UNITED STATES SECURITIES AND EXCHANGE COMMISSION ~~Washington, D.C. 20549~~

Washington, D.C. 20549

FORM 10-Q

/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended September 30, 2004

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from to

~~For~~Commission File ~~the~~No. ~~Quarterly Period Ended December 31, 2001~~ 000-24999

OPTA OR CORPORATION

~~/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15~~(d)Exact OFname ~~THE~~of ~~SECURITIES~~registrant ~~EXCHANGE~~as specified ~~ACT~~in OFits ~~1934~~charter)

For the transition period from to

Delaware		52-1947160
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

1350 Bayshore Highway, Suite 740, Burlingame, CA 94010
(Address of principal executive offices, zip code)

Registrant’s telephone number, including area code: (650) 579-3610

Indicate ~~Commission~~by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such period that the registrant was required to file ~~number~~such ~~000-24999~~ reports), and (2) has been subject to such filing requirements for the past 90 days. (1) Yes o No ý (2) Yes ý No o

~~LOTUS~~Indicate ~~PACIFIC,~~by ~~INC (Exact~~check ~~name~~mark ofwhether the registrant is an accelerated filer (as ~~specified~~defined in ~~its~~Exchange ~~charter)~~Act Rule 12b-2). Yes o No ý

~~Delaware~~The ~~(State~~number of ~~incorporation)~~shares ~~52-1947160~~of ~~(IRS~~Common Stock ~~Employer~~outstanding ~~Identification~~as Noof March 31, 2005 was 50,037,538.)

200 Centennial Avenue, Suite 201 Piscataway, New Jersey 08854 (Address of principal executive offices, zip code)

Registrant's telephone number, including area code: (732) 885-0100

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /x/ No / /

As of February 12, 2002, there were 64,232,125 shares of common stock outstanding.

FORM 10-Q INDEX

		Page
PART I.	FINANCIAL INFORMATION
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of September 30, 2004 (unaudited) and June 30, 2004
	Condensed Consolidated Balance Sheets as of December 31, 2001 (unaudited) and June 30, 2001	3
	Condensed Consolidated Statements of Operations (unaudited) for the Three Months Ended September 30, 2004 and 2003
	Condensed Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended December 31, 2001 and 2000	4
	Condensed Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended September 30, 2004 and 2003
	Condensed Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended December 31, 2001 and 2000	5
	Notes to Condensed Consolidated Financial Statements (unaudited)
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosure About Market Risk
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	17
Item 4.	Controls and Procedures
PART II. OTHER INFORMATION
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	18
Item 5.	Other Information	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.	Exhibits and Reports on Form 8-K	18
Item 3.	Defaults Upon Senior Securities
SIGNATURE		19
Item 4.	Submission of Matters to a Vote of Security Holders
Item 5.	Other Information
Item 6.	Exhibits
SIGNATURE

~~PART I FINANCIAL INFORMATION~~ 2

~~Item~~PART ~~1—Financial~~I. FINANCIAL ~~Statements:~~ INFORMATION

~~LOTUS~~Item ~~PACIFIC,~~1 ~~INC CONDENSED~~- ~~CONSOLIDATED~~Financial ~~BALANCE SHEETS (in thousands)~~ Statements:

				December 31, 2001			June 30, 2001
				(Unaudited)
ASSETS
Current assets:
	Cash and cash equivalents			$	21,947		$	24,994
	Short-term investments				8,631			4,237
	Accounts receivable, net				2,712			12,772
	Accounts receivable from related parties, net				6,855			14,822
	Inventories				1,356			19,659
	Prepaid expenses				581			897
	Deferred tax asset				2,515			2,742
	Other				29			152
		Total current assets			44,626			80,275
	Property and equipment, net				1,689			3,598
	Restricted cash				5,500			5,640
	Notes receivable				6,926			4,734
	Goodwill, net				47,574			43,031
	Investment in unconsolidated subsidiary				2,398			2,469
	Other assets				—			211
	Total assets			$	108,713		$	139,958
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Line of credit			$	—		$	3,000
	Accounts payable and accrued expenses				6,263			29,571
	Accounts payable to related parties				7,735			25,950
	Income taxes payable				219			445
			Total current liabilities		14,217			58,966
	Minority interest in subsidiaries				10,862			18,454
	Stockholders' equity:
		Common stock			64			64
		Preferred stock, series A			—			—
		Additional paid-in capital			183,012			185,273
		Deferred stock compensation			(1,467	)		(2,720	)
		Treasury stock			(7,057	)		(7,057	)
		Accumulated deficit			(90,918	)		(113,022	)
			Total stockholders' equity		83,634			62,538
	Total liabilities and stockholders'equity			$	108,713		$	139,958

OPTA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

	September 30, 2004			June 30, 2004
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	3,494		$	3,037
Short-term investments	18,448			17,643
Accounts receivable, net	28,964			25,528
Inventories, net	15,090			18,004
Income tax receivable	909			909
Prepaid expenses and other current assets	1,529			2,270
Total current assets	68,434			67,391

Property and equipment, net	1,075			1,083
Tradename	2,420			2,420
Other assets	208			226
Total assets	$	72,137		$	71,120

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Line of credit	$	20,434		$	15,833
Notes and interest payable to related parties	10,720			10,795
Accounts payable and accrued expenses	16,888			14,262
Accounts payable to related parties	—			170
Accrued restructuring charges	540			796
Warranty reserve	490			490
Total current liabilities	49,072			42,346

Non-controlling interest in subsidiaries	6,495			8,425

Stockholders’ equity:
Preferred stock, Series A $.001 par value, 100 authorized, 4 shares issued and outstanding at September 30, 2004 and June 30, 2004	—			—
Common stock $.001par value, 100,000 authorized, 64,241 shares issued and 50,037 outstanding at September 30, 2004 and 64,241 shares issued and 50,724 outstanding at June 30, 2004	64			64
Additional paid-in capital	128,442			128,431
Less: treasury stock at cost, 14,204 shares at September 30, 2004 and 13,517 at June 30, 2004	(2,478		)	(2,410		)
Accumulated deficit	(109,395		)	(105,611		)
Accumulated other comprehensive loss	(63		)	(125		)
Total stockholders’ equity	16,570			20,349
Total liabilities and stockholders’equity	$	72,137		$	71,120

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

OPTA CORPORATION ~~LOTUS PACIFIC, INC~~ CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ~~(in thousands, except per share amounts)~~

		Three Months Ended December 31,						Six Months Ended December 31,
		2001			2000			2001			2000
Sales		$	32,804		$	105,644		$	69,475		$	205,551
Cost of sales			29,349			93,857			63,883			175,191
Gross profit			3,455			11,787			5,592			30,360
Operating expenses:
	Selling, general and administrative		5,648			7,104			12,924			14,742
	Research and development		3,318			3,936			7,840			12,281
	Total operating expenses		8,966			11,040			20,764			27,023
Income (loss) from operations			(5,511	)		747			(15,172	)		3,337
Other income (expenses):
	Gain on sale of subsidiary		32,299			—			32,299			—
	Interest income, net		66			508			356			854
	Minority interest in (income) loss of unconsolidated subsidiaries		976			408			2,785			(554	)
	Equity in loss of unconsolidated subsidiaries		(34	)		(1,021	)		(71	)		(1,079	)
	Other		(113	)		101			(139	)		131
Income before income taxes			27,683			743			20,058			2,689
Provision (benefit) for income taxes			(290	)		2,880			(2,046	)		7,523
Net income (loss)		$	27,973		$	(2,137	)	$	22,104		$	(4,834	)
Net income (loss) per share — basic and diluted		$	0.44		$	(0.03	)	$	0.34		$	(0.07	)
Common shares outstanding — basic and diluted			64,232			64,134			64,232			64,134

(in thousands, except per share amounts)

	Three Months Ended September 30,
	2004			2003

Net revenues:
Products	$	38,769		$	20,764
Products – related party	—			56
Total net revenues	38,769			20,820

Cost of net revenues:
Products	40,283			19,520
Products – related party	—			38
Total cost of net revenues	40,283			19,558

Gross profit (loss)	(1,514		)	1,262

Operating expenses:
Selling, general and administrative	1,683			3,011
Research and development	284			1,277
Impairment of assets	—			33
Total operating expenses	1,967			4,321

Loss from operations	(3,481		)	(3,059		)

Other income (expense):
Interest income	105			108
Interest expense	(646		)	(170		)
Equity in loss of joint venture	—			(168		)
Other	863			181
Total other income (expense), net	322			(49		)
Loss before income taxes and non-controlling interest	(3,159		)	(3,108		)
Provision (benefit) for income taxes	—			5
Loss before non-controlling interest	(3,159		)	(3,113		)

Non-controlling interest in (income) loss of consolidated Subsidiaries	(625		)	409

Net loss	$	(3,784	)	$	(2,704	)

Net loss per common share – basic and diluted:	$	(0.07	)	$	(0.05	)
Weighted average common shares outstanding – basic and Diluted	50,500			59,703

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

OPTA CORPORATION LOTUS PACIFIC, INC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)

			Six Months Ended December 31,
			2001			2000
Operating activities
Net income (loss)			$	22,104		$	(4,834	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
	Gain on sale of subsidiary			(32,299	)		—
	Equity in loss of unconsolidated subsidiaries			71			1,079
	Depreciation and amortization			5,006			4,393
	Amortization of deferred stock compensation			989			6,674
	Minority interest in subsidiary			(2,785	)		554
	Changes in operating assets and liabilities:
		Accounts receivable		(3,389	)		(35,943	)
		Accounts receivable from related party		7,967			(16,164	)
		Inventory		8,500			(6,959	)
		Prepaid expenses		76			7
		Other current assets		123			90
		Restricted cash		—			300
		Other assets		(120	)		572
		Deferred tax asset		227			(1,313	)
		Accounts payable and accrued expenses		6,235			8,666
		Accounts payable to related parties		(18,215	)		14,890
		Income taxes payable		(226	)		754
Net cash used in operating activities				(5,736	)		(27,234	)
Investing activities
Purchases of property and equipment				(650	)		(1,442	)
Proceeds from sale of subsidiary, net of cash sold				8,233			—
Purchases of short term investments				(4,394	)		—
Proceeds from sale of subsidiary preferred stock				—			13,258
Net cash provided by investing activities				3,189			11,816
Financing activities
Investment deposits				—			32
Proceeds from loans receivable				—			3,560
Proceeds from line of credit				—			1,722
Payments on line of credit				(500	)		—
Repayments of notes payable				—			(878	)
Net cash (used in) provided by financing activities				(500	)		4,436
Net decrease in cash and cash equivalents				(3,047	)		(10,982	)
Cash and cash equivalents at beginning of period				24,994			27,942
Cash and cash equivalents at end of period			$	21,947		$	16,960

