year ended January 31, 2010, filed on May 17, 2010. Actual results, including, without limitation, the Company’s ability to increase revenue and successfully raise capital, may differ significantly from those set forth in the forward-looking statements. Forward-looking statements involve risks and uncertainties that are subject to change based on various factors (many of which are beyond the Company’s control). For example, statements about our expectations in connection with financings are subject to a variety of uncertainties and are subject to change as a result of changes in circumstances that could make it difficult for us to consummate such financings on terms acceptable to the Company, or at all. The Company undertakes no obligation to update any forward-looking statements, except as provided for by law.

NeoMagic is a registered trademark of NeoMagic Corporation and MiMagic is trademarked. All other trademarks are the property of their respective owners. NeoMagic disclaims any proprietary interest in the marks and names of others.

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Rod Peterson
NeoMagic
(408) 428-9725
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