MOSAID Reports Results for Second Quarter Fiscal 2012

On September 1, 2011, MOSAID announced that it had acquired Core Wireless S.a.r.l., a Luxembourg company, which owns approximately 2,000 wireless patents and patent applications originally filed by Nokia in 49 different countries, 1,215 of which had been declared to be essential to 2G, 3G, and 4G standards (the "Core Wireless Patents"). The average remaining life of the issued patents in the portfolio exceeds 10 years. In MOSAID's view, these acquired patents constitute one of the strongest standards-essential wireless portfolios available on the market and will drive significant revenue growth and significant value for Shareholders over the next decade. This acquisition firmly positions MOSAID to be a world leader in wireless patent licensing. This acquisition is made at a time when there is an increasing market awareness of the significant value of patents and their licensing. Based on its extensive experience in the industry, MOSAID conservatively estimates that revenues from licensing, enforcing and monetizing this wireless portfolio will surpass MOSAID's total revenue of approximately $1 billion since its formation in 1975. MOSAID bases this revenue estimate in part on the anticipated worldwide sales by unlicensed wireless device manufacturers of US$500 billion of mobile handsets and smartphones over the next five years, and an extrapolation of sales of such devices for the remainder of the lives of the patents. Based on quantity alone, MOSAID acquired in this portfolio more than twice as many wireless patents declared to be standards-essential than were contained in the Nortel patent portfolio in June 2011, when Nortel's portfolio of 6,000 patents and patent applications was sold for US$4.5 billion.

6. Share Capital

Authorized

Unlimited number of common shares.

During the quarter ended October 31, 2011 the Company paid dividends of $0.25 per common share totaling $3.0 million (October 31, 2010 - $0.25 per common share totaling $2.9 million).

7. Stock-based Compensation Plans

a) Employee and Director Stock Option Plan (ESOP)

Pursuant the Company's ESOP, the maximum number of common shares which may currently be issued upon the exercise of stock options granted under the ESOP cannot exceed 1,560,177, of which 738,242 are issued and outstanding at October 31, 2011. The exercise price is to be fixed by the Human Resources Committee of the Board of Directors, but shall not be lower than the closing price of the common shares on the TSX on the day prior to the date of grant. Options granted under the ESOP currently expire within a period of six years of granting, with vesting periods determined by the Human Resources Committee. All options outstanding at October 31, 2011 have been granted with equal annual vesting over a four year vesting period.

A summary of the status of the ESOP as of October 31, 2011 and October 31, 2010 and changes during the periods ending on those dates are presented below:


                                   October 31, 2011         October 31, 2010
----------------------------------------------------------------------------
                                           Weighted                 Weighted
                                            Average                  Average
                             Number of     Exercise   Number of     Exercise
                               Options        Price     Options        Price
----------------------------------------------------------------------------
Outstanding at start of                                                     
 the year                      742,992       $19.92     636,145       $17.64
Granted                              -            -     215,050       $26.42
Exercised                       (4,750)      $18.81     (77,040)      $19.42
Forfeited                            -            -           -            -
----------------------------------------------------------------------------
Outstanding at end of                                                       
 period                        738,242       $19.93     774,155       $19.91
----------------------------------------------------------------------------
Options exercisable at                                                      
 period-end                    379,372       $18.52     225,287       $17.91
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Period ended October 31, 2011

                                                                     Options
                                   Options Outstanding           Exercisable
----------------------------------------------------------------------------
                                    Weighted                                
                                     Average  Weighted              Weighted
                                   Remaining   Average               Average
Range of                                Number      Contractual    Exercise            Number    Exercise
  Exercise  Prices      Outstanding    Life  (Years)          Price  Exercisable          Price
----------------------------------------------------------------------------
$10.50  -  $11.66                171,889                    2.92        $11.65          123,480        $11.65
$14.87  -  $18.88                188,275                    4.07        $18.86            44,225        $18.81
$20.22  -  $21.61                153,028                    1.61        $20.93          150,778        $20.93
$24.50  -  $29.96                225,050                    4.79        $26.47            60,889        $26.26
----------------------------------------------------------------------------
$10.50  -  $29.96                738,242                    3.51        $19.93          379,372        $18.52
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
Period ended October 31, 2010
 

                                                                                                                                          Options
                                                                      Options  Outstanding                      Exercisable
----------------------------------------------------------------------------
                                                                        Weighted                                                                
                                                                          Average    Weighted                            Weighted
                                                                      Remaining      Average                              Average
Range  of                                Number      Contractual    Exercise            Number    Exercise
  Exercise  Prices      Outstanding    Life  (Years)          Price  Exercisable          Price
----------------------------------------------------------------------------
$10.50  -  $11.66                175,014                    3.92        $11.65            78,571        $11.65
$14.87  -  $18.88                196,150                    5.00        $18.83              3,750        $17.28
$20.22  -  $21.61                174,441                    2.53        $20.97          127,966        $21.02
$23.15  -  $26.49                228,550                    5.63        $26.34            15,000        $24.37
----------------------------------------------------------------------------
$10.50  -  $26.49                774,155                    4.39        $19.91          225,287        $17.91
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
The weighted average fair value of options granted during the period was calculated using the Black-Scholes option pricing model with the following assumptions:
 


Period  ended                                                        October  31,  2011      October  31,  2010  
----------------------------------------------------------------------------
Risk  free  interest  rate                                                          1.35%                            1.93%
Expected  life  in  years                                                              4.1                                4.8  
Expected  dividend  yield                                                          2.20%                            3.78%
Volatility                                                                                  37.72%                          37.17%

 
b) Restricted share unit plan (RSUs)
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