(in thousands)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

	Three Months Ended September 30,
	2004			2003

Operating activities
Net loss	$	(3,784	)	$	(2,704	)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on treasury stock obtained during settlement	(842		)	(179		)
Equity in loss of joint venture	—			168
Depreciation and amortization	146			58
Stock compensation expense (reversal) recorded by subsidiary	—			(55		)
Impairment of assets	—			33
Non-controlling interest in income (loss) subsidiary	625			(409		)
Non-cash recovery of bad debt	(1,946		)	—
Changes in operating assets and liabilities:
Accounts receivable, net	(3,436		)	(1,156		)
Accounts receivable from related parties, net	—			(59		)
Inventories, net	2,914			2,769
Prepaid expenses and other current assets	741			(3,276		)
Income tax receivable	—			2,219
Other assets	18			(75		)
Accrued restructuring charges	(256		)	—
Accounts payable and accrued expenses	2,626			(546		)
Accounts payable to related parties	—			17
Interest payable to related parties	(75		)	95
Warranty reserve	—			(84		)
Cash used by operating activities	(3,269		)	(3,184		)

Investing activities
Purchases of property and equipment	(168		)	(209		)
Proceeds from sale of property and equipment	30			—
Payments received on notes receivable from related parties	—			400
Proceeds from investment deposit	—			1,500
Purchase of short-term investments	(718		)	(6,037		)
Cash used by investing activities	(856		)	(4,346		)

Financing activities
Proceeds from advances on line of credit	39,635			11,119
Payments on line of credit	(35,034		)	(9,531		)
Purchase of treasury stock by subsidiary	(19		)	—
Proceeds from issuance of stock by subsidiary	—			1
Repayments of notes payable	—			(1,272		)
Cash provided by financing activities	4,582			317
Net increase (decrease) in cash and cash equivalents	457			(7,213		)
Cash and cash equivalents at beginning of period	3,037			12,044
Cash and cash equivalents at end of period	$	3,494		$	4,831

5The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~LOTUS PACIFIC, INC NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS December 31, 2001~~ 5

~~Basis~~OPTA ofCORPORATION ~~Presentation~~ AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~The~~Note ~~accompanying~~1 ~~unaudited~~- ~~condensed~~Basis consolidated financial statements included herein have been prepared by Lotus Pacific, Inc. (Lotus or Company) in accordance with generally accepted accounting principles and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures in these financial statements are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended June 30, 2001. Presentation

InThe accompanying unaudited condensed consolidated financial statements have been prepared by Opta Corporation (formerly Lotus Pacific, Inc.) (“Opta” or “Company”) in accordance with generally accepted accounting principles and pursuant to the ~~opinion~~rules and regulations of ~~management~~the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements, prepared in accordance with accounting principles generally accepted in the ~~unaudited~~United States, have been condensed or omitted pursuant to such rules and regulations. However, we believe the disclosures in these financial statements are adequate to ensure the information presented is not misleading. The unaudited condensed consolidated financial statements ~~contain~~should ~~all~~be ~~adjustments~~read ~~(consisting~~in ~~only~~conjunction ofwith ~~normal~~the consolidated ~~recurring~~financial ~~adjustments)~~statements ~~necessary~~and ~~for~~notes athereto ~~fair~~included in our Annual ~~presentation~~Report ofon Form 10-K for the ~~Company's~~year ~~financial~~ended ~~position~~June 30, ~~results~~2004, ofwhich ~~operations~~was ~~and~~filed ~~cash~~with the ~~flows.~~SEC on February 18, 2005.

~~Current and~~In ~~future~~the ~~financial~~opinion ~~statements~~of ~~may~~management, ~~not be directly comparable to~~ the ~~Company's~~unaudited ~~historical~~condensed consolidated financial statements. ~~The~~contain ~~results~~all ofadjustments, ~~operations~~consisting ~~for~~only ~~the~~of ~~three and six months ended~~normal ~~December 31,~~recurring ~~2001~~adjustments, ~~are~~necessary ~~not~~for ~~necessarily~~a ~~indicative~~fair presentation of ~~the~~our financial position, results of operations, ~~which~~and ~~may~~cash ~~be reported for any other interim period or for the fiscal year ending June 30, 2002~~flows.

~~Effective December 11,~~The ~~2001,~~results ~~Acumen~~of ~~Technology, Inc.~~operations ~~(Acumen),~~for athe ~~Delaware~~three ~~corporation~~months ~~and~~ended ~~wholly~~September 30, 2004 ~~owned~~are ~~subsidiary~~not necessarily indicative of the ~~Company,~~results ~~merged~~of ~~into~~operations ~~Lotus.~~that Asmay abe reported ~~result~~for ofany other interim period or for the entire year ending June 30, ~~merger~~2005. The balance sheet at June 30, 2004 has been derived from the ~~Company~~audited ~~assumed~~financial statements at that date, but does not include all of the ~~rights~~information and ~~obligations~~footnotes ofrequired ~~Acumen~~by ~~and~~accounting principles ~~acquired~~generally accepted in the ~~assets~~United ofStates ~~Acumen~~for ~~which~~complete ~~include~~financial statements, ~~without~~as ~~limitation,~~permitted ~~shares~~by ofSEC ~~stock~~rules ofand ~~Correlant~~regulations ~~Communications, Inc~~for interim reporting. Certain prior period amounts ~~(Correlant)~~have ~~and~~been ~~Arescom, Inc.~~reclassified ~~(Arescom)~~to conform to the current period presentation. Such reclassifications had no effect on the results of operations.

~~Effective~~The ~~December 18,~~accompanying ~~2001~~condensed ~~Lotus~~consolidated ~~sold~~financial astatements ~~major~~include ~~portion~~the accounts of ~~its~~Opta ~~investment~~and inits ~~and~~subsidiaries. All significant ~~cash~~intercompany ~~advances~~transactions toand ~~Arescom~~balances ~~for~~have ~~$10,000,000~~been eliminated. Subsidiaries in ~~cash,~~which aOpta ~~promissory~~owns ~~note~~at ~~for~~least ~~$2,192,000~~50% are ~~and 11~~consolidated,~~048 shares~~ ofexcept ~~subordinated~~for ~~preferred~~investments ~~stock~~where ofcontrol ~~Arescom.~~is ~~The~~deemed ~~sale~~to ~~represented~~be temporary, ~~approximately~~in ~~70.0%~~which ofcase the ~~outstanding~~equity ~~shares~~method of ~~Arescom.~~accounting ~~Lotus~~is ~~retains~~used. Equity ~~4,000,000 million~~investments ~~shares~~in ofwhich ~~common~~Opta ~~stock~~owns ofat ~~Arescom,~~least ~~representing approximately 11.0~~20% of the ~~outstanding~~voting ~~shares~~securities ofare ~~Arescom~~accounted ~~with~~for using the ~~balance~~equity ~~owned~~method, except byfor ~~outside~~investments ~~investors.~~that ~~Subsequent~~the toCompany ~~December 18,~~is ~~2001,~~not ~~the~~able ~~Company~~to ~~accounts~~exercise ~~for its~~significant ~~investment~~influence over the investee, in ~~Arescom~~which ~~under~~case, the cost method ~~and~~of asaccounting ~~such~~is ~~the~~used. The ~~accounts,~~cost ~~results~~method of ~~operations~~accounting ~~and~~is ~~cash~~used ~~flows~~for ofall investments ~~Arescom~~in ~~are~~which ~~not~~Opta ~~included~~owns ~~with~~less ~~the~~than ~~Company's financial statements~~20%.

~~The accompanying~~As ~~financial~~of ~~statements~~September 30, ~~include~~2004, ~~the~~our ~~accounts~~only ofsignificant ~~Lotus,~~operating subsidiary ~~its~~was ~~90.5%~~Opta ~~owned subsidiary~~Systems, ~~Lotus~~LLC ~~World, Inc.,~~a Delaware LLC (~~Lotus~~“Opta ~~World)~~Systems” ~~its~~or 66“GoVideo”).5% GoVideo, ~~owned~~established ~~subsidiary~~in ~~Correlant~~1984, designs and manufactures ~~its~~product lines in the consumer electronics industry, including ~~81.0%~~digital ~~owned~~video ~~subsidiary~~disc ~~Arescom~~(“DVD”) ~~until~~players, ~~December 18~~portable DVDs, ~~2001~~DVD-Video ~~when~~Cassette ~~the~~Recorder (“VCR”) ~~ownership~~Combos, ~~decreased~~Dual-Deck toVCRs, ~~11.0%. The~~DVD ~~portions~~Recorders, ofDVD ~~Correlant~~Recorder + VCRs, and ~~Lotus~~LCD TVs. ~~World~~GoVideo ~~not~~holds ~~owned~~various bypatents ~~the~~covering ~~Company~~Dual-Deck attechnology as well as ~~December 31,~~other ~~2001~~electronics ~~appear~~products and systems. GoVideo was purchased as ~~minority~~part ~~interest~~of the Company’s strategic direction of investing in ~~subsidiaries~~companies onwhich will benefit from the ~~balance~~Company’s ~~sheet.~~strategic ~~All~~relationships ~~intercompany~~with ~~transactions~~Asian ~~have~~consumer ~~been~~electronic manufacturers. We ~~eliminated~~owned 100% of GoVideo during ~~the~~all ~~consolidation.~~periods presented.

~~Reclassifications~~As of September 30, 2004, we had one significant non-operating subsidiary, Correlant Communications, Inc. (formerly TurboNet Communications, Inc.) (“Correlant”). In March 1999, the Company acquired 94.5% of the issued and ~~Adjustments~~ outstanding common shares of Correlant representing an 81% ownership interest. Correlant designed, developed and marketed telecommunications products to cable operators, network service providers, and communications network users in the United States and Asian countries. As a result of declining margins and demand for its products, Correlant’s Board of Directors approved the wind down and cessation of Correlant’s historical operations in the cable modem business effective December 23, 2003. Correlant, together with Opta, will continue to explore either acquiring or investing in other businesses to utilize its assets. As of September 30, 2004, we owned 73.6% of Correlant’s outstanding common stock, which represented a 62.5% ownership interest.

