San Diego Union Tribune

San Diego Union Tribune
Business Extra
November 5, 1996

Patriot Scientific of Poway to buy Metacomp

by Bruce V. Bigelow

Patriot Scientific Corp. of Poway disclosed plans yesterday to acquire at least 90 percent of Metacomp Inc. of Rancho Bernardo in a stock deal valued at about $2.5 million.

The announcement barely moved the price of shares in Patriot, a development-stage company with eight full-time and eight part-time employees. The stock rose 6.25 cents to close at $1.9375 in relatively light Nasdaq trading.

Metacomp Inc., a closely held company with 16 employees, makes circuit boards used in high-performance digital telecommunications. The company emerged from Chapter 11 bankruptcy reorganization July 19.

"We spent five years surviving and paying back our debt to society," said Metacomp President Norm Dawson, referring to Metacomp's reorganization. "We spent extra money doing research and development so our products would be competitive with the marketplace."

Metacomp sells ISDN interface cards and related telecommunications products to such customers as Motorola, Hewlett Packard, AT&T, E-Systems, Northern Telecom and GE Capital Spacenet. Founded in 1978, it reported revenues of more than $2 million for the fiscal year ended July 31.

The privately held company has 103 shareholders, who will receive Patriot shares in a one-for-one stock swap expected to close in December.

Patriot has yet to show a profit, although it is free of debt. Since its initial public offering in 1989, the company has financed its operations through additional stock offerings and now has about 26 million shares outstanding.

Patriot's communications technology, which is based on its proprietary ShBoom microprocessor, fits "hand-in-glove with Metacomp's communications products," said Michael A. Carenzo, Patriot's president and chief executive.

"It is a nice, synergistic fit," said Carenzo.

He noted that Metacomp supplies its products chiefly to original equipment manufacturers and value-added resellers, while Patriot hopes to sell its new CyberShark digital modem as a consumer product.

"It give us an entry into the market," Carenzo said. "It certainly gives access to the communications market that we didn't have before."

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