~~Certain prior period amounts have been reclassified to conform to the current period presentation.~~ 6

~~Previously, minority~~Note ~~interest~~2 ~~related~~– toDelays existing preferred stock when Correlant was acquired, and the related goodwill, was not recorded by Lotus. During the current period, minority interest and corresponding goodwill related to this preferred stock was recorded in ~~the amount of $8,450,000. For~~ Reporting

6This Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 is being filed after the required due date as a result of restating financial information included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2002 as previously filed with the Securities and Exchange Commission (“SEC”) on April 16, 2004. As a result of the restatement, our Form 10-K for the fiscal years ended June 30, 2003 and June 30, 2004, which were filed August 24, 2004 and February 18, 2005, respectively, were also filed after the due date.

~~the~~Note ~~period~~3 ~~ending~~– ~~December 31,~~Liquidity ~~2001 amortization expense of $1,000,000 was included in selling, general~~ and ~~administrative~~Going ~~expense in conjunction with this write-up of goodwill.~~ Concern

~~Comprehensive~~The ~~Income~~Company incurred ~~(Loss)~~ a net loss of $3,784,000 during the three months ended September 30, 2004. Additionally, cash used by operating activities was $3,269,000 during the three months ended September 30, 2004. At September 30, 2004, the Company had an accumulated deficit of $109,395,000 and the Company’s sole operating subsidiary, GoVideo, was, and still is, in default under certain debt covenant provisions of its line of credit. GoVideo is currently under a forbearance agreement with its lender which commenced March 1, 2005 and is due to expire on August 31, 2005. See note 11.

~~Statement~~Additionally, in ofJune 2003 ~~Financial~~GoVideo ~~Accounting~~borrowed ~~Standards~~substantial funds from T.C.L. Industries Holdings (~~SFAS~~H.K.) ~~130,~~Limited ~~Reporting~~(“TCL ~~Comprehensive Income~~Industries”), ~~requires~~the ~~that~~majority ~~all components~~stockholder of ~~comprehensive income (loss)~~Opta, and ~~including~~Asia ~~net~~Focus ~~income~~Industrial ~~(loss)~~Ltd., bean ~~reported~~entity inaffiliated ~~the~~with ~~financial~~TCL ~~statements~~Industries. The inpurpose of the ~~period~~loans inwas ~~which~~to ~~they~~fund inventory ~~are~~purchases ~~recognized~~and operating expenses. Both ~~Comprehensive~~loans, ~~income~~which ~~(loss)~~are issubordinate ~~defined~~to ~~as the~~GoVideo’s ~~change~~line inof ~~equity~~credit, became due during afiscal ~~period~~year ~~from~~2004. GoVideo ~~transactions~~was unable ~~and~~to ~~other~~pay ~~events~~off the loans and ~~circumstances~~extended ~~from~~the ~~non-owner~~due ~~sources.~~date ~~Net~~three ~~income~~times. The ~~(loss)~~current ~~and~~due ~~other~~date ~~comprehensive~~for ~~income~~the ~~(loss),~~loan ~~including~~with ~~foreign~~TCL ~~currency~~Industries ~~translation~~is ~~adjustments~~July 24, ~~and~~2005. The current ~~unrealized~~due ~~gains~~date ~~and~~for ~~losses~~the onloan ~~investments,~~with ~~shall~~Asia beFocus ~~reported~~Industrial Ltd. is August 11, 2005. Both ~~net~~loans are collateralized by 100% of ~~their~~the ~~related~~Common ~~tax~~and ~~effect,~~Preferred toSeries ~~arrive~~D atstock ~~comprehensive~~of ~~income~~Correlant ~~(loss)~~Communications owned by Opta. There ~~The~~can ~~Company~~be ~~does~~no ~~not~~assurance ~~have~~that ~~any~~GoVideo ~~material~~will ~~other~~be ~~comprehensive~~able ~~income~~to ~~(loss)~~pay ~~items~~the atloans ~~December 31,~~when ~~2001~~they ~~and~~mature ~~June 30,~~or ~~2001.~~that another extension can be successfully negotiated.

~~Basic~~During fiscal 2004, Opta entered into a financing agreement with TCL Industries. Opta ultimately loaned the funds to GoVideo to fund inventory purchases and ~~Diluted~~operating ~~Net~~expenses. The ~~Income~~financing ~~(Loss)~~agreement ~~Per~~has ~~Share~~ been extended three times with a current maturity date of July 21, 2005. The loan is collateralized by 100% of the Common and Preferred Series D stock of Correlant Communications owned by Opta.

~~Basic~~The ~~net~~above matters ~~income~~raise ~~(loss)~~substantial ~~per~~doubt ~~share~~about isthe ~~computed~~Company’s byability ~~dividing~~to ~~net~~continue ~~income~~as ~~(loss)~~a going byconcern. ~~the~~Although ~~weighted~~Opta ~~average~~expects ~~number~~to ofincur ~~shares~~additional oflosses ~~common~~during ~~stock~~the remainder ~~outstanding~~of ~~during~~fiscal 2005, the ~~period.~~ ~~Diluted~~Company ~~net~~believes ~~income~~that ~~(loss)~~it ~~per~~will ~~share~~have issufficient resources ~~computed~~to bycontinue ~~dividing~~normal ~~net~~operations. The ~~income~~Company ~~(loss)~~has bytaken ~~the~~steps ~~weighted~~to ~~average~~reorganize ~~number~~certain aspects of ~~shares~~its business. GoVideo ofreplaced ~~common~~its ~~stock~~Chief Executive ~~and~~Officer ~~common~~with ~~stock~~the ~~equivalents~~Chief ~~outstanding~~Operating ~~during~~Officer ~~the~~of Opta on an interim basis ~~period.~~to ~~For~~further evaluate the ~~three~~ongoing ~~and~~operations ~~six~~of ~~months~~GoVideo. Additionally, ~~ended~~GoVideo ~~December 31,~~has ~~2001~~undertaken ~~and~~cost reduction ~~2000~~efforts, ~~employee~~including ~~stock~~reducing ~~options~~staff, ~~warrants~~realigning ~~and~~the ~~convertible~~roles ~~securities~~and responsibilities ~~were~~of ~~not~~management ~~considered~~and inreducing ~~calculating~~other ~~basic~~operating ~~and~~expenses ~~diluted~~in ~~net~~an ~~income~~attempt ~~(loss)~~to ~~per~~return ~~common~~to ~~share~~profitability. If the asCompany ~~their~~is ~~effect~~unable ~~would~~to bereturn ~~anti-dilutive.~~to Asprofitability as a result, ~~for~~of ~~all~~this realignment, ~~periods~~additional ~~presented~~steps including, ~~the~~but ~~Company's~~not ~~basic~~limited to, further cost reductions and ~~diluted~~eliminating ~~net~~some ~~income~~of ~~(loss)~~its ~~per~~current ~~share~~activities, ~~are~~may ~~the~~be ~~same~~necessary.

~~Inventories~~ The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities or any other adjustment that might be necessary should the Company be unable to continue as a going concern.

~~Inventories~~Note ~~are~~4 ~~stated~~– atRecently ~~the~~Issues ~~lower~~Accounting of cost (first in, first out) or market (net realizable value). Given the volatility of the market for the Company's products, the Company makes inventory write-downs for excess and obsolete inventory based on forecast demand. However, forecast demand is subject to revisions, cancellations, and rescheduling. Actual demand will inevitably differ from forecast demand, and such differences may be material to the financial statements. The components of inventory are as follows (in thousands): Standards

		December 31, 2001		June 30, 2001
Raw materials		$	1,356	$	12,434
Work-in-process			—		3,439
Finished goods			—		3,786
	Total	$	1,356	$	19,659

In November 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) 151, Inventory Costs (“SFAS 151”), which revised Accounting Research Bulletin (“ARB”) 43, relating to inventory costs. This revision is to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage). SFAS 151 requires that these items be recognized as a current period charge regardless of whether they meet the criterion specified in ARB 43. In addition, this Statement requires the allocation of fixed production overheads to the costs of conversion be based on normal capacity of the

~~Revenue Recognition~~ 7

~~The~~production ~~Company~~facilities. ~~recognizes~~SFAS ~~revenue~~151 ~~upon~~is ~~passing~~effective offor ~~title~~inventory ~~and~~costs incurred ~~risk~~during offiscal ~~ownership,~~years ~~which~~beginning ~~coincides~~after ~~with the timing of product shipment. The Company~~June 15, ~~under specific conditions, permits its customers to return products~~2005. We ~~The~~do ~~provision~~not ~~for~~believe ~~estimated sales returns is recorded concurrently with~~ the ~~recognition~~adoption of ~~revenue.~~SFAS ~~Contract~~151 will ~~services~~have ~~revenue~~a ismaterial ~~recognized~~impact ~~over the~~on ~~term~~our offinancial ~~the contract~~statements.

~~Segment~~In ~~Information~~ December 2004, the FASB issued SFAS 123R, Share-Based Payment (“SFAS 123R”) which is a revision of SFAS 123 and supersedes Accounting Principles Board (“APB”) 25, Accounting for Stock Issued to Employees (“APB 25”). Among other items, SFAS 123R eliminates the use of APB 25 and the intrinsic value method of accounting, and requires companies to recognize the cost of employee services received in exchange for awards of equity instruments, based on the grant date fair value of those awards, in the financial statements. The effective date of SFAS 123R is the first reporting period beginning after June 15, 2005. SFAS 123R permits companies to adopt its requirements using either a “modified prospective” method, or a “modified retrospective” method. Under the “modified prospective” method, compensation cost is recognized in the financial statements beginning with the effective date, based on the requirements of SFAS 123R for all share-based payments granted after that date, and based on the requirements of SFAS 123 for all unvested awards granted prior to the effective date of SFAS 123R. Under the “modified retrospective” method, the requirements are the same as under the “modified prospective” method, but also permits entities to restate financial statements of previous periods based on proforma disclosures made in accordance with SFAS 123.

~~SFAS 131,~~The ~~Segment~~Company ~~Information,~~currently utilizes a standard option pricing model (~~SFAS 131~~i.e., Black-Scholes) ~~amends~~to measure the ~~requirements~~fair ~~for~~value ~~public~~of ~~enterprises~~stock options granted to ~~report~~Employees. ~~financial~~While ~~and~~SFAS ~~descriptive~~123R ~~information~~permits ~~about~~entities ~~its~~to ~~reportable~~continue ~~operating~~to ~~segments.~~use ~~Operating~~such ~~segments~~a model, asthe ~~defined~~standard also inpermits ~~SFAS 131,~~the ~~are~~use ~~components~~ of ana ~~enterprise~~“lattice” ~~for~~model. The Company has not yet determined which ~~separate~~model ~~financial~~it will use to measure the fair value of employee stock options upon the adoption of SFAS 123R.

7The Company currently expects to adopt SFAS 123R effective July 1, 2005. However, because the Company has not yet determined which of the aforementioned adoption methods it will use, the Company has not yet determined the impact of adopting SFAS 123R.

~~information~~Note is5 ~~available~~– ~~and~~Stock-Based is evaluated regularly by the Company in deciding how to allocate resources and in assessing performance. The financial information is required to be reported on the basis that is used internally for evaluating this segment performance. The Company operates in one business segment: the design, development and marketing of Internet related products and services. Compensation

~~Sale~~SFAS 123, Accounting for Stock-Based Compensation (“SFAS 123”) encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. The Company elected to continue to account for stock-based compensation using the intrinsic value method prescribed in APB 25 and related Interpretations. Under APB 25 and the intrinsic value method, the exercise price of ~~Subsidiary~~ the Company’s employee stock options equals the market price of the underlying stock on the date of grant or, in the case of the Company’s employee stock purchase plans since the plans are non-compensatory, no compensation expense is recognized. In December 2002, the FASB issued SFAS 148, Accounting for Stock-Based Compensation—Transition and Disclosure (“SFAS148”). SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results.

~~Effective~~In accordance ~~December 18~~with SFAS 148, ~~2001~~the ~~Lotus~~following ~~sold~~table aillustrates ~~major~~the ~~portion~~effect ofon ~~its~~the Company’s ~~investment~~net inloss and ~~cash~~loss ~~advances~~per toshare ~~Arescom~~as ~~for~~if ~~$10,000,000~~the inCompany ~~cash,~~had aapplied ~~promissory~~the ~~note for~~fair ~~$2,192,000~~value ~~and~~recognition ~~11,048~~provisions ~~shares~~ of ~~subordinated~~SFAS ~~preferred~~123 ~~stock~~to ofits ~~Arescom. The subsidiary was in the business of designing, developing and marketing a full line of DSL~~stock-based ~~broadband access~~employee ~~and~~compensation ~~networking devices that address the needs of DSL providers~~awards, ~~systems integrators~~ and ~~users. In connection with this sale, the Company~~ recognized aexpense ~~gain~~over ~~of $32,299,000. The gain, which is primarily a result of recaptured consolidated losses from Arescom, has no related tax liability. The Company accounts for its remaining investment in Arescom under~~ the ~~cost~~applicable ~~method.~~award ~~During fiscal 2001,~~vesting ~~management~~period ~~identified impairment losses associated with its investment~~ (in ~~Arescom. As a result~~thousands, ~~the~~except ~~remaining~~per ~~investment~~share ~~in Arescom has no associated value.~~ amounts):

Income Taxes

	Three Months Ended September 30,
	2004			2003

Net loss, as reported	$	(3,784	)	$	(2,704	)
Add: Stock-based employee compensation expense (reversal) included in reported net loss	—			(40		)
Less: Stock-based employee compensation (expense) reversal determined under fair value based method for all awards, net of related tax effects	—			175
Pro-forma net loss	$	(3,784	)	$	(2,569	)

Basic and diluted net loss per share, as reported	$	(0.07	)	$	(0.05	)

Pro-forma basic and diluted net loss per share	$	(0.07	)	$	(0.04	)

The Company's provision (benefit) for income taxes for the three and six months ended December 31, 2001 and 2000 differed from the amounts computed by applying the statutory U.S. Federal income tax rate to income before taxes and minority interest as follows (in thousands): 8

		Three Months Ended December 31,						Six Months Ended December 31,
		2001			2000			2001			2000
U.S. Federal income tax provision at Federal Statutory rate		$	9,689		$	537		$	7,020		$	945
Gain on sale of subsidiary			(11,305	)		—			(11,305	)		—
Amortization of goodwill			859			695			1,368			1,325
Deferred compensation amortization			134			250			356			2,747
Minority interest in subsidiary			(342	)		(195	)		(975	)		195
Equity in loss of unconsolidated subsidiary			9			400			29			400
Increase in valuation allowance			800			—			1,575			—
State income taxes, net of federal benefit			—			1,650			—			1,650
Other			(134	)		(457	)		(114	)		261
	Total provision (benefit)	$	(290	)	$	2,880		$	(2,046	)	$	7,523

The pro-forma effect for the years presented is not likely to be representative of the pro-forma effect on reported net income or loss in future years because these amounts reflect less than four years of vesting.

~~Recent~~Note ~~Accounting~~6 ~~Pronouncements~~ – Basic and Diluted Net Income (Loss) Per Share

InBasic ~~June 2001~~net ~~the~~income ~~Financial~~(loss) ~~Accounting~~per ~~Standards~~share ~~Board~~is computed by dividing net income (~~FASB~~loss) ~~issued~~by ~~SFAS 142,~~the ~~Goodwill~~weighted ~~and~~average ~~Other~~number ~~Intangible~~of shares of common stock outstanding ~~Assets~~during the period. Diluted net income (~~SFAS142~~loss), ~~effective~~per ~~for~~share ~~fiscal~~is ~~years~~computed ~~beginning~~by ~~after~~dividing ~~December 15,~~net ~~2001.~~income ~~Under~~(loss) by the ~~new~~weighted average ~~rules,~~number ~~goodwill~~of ~~and~~shares ~~intangible~~of ~~assets~~common ~~deemed~~stock toand ~~have~~common ~~indefinite~~stock ~~lives~~equivalents outstanding ~~will~~during the period. There were no ~~longer~~employee bestock ~~amortized~~options, ~~but~~common ~~will~~stock bewarrants ~~subject~~or toemployee ~~annual~~stock ~~impairment~~options outstanding ~~tests~~as of September 30, 2004 or 2003. There were 3,000 and 579,000 shares contingently issuable in ~~accordance~~connection with ~~SFAS~~share exchange agreements, as of September ~~142.~~30, 2004 ~~Other~~and ~~intangible~~2003, ~~assets~~respectively, ~~will~~which ~~continue~~were tonot beconsidered ~~amortized~~in ~~over~~calculating diluted net loss per common share as their ~~useful~~effect ~~lives~~would be anti-dilutive. As a result, for all periods presented, the Company’s basic and diluted net income (loss) per share are the same.

~~Although early~~Note ~~adoption~~7 is– ~~allowed,~~Comprehensive ~~the~~Income Company did not adopt SFAS 142 during the quarter ended September 30, 2001. Therefore, the Company's condensed consolidated financial statements for the three and six months ended December 31, 2001 and 2000 reflect goodwill amortization using the straight-line basis over an estimated 10-year life. The Company will adopt the new standard for the fiscal year beginning July 1, 2002. The impact of adopting SFAS 142 on the results of operations and financial position of the Company has not yet been determined. Goodwill will continue to be evaluated (Loss)

8Comprehensive income (loss) consists of net income (loss) and other gains (losses) affecting shareholders’ equity that, under generally accepted accounting principles are excluded from net income (loss) in accordance with SFAS 130, Reporting Comprehensive Income (“SFAS 130”). Other comprehensive income(loss) includes unrealized gains (losses) on marketable securities and foreign currency translation adjustments. The following table computes the Company’s comprehensive loss (in thousands):

under SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of (SFAS 121).

	Three Months Ended September 30,
	2004			2003

Net loss, as reported	$	(3,784	)	$	(2,704	)
Opta’s portion of the change in Correlant’s unrealized gain (loss) on short term investments	86			(2		)
Comprehensive loss	$	(3,698	)	$	(2,706	)

~~In August 2001,~~Note ~~the~~8 ~~FASB~~– ~~issued~~Restructuring SFAS 143, Accounting for Asset Retirement Obligations (SFAS 143), which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS 143 is required to be adopted for fiscal years beginning after June 15, 2002. The Company has not yet determined what effect this statement will have on its consolidated financial statements. Charges

~~Also in~~During ~~August 2001,~~ the ~~FASB~~second quarter ~~issued SFAS 144, Accounting for the Impairment or Disposal~~ of ~~Long-Lived~~fiscal ~~Assets~~2004, ~~which~~ ~~supersedes~~Correlant’s ~~SFAS 121.~~board ~~This new statement also supersedes certain aspects~~ of ~~APB~~directors ~~30,~~approved ~~Reporting~~ the ~~Results~~wind ~~of Operations-Reporting the Effects of Disposal of a~~down ~~Segment of a Business,~~ and ~~Extraordinary,~~cessation ~~Unusual and Infrequently Occurring Events and Transactions, with regard to reporting the effects~~ of aCorrelant’s ~~disposal~~historical ~~of a segment of a business and will require expected future operating losses from discontinued~~ operations ~~to be reported~~ in ~~discontinued operations in~~ the ~~period~~cable ~~incurred~~modem ~~(rather~~and ~~than~~CMTS business. In asconnection ofwith the ~~measurement date as~~shut ~~presently required by APB 30). In addition~~down, ~~more~~Correlant ~~dispositions~~recorded ~~may~~a ~~qualify~~restructuring ~~for~~charge ~~discontinued operations treatment. The provisions~~ of ~~this statement are required to be applied for fiscal years beginning after December 15~~$1,845,000 ~~2001~~during ~~and interim periods within those~~ fiscal ~~years~~ 2004. The ~~Company~~following ~~will~~table ~~adopt~~summarizes the activity ~~new~~in ~~standard~~Correlant’s ~~for~~reserves ~~the~~associated ~~fiscal~~with ~~year~~its ~~beginning~~shut ~~July 1,~~down ~~2002.~~of ~~The Company has not yet~~historical ~~determined~~operations ~~what~~(in ~~effect this statement will have on its consolidated financial statements.~~ thousands):

	Separation costs for terminated employees and contractors			Facilities closing			Other			Total restructuring charges
Balance at June 30, 2003	$	—		$	—		$	—		$	—
Fiscal 2004 restructuring charges	890			583			372			1,845
Cash payments	(628		)	(49		)	(372		)	(1,049		)
Balance at June 30, 2004	262			534			—			796
Cash payments	(131		)	(125		)	—			(256		)
Balance at September 30, 2004	$	131		$	409		$	—		$	540

~~Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations:~~9

~~You should~~Note ~~read~~9 ~~the~~–Litigation following discussion in conjunction with Lotus Pacific, Inc.'s (Lotus) unaudited condensed consolidated financial statements and notes included herein. The results described below are not necessarily indicative of the results to be expected in any future period. Certain statements in this discussion and analysis, including statements regarding our strategy, financial performance and revenue sources, are forward-looking statements based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Readers are referred to Lotus's Annual Report on Form 10-K dated October 15, 2001 and to the section entitled "Certain Factors That May Affect Future Results" contained herein which identify important risk factors that could cause actual results to differ from those contained in the forward looking statements. Settlement

~~Overview~~ On July 30, 2004, Correlant reached a settlement agreement with one of its stockholders and major vendors, TurboComm Technologies, Inc (“TurboComm”). Under the agreement, Correlant dismissed its lawsuit against TurboComm and in exchange Turbocomm transferred 700,000 shares of Series A Preferred Stock of Correlant and 300,000 shares of Series C Preferred Stock of Correlant owned by TurboComm to Correlant. Both parties mutually agreed to release and discharge any and all claims that each may have against the other party. This transaction resulted in a $1,946,000 recovery of bad debt included in Selling, general and administrative expense, and a $774,000 gain included in Other income (expense) on the consolidated statement of operations for the three months ended September 30, 2004.

WeOn ~~create~~August 31, ~~manage,~~2004 ~~and~~Opta ~~operate~~reached ~~communications and network technology companies and serve as~~ a settlement ~~holding~~agreement ~~company~~with ~~of two subsidiaries, Lotus World, Inc~~TurboComm. ~~(Lotus~~ ~~World)~~Under ~~and~~the ~~Correlant Communications~~agreement, ~~Inc.~~ ~~(Correlant).~~TurboComm Weagreed ~~own~~to ~~90.5%~~pay ofOpta ~~Lotus World and 66.5% of Correlant. During the three and six months ended December 31~~$20,000 ~~2001~~ and ~~2000~~deliver 686,000 ~~Lotus~~shares ~~World's results~~ of ~~operations were not material to our results of operations. Until December 18~~Opta, ~~2001,~~constituting weall shares owned ~~81%~~by ~~of Arescom, Inc~~TurboComm. Both ~~(Arescom),~~parties atmutually ~~which~~agreed ~~time~~to werelease ~~sold a major portion of our~~and ~~investment~~discharge inany ~~Arescom.~~and ~~Subsequent~~all toclaims ~~December 18,~~that ~~2001,~~each wemay ~~own~~have ~~approximately~~against ~~11.0% of~~ the ~~outstanding~~other ~~shares~~party. This oftransaction ~~Arescom~~resulted ~~and~~in ~~account~~an ~~for the investment under the cost method. Arescom's accounts~~$88, ~~results~~000 ~~of operations and cash flows are~~ gain included in ~~our~~Other ~~financial~~income ~~statements~~(expense) ~~through~~on ~~December 18,~~the ~~2001~~consolidated ~~and~~statement ~~are~~of ~~excluded~~operations for ~~from~~the ~~our~~three ~~financial~~months ~~statements~~ended ~~after December~~September 1830, ~~2001~~2004.

~~We provide~~Note ~~solutions~~10 ~~for~~– ~~the~~Segment ~~communications~~ and ~~network technology markets and engage in the development, manufacture and distribution of products used for broadband Internet access,~~ ~~including~~Geographic data-over-cable equipment and networking devices. Subsequent to the sale of our controlling interest in Arescom, we no longer compete in the DSL market space. We anticipate that our experience in communications and network technology will enable us to capitalize on new opportunities in diverse areas of the fast-growing telecommunications industry. Information

~~During the~~SFAS ~~first~~131, ~~half~~Disclosures about Segments of ~~calendar~~an ~~2000,~~Enterprise and ~~cable~~Related ~~modem~~Information ~~manufacturers~~(“SFAS ~~experienced~~131”), ~~shortages~~establishes ~~and~~standards ~~long~~for reporting ~~lead~~information ~~times~~about ~~for~~operating ~~component~~segments. ~~materials~~Operating ~~such~~segments are defined as ~~flash~~components ~~memory~~of ~~and~~an ~~capacitors.~~enterprise ~~Due~~about towhich ~~these~~separate financial information is ~~shortages,~~available and is evaluated regularly by the ~~production~~ ofchief ~~cable~~operating ~~modems~~decision ~~was~~maker, ~~constrained~~or decision ~~and~~making ~~our~~group. Our ~~customers~~chief operating ~~placed~~decision ~~substantial~~maker ~~orders~~is ~~for~~the ~~our~~Chief ~~cable~~Executive ~~modems~~Officer. We ~~believe~~are ~~cable~~organized geographically ~~operators~~and ~~also~~by ~~overbought~~line inof business. While the ~~second~~Chief ~~half~~Executive Officer evaluates results in a number of ~~calendar~~different ~~2000~~ways, tothe ~~ensure~~primary basis for which the ~~they~~allocation ~~had~~of ~~sufficient~~resources ~~product~~and tofinancial ~~meet~~results ~~subscriber~~are ~~demand~~assessed is product type. During Asthe athree ~~result~~months ended September 30, 2004 we ~~believe~~operated ~~there~~in ~~was~~one ansegment ~~inflated~~through ~~demand~~our ~~for~~subsidiary ~~cable~~GoVideo, ~~modems~~which ~~during~~was the distribution ~~three~~of ~~and~~innovative, ~~six~~high performance consumer electronic products. During the three months ended ~~December~~September 3130, 2003, ~~2000.~~we ~~Starting~~operated in an additional segment through our subsidiary Correlant, ~~January 2001~~which was the development, ~~our~~manufacture ~~customer~~and ~~orders~~distribution ~~began~~of ~~dropping~~products ~~sharply~~used ~~resulting~~for broadband inInternet ~~lower~~access, ~~demand~~including asdata-over-cable ~~end~~equipment ~~customers~~and ~~started~~digital subscriber toline ~~work~~(“DSL”) ~~through~~access ~~their~~and ~~inventory~~networking ~~levels~~devices and development. The ~~This~~following ~~lower~~table ~~demand~~presents ~~continued~~a ~~through~~summary ~~the~~of ~~three~~the ~~and~~Company’s ~~six~~businesses ~~months~~and ~~ended~~operating ~~December 31,~~segments ~~2001.~~(in thousands):

The extremely competitive nature of the market for broadband access systems has resulted in significant price erosion over time. We experienced, and continue to experience downward pressure on our average selling price per unit. We are continuing to work with our contract manufacturer to decrease the cost of manufacturing our products in order to offset the decline in average selling price and gross margin pressure on DOCSIS certified cable modems.

	As of or for the Three Months Ended September 30,
	2004			2003
Broadband Internet access products:
Net revenues	$	—		$	144
Cost of net revenues	—			84
Gross profit	—			60

Income (loss) from operations	$	1,787		$	(1,597	)

Total assets	$	18,779		$	22,347

Consumer electronics:
Net revenues	38,769			20,676
Cost of net revenues	40,283			19,474
Gross profit	(1,514		)	1,202

Income (loss) from operations	$	(4,622	)	$	(760	)

Total assets	$	51,333		$	21,103

Total operating segments:
Net revenues	$	38,769		20,820
Cost of net revenues	40,283			19,558
Gross profit	(1,514		)	1,262
Loss from operations attributable to operating segments	$	(2,835	)	$	(2,357	)

Total assets attributable to operating segments	$	70,112		$	43,449

~~Results of Operations~~ 10

~~The~~Disclosed ~~following~~in the table ~~summarizes~~below ~~certain~~is ~~aspects~~the reconciliation of ~~our~~the ~~results~~loss offrom operations attributable ~~for~~to ~~the~~operating ~~three~~segments ~~and~~to ~~six~~loss ~~months~~from ~~ended~~continuing ~~December 31,~~operations ~~2001~~before income ~~compared~~taxes toand ~~the~~non-controlling ~~three~~interest and total assets attributable to ~~six~~operating ~~months~~segments ~~ended~~to ~~December 31,~~total ~~2000~~assets (in thousands):

	As of or for the Three Months Ended September 30,
	2004			2003
Loss from operations attributable to operating segments	$	(2,835	)	$	(2,357	)
Corporate general and administrative expenses	646			702
Total other income (expense), net	322			(49		)
Loss before income taxes and non-controlling interest	$	(3,159	)	$	(3,108	)

Total assets attributable to operating segments	$	70,112		$	43,449
Total assets attributable to non-reporting segments	2,025			9,340
Total assets	$	72,137		$	52,789

Geographic ~~millions). Certain amounts for the three and six months ended December 31, 2000 have been restated as discussed in "PART II Item 5—Other~~ Information."

		Three Months Ended December 31,								Six Months Ended December 31,
		2001			2000			Change %		2001			2000			Change %
Sales		$	32.8		$	105.6		(69	%)	$	69.5		$	205.6		(66	%)
Gross profit			3.5			11.8		(70	%)		5.6			30.4		(82	%)
	As a percentage of revenues		11	%		11	%				8	%		15	%
Selling, general and administrative			5.6			7.1		(21	%)		12.9			14.7		(12	%)
Research and development			3.3			3.9		(15	%)		7.8			12.3		(37	%)
Gain on sale of subsidiary			32.3			—		NA			32.3			—		NA
Net income (loss)			28.0			(2.1	)	1,433	%		22.1			(4.8	)	560	%

During the three months ended September 30, 2004 and 2003, we recorded net revenues throughout the U.S., Asia and Europe as determined by the final destination of the product. The following table summarizes total net revenues attributable to significant countries (in thousands):

Revenues

	Three Months Ended September 30,
	2004		2003
Asia	$	100	$	56
U.S.	38,669		20,758
Europe and other	—		6
	$	38,769	$	20,820

~~During~~Presented ~~the~~below ~~three~~is ~~months ended December 31, 2001, revenues attributable to Correlant and Arescom accounted for 42% and 58%, respectively, of total revenues~~information asregarding ~~compared~~identifiable toassets ~~87%~~from ~~and~~continuing ~~13%~~operations, ~~respectively,~~classified ~~for the same period in the prior year. During the six months ended December 31, 2001, revenues attributable to Correlant and Arescom accounted for 49%~~by ~~and~~operations ~~51%,~~located ~~respectively, of total revenues as compared to 87% and 13%, respectively, for the same period~~ in the ~~prior year~~U.S. ~~The decrease in overall revenues for the three~~ and ~~six~~Asia ~~months ended December 31, 2001 as compared to the three and six months ended December 31, 2000, as well as the change~~ (in ~~relative percentage of revenues between Correlant and Arescom, was primarily attributable to the following factors~~thousands):

The decrease in cable modem revenues of Correlant was offset slightly by the increase in Arescom's DSL broadband equipment sales.

	September 30,
	2004		2003
U.S.	$	71,511	$	52,400
Asia	626		388
	$	72,137	$	52,788

~~Revenues generated~~Note by11 ~~international~~– ~~sales~~Subsequent as a percentage of revenues increased slightly to 56% from 51% during the three months ended December 31, 2001 as compared to the three months ended December 31, 2000. Additionally, revenues generated by international sales as a percentage of revenues increased slightly to 52% from 50% during the six months ended December 31, 2001 as compared to the six months ended December 31, 2000. Due to the recent significant economic slowdown in our industry, both domestic and international, we experienced a slowdown in customer orders. We anticipate that revenues will continue to be negatively impacted by the current economic slowdown and will decrease as a result of the sale of the controlling interest in Arescom. In addition, we anticipate the average sales price of cable modems will continue to decline in the near term. Events

~~Gross~~On ~~Profit~~ November 1, 2004, GoVideo entered a forbearance agreement (“Agreement”) with its line of credit lender. See Agreement details discussed at Note 20 of our Annual Report on Form 10-K as filed with the SEC on February 18, 2005. GoVideo was unable to cure the existing defaults under the terms of the Agreement, which expired

~~The reduction in gross profit absolute dollars for the three and six months ended December 31, 2001 as compared to the three and six months ended December 31, 2000 as well as the decrease in~~ 11

11February 28, 2005, and was forced to extend the forbearance agreement (“Amended Agreement”) until August 31, 2005. In the Amended Agreement, GoVideo agreed to the following significant conditions:

• To ~~gross~~pay ~~profit~~all ~~percentage for~~ the ~~six~~lender’s ~~months~~costs ~~ended~~and ~~December 31,~~expenses ~~2001~~associated ~~compared~~with to the ~~six~~existing ~~months ended December 31, 2000 was due to the following:~~ default;

~~The~~• To ~~gross~~pay ~~profit~~$100,000, ~~percentage~~in ~~remained~~installments, ~~a constant 11%~~ for ~~both~~forbearance ~~the three months ended December 31, 2001~~ and ~~2000~~other ~~due to a higher proportion of revenues from DSL broadband equipment~~accommodations ~~sales~~provided ~~which~~by ~~bear~~the alender ~~higher~~under ~~gross~~the ~~margin~~Amended ~~percentage than cable modems.~~ Agreement;

~~Although~~• To wepay ~~anticipate~~no ~~continued~~more ~~pressure~~than ~~on margins~~$100,000 wetoward ~~are~~any ~~taking~~subordinate ~~steps~~indebtedness; ~~to counter the impact of this price erosion by continuing to implement cost reduction efforts in the manufacturing of our products~~ and ~~introduce new lower cost technology driven products to the market.~~

In• To ~~the~~not ~~near~~incur ~~term,~~capital weexpenditures ~~also expect gross profit~~ in ~~absolute~~excess ~~dollars and as a percentage~~ of ~~revenue to decrease as a result of the sale of our controlling interest in Arescom and the corresponding loss of revenues from DSL equipment sales~~$150,000.

~~Operating~~The ~~Expenses~~ Agreement also called for the following modifications:

~~Selling, general and administrative (SG&~~• A). reduction ~~SG&A expenses consist primarily~~ of personnel costs, including amortization of deferred stock compensation, for our administrative and support personnel, goodwill amortization, allowance for doubtful accounts, legal and accounting fees. The decrease in SG&A expenses for both the ~~three~~maximum ~~and~~line ~~six months ended December 31, 2001 was due~~ to ~~the following factors:~~ $20,000,000;

~~The~~• A ~~decrease~~change into ~~SG&A~~the ~~was~~minimum ~~partially~~net ~~offset~~income by(loss) per month requirement for the ~~following~~period ~~factors:~~of February 1, 2005 through August 31, 2005; and

In• A ~~the~~reduction ~~near term, we believe SG&A expenditures~~ in ~~absolute~~the ~~dollars~~borrowing ~~will~~base ~~decrease~~ as adetermined ~~result~~by ofspecific ~~the~~inventory ~~sale~~and receivable ~~of our controlling interest in Arescom~~balances.

~~Research and~~The ~~development~~reduction ~~(R&D). R&D expenses consist primarily~~ of ~~personnel~~the ~~costs,~~maximum ~~including~~line ~~amortization~~to ~~of deferred stock compensation~~$20, ~~of employees engaged in research~~000,000 ~~design~~could ~~and~~limit GoVideo’s ~~development~~ability ~~activities and,~~ to ~~a lesser extent~~expand. However, ~~design~~this ~~prototype~~most likely ~~material~~will ~~expenditures~~not ~~and~~impact ~~equipment~~GoVideo ~~and~~as ~~supplies~~the ~~required~~current tooperating ~~develop~~plan ~~new~~does ~~products and enhance our existing products. The decrease in~~not ~~R&D~~contemplate ~~expense~~further ~~for~~growth ~~both~~until the ~~three~~current ~~and~~operating ~~six~~levels ~~months~~return ~~ended December 31, 2001 was primarily attributable~~ to profitability.

toItem ~~the~~2 ~~decrease~~- inManagement’s ~~amortization~~Discussion ~~of deferred stock compensation to $0.4~~ and ~~$1.0 million~~Analysis inof ~~the~~Financial ~~three and six months ended December 31, 2001 from $0.9 and $6.7 million during the~~Condition ~~three~~ and ~~six~~Results ~~months~~of ~~ended December 31, 2000.~~ Operations:

You should read the following discussion in conjunction with Opta Corporation’s (“Opta”) unaudited condensed consolidated financial statements and notes included herein. The results ~~decrease~~described ~~was~~below ~~offset~~are not necessarily indicative of the results to be expected in any ~~part~~future byperiod. Certain statements in this discussion and analysis, including statements regarding our strategy, financial performance and revenue sources, are forward-looking statements based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking ~~following~~statements. Readers are referred to Opta’s Annual Report on Form 10-K for the year ended June 30, 2004 as filed with the SEC on February 18, 2005 and to the section entitled “Certain Factors That May Affect Future Results” contained herein which identify important risk factors: that could cause actual results to differ from those contained in the forward-looking statements.

~~In the~~We ~~near~~begin ~~term,~~Management’s Discussion weand ~~believe~~Analysis ~~R&D~~of ~~expenditures~~Financial inCondition ~~absolute~~and ~~dollars~~Results ~~will~~of ~~decrease~~Operations as(“MD&A”) with aan ~~result~~executive ofoverview ~~the~~and ~~sale~~description of ~~our~~Opta’s ~~controlling interest in Arescom~~business. This ~~However,~~is wefollowed ~~continue~~by toa ~~invest~~discussion inof ~~the~~why we ~~future~~were byunable ~~funding~~to ~~research~~timely ~~and~~file ~~development~~our ~~projects.~~Form ~~Excluding~~10-Q for the ~~impact~~three ofmonths ~~the~~ended ~~sale~~September 30, 2004. The ofnext ~~Arescom~~discussion ~~and~~relates ~~amortization~~to our results of ~~deferred~~operations ~~compensation,~~for wethe ~~believe~~three ~~research~~months ~~and~~ended ~~development~~September 30, ~~expenditures will~~2004 ~~increase~~compared into the ~~future~~three asmonths aended ~~result~~September 30, ~~of new and existing product development~~2003.

~~Gain~~After the results of operations, we analyze the changes in our cash flows, and discuss our financial commitments in the section entitled “Liquidity and Capital Resources.” We then address current “Significant Trends” in the consumer electronics industry and our “Business Outlook” from September 30, 2004. We conclude this MD&A with (I) a discussion of the Critical Accounting Estimates we believe are important to understanding the assumptions and judgments incorporated in our reported financial results; and (II) Recently Issued Accounting Standards and the impact they had or will have on ~~Sale~~our results of ~~Subsidiary~~ operations.

EffectiveExecutive December 18,Overview 2001 we sold a major portion of our investment in and cashDescription advances to Arescom for $10.0 million in cash, a promissory note for $2.2 million and 11,048 shares of subordinated preferred stock of Arescom. The subsidiary was in the business of designing, developing and marketing a full line of DSL-based broadband access and networking devices that address the needs of DSL providers, systems integrators and users. In connection with this sale, we recognized a one-time gain of $32.3 million. The gain, which is primarily a result of recaptured consolidated losses from Arescom, has no related tax liability. We account for our remaining investment in Arescom under the cost method and will no longer include Arescom's results of operations with our results of operations. During the six months ended December 31, 2001, Arescom realized operating losses of approximately $40,000. Business

~~Liquidity~~Opta, a Delaware corporation, is a holding company and ~~Capital~~we ~~Resources~~ conduct our business through our subsidiaries. We presently develop, manage, and operate emerging consumer electronics and communications companies, focusing on developing next generation consumer electronics and communication products. We provide our subsidiaries with capital and strategic and infrastructure services. Currently, GoVideo is our sole operating subsidiary. GoVideo’s strategy is to develop, market, and distribute innovative, high performance consumer electronic products that incorporate advanced technology, ease of use, and superior industrial design. Main products include consumer electronic products such as the digital video disc (“DVD”)-Video Cassette Recorder Combos (“DVR”), Dual-Deck VCRs, DVD Recorders and the DVD Recorder + VCR. GoVideo’s current marketing strategy is to sell products with the support of independent sales representatives specific to certain geographic territories throughout the United States and who also represent many other brand name consumer electronic products. GoVideo currently sells its product lines directly to retailers nationwide including numerous national and regional chains, catalog accounts, specialty stores, warehouse clubs and home shopping channels.

~~The~~Our ~~following~~business ~~table~~strategy ~~summarizes~~in the consumer electronic segment is to leverage our ~~cash~~significant ~~flows~~experience ~~for~~in the ~~six~~consumer ~~months~~electronics ~~ended~~market, ~~December 31~~increase the GoVideo brand recognition by introducing products in Asia, ~~2001~~and ~~compared~~continue our product development to ~~the~~bring ~~six~~to ~~months~~our ~~ended~~customers ~~December 31,~~compelling ~~2000~~new products with ~~(in~~superior ~~millions):~~quality and ease-of-use.

	December 31, 2001			December 31, 2000
Cash and cash equivalents	$	21.9		$	17.0
Short-term investments		8.6			—
Net cash used in operating activities		(5.7	)		(27.2	)
Net cash provided by investing activities		3.2			11.8
Net cash provided by (used in) financing activities		(0.5	)		4.4

One of the major challenges facing Opta is managing liquidity. Liquidity has been, and will continue to be, an issue for us as we have grown our subsidiary, GoVideo, out of bankruptcy. Our majority shareholder, TCL Industries Holdings (H.K.) Limited (“TCL Industries”), has been instrumental in assisting GoVideo obtain credit from vendors, which has helped us work through some liquidity issues. We plan to continue to utilize the relationship with our majority shareholder by sourcing more products from them. This will be a challenging and important part of GoVideo’s strategy to manage liquidity.

~~As of~~The ~~December 31,~~consumer ~~2001,~~electronics industry ~~our~~is ~~principal~~constantly ~~source~~facing ofnew ~~liquidity~~trends ~~included~~and ~~cash~~challenges, ~~and~~the ~~cash~~most ~~equivalents~~prominent ~~and~~of which ~~short-term~~is ~~investments~~severe ofprice ~~$30~~competition.~~5 million.~~ We ~~used~~ ~~$5.7 million~~expect incompetition ~~cash~~to ~~for~~intensify ~~operating~~in ~~activities during~~ the ~~six month period ended December~~future. ~~31,~~ Our ~~2001~~strategy ~~primarily~~ to ~~fund~~combat the ~~operating~~price ~~loss~~competition ~~for~~is ~~the six months ended December 31, 2001 and~~ to ~~pay~~continue ~~vendors according~~ to ~~current~~focus ~~payment terms, partially offset by a decrease in inventory and collection~~ on the ~~accounts~~development ~~receivable~~of ~~from~~lower-cost ~~related~~consumer ~~parties. In addition~~electronics, ~~although~~continue wethe ~~have~~evaluation ~~not changed~~of ~~our~~potential ~~credit~~new products and ~~collections~~work ~~policy,~~with our ~~unrelated~~contract ~~customers~~manufacturers ~~have~~to ~~significantly~~reduce ~~slowed~~the purchase ~~down~~price ~~payment as a result~~ of ~~the recent overall downturn in the economy and specifically~~ our ~~industry~~products. ~~This slowdown had a negative impact on cash flow used in operating activities.~~

~~For the six months ended December 31, 2002, our principal investing activities included selling a controlling portion of interest in our subsidiary Arescom, offset by the purchase of short-term~~ 13

13Explanatory Note – Changes in Management and Delays in Reporting

On June 29, 2001, a ~~investments~~majority ~~and~~of ~~capital~~our ~~expenditures~~stockholders, led by TCL, were successful in a solicitation to gain ~~accommodate~~control of Opta and replace prior management of the Company. On June 29, 2001, new directors and officers were appointed and the then existing directors and officers were immediately removed from office. Following the termination of our ~~expanding~~relationship ~~research~~with prior independent accountants, new management concluded that a reaudit of the financial statements for fiscal 2001, 2000 and ~~development~~1999 ~~technology~~was ~~infrastructure~~required. Effective July 24, 2002, we engaged our new independent accountants to reaudit and restate these prior periods. The Company completed such restatements in its Annual Report on Form 10-K for fiscal 2002 filed with the SEC on April 16, 2004. The late filing of our Annual Report on Form 10-K for fiscal 2002 caused our Annual Reports on Form 10-K for fiscal 2003 and 2004, which were filed August 24, 2004 and February 18, 2005, respectively, to also be late.

Financing activitiesResults for the six months ended December 31, 2001 consisted entirely of our subsidiary Arescom paying down its line of credit. Operations

AtThe ~~December 31,~~following ~~2001,~~table wesummarizes ~~had~~certain ~~working~~aspects ~~capital~~ of ~~$30.4 million, compared to $21.3 million at June 30, 2001. The increase in working capital was primarily due to the sale of~~ our ~~controlling~~results ~~interest in Arescom partially offset by a decrease in inventory resulting from timing issues surrounding shipments~~ of ~~our~~operations ~~completed~~for ~~cable modems. We believe our working~~the ~~capital,~~three ~~together~~months ~~with~~ended ~~funds that may be generated from equity financings and operations~~September 30, ~~will~~2004 becompared ~~sufficient~~ to ~~meet working capital requirements for~~ the ~~next~~three 12 months. ~~There~~ended ~~can be no~~September 30, ~~assurance~~2003 ~~that~~(in ~~any necessary additional financing will be available to us on commercially reasonable terms, if at all.~~ thousands):

Certain Factors That May Affect Future Results

	September 30,
	2004			2003			$ Change			% Change

Revenues	$	38,769		$	20,820		$	17,949		86	%

Gross profit (loss)	(1,514		)	1,262			(2,776		)	(220	)%
As a percentage of revenues	(4		)%	6		%

Selling, general and administrative	1,683			3,011			(1,328		)	(44	)%
Research and development	284			1,277			(993		)	(78	)%

Other income (expense)	322			(49		)	371			757	%

Forward Looking Statements. Certain statements in this Quarterly Report are forward looking within the meaning of Section 27A of the Securities and Exchange Act of 1993, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, that involve risks and uncertainties. Any statements contained herein (including, without limitation, statements to the effect that the Company or management "estimates," "expects," "anticipates," "plans," "believes," "projects," "continues," "may," or "will" or statements concerning "potential" or "opportunity" or variations thereof or comparable terminology or the negative thereof), that are not statements of historical fact should be construed as forward looking statements. All statements that address operating performance, events or developments that our management expects or anticipates to incur in the future, including statements relating to sales and earnings growth or statements expressing general optimism about future operating results, are forward-looking statements. These forward-looking statements are based on our management's current views and assumptions regarding future events and operating performance. Many factors could cause actual results to differ materially from estimates contained in our management's forward-looking statements including the factors listed at pages 14 -16. The differences may be caused by a variety of factors, including but not limited to adverse economic conditions, competitive pressures, inadequate capital, unexpected costs, lower revenues, net income and forecasts, the possibility of fluctuation and volatility of our operating results and financial condition, inability to carry out marketing and sales plans and loss of key executives, among other things. Because of these and other factors that may affect our operating results, past performance should not be considered an indicator of future performance and investors should not use historical results to anticipate results or trends in future periods. Revenues

WeThe ~~are~~increase ~~exposed to the risks associated with the recent slowdown~~ in ~~the~~overall ~~U.S.~~revenues ~~and~~for ~~global economy. Our business is subject to~~ the ~~effects~~three ofmonths ~~general~~ended ~~economic conditions in the United States and globally~~September 30, ~~and,~~2004 inas ~~particular,~~compared ~~market~~to ~~conditions in~~ the ~~telecommunications~~three ~~and~~months ~~networking~~ended ~~industries. Concerns about inflation~~September 30, ~~decreased consumer~~ ~~confidence and reduced corporate profits and capital spending have resulted in a recent downturn in the U.S. economy. Partially as a result of these unfavorable economic conditions~~2003, wewas ~~have~~primarily ~~recently experienced~~attributable ato ~~significant slowdown in customer orders. If~~ the ~~economic~~following conditions in the United States and globally do not improve, or if we experience a worsening in the global economic slowdown, we may continue to experience material adverse impacts on our business, operating results, and financial condition. factors:

~~Because~~• GoVideo’s increased ~~the~~product ~~data-over-cable market is still evolving~~offerings, weprimarily ~~cannot~~the ~~accurately~~DVD ~~predict~~Recorder ~~its~~+ ~~future growth rate or its ultimate size~~VCR, ~~nor~~which ~~can~~was ~~we ensure~~introduced ~~the~~during ~~widespread acceptance of our products. Our success depends on~~ the ~~timely~~second ~~acceptance~~quarter ~~or adoption~~ of fiscal ~~our products by our customers and cable operators~~2004. Revenues ~~The~~attributable ~~market for~~to ~~our~~the ~~products~~new isDVD ~~rapidly~~Recorder ~~evolving.~~+ AnVCR ~~increasing~~totaled ~~number of competitors have introduced or developed~~$11,455,000 orduring ~~are in~~ the ~~process~~three ofmonths ~~introducing~~ended ~~or developing~~September 30, ~~cable modems that compete with our~~ 2004.

14• GoVideo’s increased ability to purchase products for resale during the three months ended September 30, 2004 as compared to the three months ended September 30, 2003. This increased ability was a result of obtaining a line of credit and additional subordinate debt. As GoVideo was emerging from bankruptcy, the majority of the products purchased for resale during the three months ended September 30, 2003, were prepaid. This severely restrained product purchases.

~~own.~~Nearly ~~Some~~100% of ~~the~~our ~~critical~~revenues ~~issues~~were ~~concerning~~generated ~~the~~from ~~use~~domestic ofsales ~~cable~~during the ~~modems,~~quarters ~~including~~ended ~~security~~September 30, ~~reliability,~~2004 ~~cost, ease of deployment~~ and ~~administration, and quality of service are not completely resolved and may harm our business~~2003. We ~~Because~~expect ~~our~~this ~~market~~trend isto ~~evolving,~~continue weas ~~cannot accurately predict its future growth rate or its ultimate size. In addition,~~ the ~~market for cable modems may never fully develop,~~ ~~and~~majority ~~even~~of ifour itrevenues ~~does,~~are weattributable ~~may not be able~~ to ~~compete successfully in that market~~GoVideo. ~~If our products do not achieve widespread acceptance in their markets, our business may be harmed.~~

~~Our~~Gross ~~products~~Profit ~~must~~(loss) ~~meet~~including ~~evolving~~Cost ~~industry standards or they may not achieve market acceptance. Our industry is constantly evolving and is characterized by the emergence~~ of ~~new industry standards, such as the DOCSIS standard. In order to gain acceptance by our customers, our products must meet the most current industry standards. This~~ requires the redesign and recertification of our products and can be a costly and time-consuming process at which we may not be successful. Our failure to produce products that meet evolving standards could harm our reputation and competitive position. Furthermore, existing or potential customers may delay purchases of our current products in order to purchase systems that comply with new industry standards as they are introduced, such as the DOCSIS 1.1 standard. This could create unexpected fluctuations or decreases in our revenues. If we are unable to successfully introduce new products, our customers may choose to purchase products from other sources. Additionally, industry standardization could make it more difficult for any one company to gain a competitive advantage based on the quality of its products. For example, industry standards may diminish product differentiation and cause competition to be based upon the relative size and marketing skills of competitors rather than upon specific factors such as product functionality. Because many of our competitors are larger or have greater financial or marketing resources, we may be at a disadvantage. In addition, there is currently no internationally accepted standard for data-over-cable equipment. If standards achieve market acceptance and if our products do not comply with them, customers may refuse to purchase our products. Revenues

WeThe ~~derive~~decrease ~~most~~in ofgross ~~our~~profit ~~revenues~~dollars ~~from~~and agross ~~limited~~profit ~~number~~percentage ~~of customers. During~~ for the ~~six~~three months ended ~~December~~September 3130, ~~2001,~~2004 ~~84% of~~as ~~our~~compared ~~revenues were derived from two customers. Subsequent~~ to the ~~sale~~three ofmonths ended ~~our~~September 30, ~~controlling~~2003 ~~interest~~was indue ~~Arescom,~~to the ~~majority~~liquidation of ~~our~~GoVideo’s significantly ~~revenues~~overstocked ~~are~~and ~~derived~~overpriced ~~from~~inventory ~~one~~of ~~customer.~~DVD Ifrecorders ~~our~~and ~~major customer ceases~~DVD toRecorders ~~purchase~~+ ~~products~~VCRs. During ~~from~~the usquarter, GoVideo ~~our~~had ~~revenues~~committed ~~will~~outstanding ~~decline~~orders ~~significantly. We expect this customer concentration~~ to ~~continue~~purchase ~~for~~DVD ~~the~~recorders ~~foreseeable~~and ~~future. We have limited agreements with our customers~~DVD ~~obligating~~Recorders ~~them~~+ toVCRs ~~purchase~~as ~~quantities~~the prices of ~~our~~these products inbegan ~~the~~to ~~near term~~drop substantially. Although ~~Accordingly,~~GoVideo ~~our~~was ~~customers~~able to ~~may~~cancel ~~cease~~and/or ~~purchasing~~renegotiate ~~our products on short notice without penalty.~~ some

Our quarterly and annual operating results may fluctuate significantly. Our operating results are likely to fluctuate significantly in the future on a quarterly and an annual basis due to a number of factors, many of which are outside our control. Our operating results may not meet the expectations of our investors and shareholders. Factors that could cause our operating results to fluctuate include: 14

15outstanding orders, it was not sufficient to mitigate the substantial price drop. As a result, DVD recorders were liquidated at a negative 16% gross profit while DVD Recorders + VCRs were liquidated at a negative 5% gross profit. These two products represent approximately 27% of our revenues for the three months ended September 30, 2004.

~~Our~~Although ~~dependence~~we onanticipate ~~one~~continued ~~strategic~~pressure ~~manufacturer may affect our ability to fulfill orders and cost effectively produce our cable modems. Our operating subsidiary, Correlant Communications, currently relies~~ on ~~one~~the ~~manufacturer~~selling ~~for~~prices ~~substantially all~~ of ~~its manufacturing requirements. If the manufacturer were unable or unwilling to continue~~our ~~manufacturing~~different ~~our~~consumer ~~products~~electronics ~~in required volumes, we will have to find alternative sources to manufacture our~~ products~~. During this time~~, we ~~would~~are betaking ~~unable~~steps to ~~fulfill~~counter ~~orders, which could significantly~~the ~~harm~~impact ~~our competitive position and results~~ of ~~operations. Although we do not presently anticipate a disruption in~~ this ~~source~~price oferosion ~~supply,~~by itcontinuing ~~is possible that alternative manufacturers would not be available~~ to usimplement ~~when~~cost ~~needed,~~reduction ~~or would be unable to satisfy our volume production or quality requirements at acceptable prices or on a timely basis. Moreover, because Correlant works closely with our~~efforts ~~manufacturer~~in tothe ~~ensure~~manufacture ~~cost-effective production~~ of our ~~cable~~products ~~modems,~~and ~~the~~by ~~loss~~introducing ~~could impair our ability to produce our cable modems. In addition~~new, welower ~~are~~cost technology ~~subject~~driven toproducts ~~other risks due~~ to ~~our dependence~~the ~~on a single third-party manufacturer, including:~~ market.

~~Additionally, the~~Operating manufacturer is a foreign corporation. Any foreign or domestic regulations regarding foreign exports and imports, trade barriers and tariffs could adversely affect our ability to fulfill orders in a timely or cost effective manner. As a result, our revenues would decline and our results of operations could be significantly harmed. Expenses

~~Our~~Selling, ~~near~~general ~~term~~and ~~operating~~administrative ~~results are dependent on the sale of one product~~(SG&A). ~~Subsequent~~ SG&A toexpense ~~the~~consists ~~sale~~primarily of ~~controlling~~personnel ~~interest~~costs ~~in Arescom,~~for ~~we derive substantially all~~ our ~~revenues~~sales, administrative ~~from the sale of our cable modems~~ and ~~expect~~support ~~this~~staff, toallowance ~~continue~~ for ~~the~~doubtful ~~foreseeable~~accounts, ~~future.~~legal ~~If our customers stop purchasing our cable modems or if~~and ~~there~~accounting isfees ~~any~~and ~~unexpected~~advertising ~~change~~and inproduct ~~revenues~~promotional ~~from the sales of cable modems, we do not currently have other products to offset the negative impact on our operating results~~expenses. The ~~There~~decrease ~~can~~in beSG&A noexpenses ~~assurance~~for ~~that~~the wethree ~~will~~months ~~successfully~~ended ~~identify new product opportunities~~September 30, ~~develop~~2004 ~~and~~as ~~bring~~compared ~~new products~~ to ~~market~~September 30, ~~and achieve market acceptance of our products, or that products and technologies developed by~~ ~~others~~2003 ~~will~~was ~~not~~due ~~render~~to ~~our~~the ~~products or technologies obsolete or noncompetitive.~~ following:

We• The ~~may~~shut ~~not~~down ~~be able to produce sufficient quantities~~ of ~~our~~Correlant’s ~~products~~historical operations aswhich wecontributed ~~obtain components from~~$159,000 and depend on, a limited number of key suppliers.All of our cable modems contain one or more components that are available from a single supply source and other components that are available from limited sources. We depend on these sources to ~~meet~~SG&A ~~our~~during ~~production~~the ~~requirements.~~three Wemonths ~~do not have any long term supply contracts. Although we do not presently anticipate a disruption in this source of supply~~ended September 30, if2004 itas ~~is necessary~~compared ~~for us~~ to ~~obtain these key components from an alternative supplier~~$660,000 itduring ~~could~~the ~~take~~three ~~six~~ months orended ~~longer before we would begin receiving adequate supplies~~September 30, ~~and during this time we would be~~ ~~unable to satisfy our customers' demands~~2003. ~~In such event, prolonged delays could result in the cancellation of orders and the loss of customers.~~

~~Our~~• The one ~~business~~time isrecovery ~~subject~~of tobad ~~the~~debt ~~risks~~associated ofwith ~~catastrophic~~settling ~~events. The~~a ~~terrorist~~legal ~~attacks~~dispute, induring the ~~New~~three ~~York~~months ~~and~~ended ~~Washington, D.C. on~~ September 1130, ~~2001~~2004, ~~disrupted~~with ~~commerce~~one ~~throughout the world and intensified the uncertainty~~ of ~~the~~Correlant’s previous Ucustomers.~~S. economy and other economies around the world.~~ The ~~continued~~recovery ~~threat of~~ totaled $1,946,000.

16The above decrease was slightly offset by the following:

• Increased ~~terrorism~~sales and ~~heightened~~marketing ~~security~~efforts ~~and~~expended ~~military action in response~~ to ~~this~~launch ~~threat,~~the ornew ~~any~~MP3 ~~future acts of terrorism~~brand, ~~may~~Rave ~~cause further disruptions to these economies and create further uncertainties.~~MP3, Toduring the ~~extent~~three ~~that~~months ~~such~~ended ~~disruptions or uncertainties result in delays or cancellations of customer orders~~September 30, ~~or the manufacture or shipment of our products, our business, operating results and financial condition could be materially and adversely affected.~~ 2004;

~~Our stock price may be volatile. The stock market has experienced extreme price and volume fluctuations that have affected the market price of many technology companies~~• $200, ~~in particular, and that have often~~000 ~~been~~increased ~~unrelated~~bad todebt ~~the~~allowance ~~operating~~related performance of these companies. These factors, as well as general economic and political conditions, may materially adversely affect the market price of our common stock in the future. Additionally, volatility or a lack of positive performance in our stock price may adversely affect our ability to ~~retain~~GoVideo’s ~~key~~slow ~~employees,~~paying ~~some of whom have been granted stock options.~~ customers;

~~Our~~• Increased sales ~~executive officers~~ and ~~key~~marketing ~~personnel~~dollars ~~are~~offered ~~critical~~ to ~~our~~customers ~~business~~as ~~and~~an ~~the~~incentive ~~loss~~to ~~of their services could disrupt our operations and our customer~~purchase ~~relationships.~~GoVideo ~~Our~~brand ~~success~~products ~~depends~~as opposed to acompetitor’s ~~significant~~product ~~degree upon the continuing contributions of our key management, technical, marketing and sales employees. There can be no assurance~~ that wealready ~~will be successful~~ exists in ~~retaining our key employees or that we can attract and retain additional skilled personnel as required. The loss of~~ the ~~services~~market; ~~of key personnel could significantly harm our results of operations~~ and ~~business.~~

~~Because~~• Increased ofheadcount ~~these~~to ~~and~~support ~~other~~GoVideo’s ~~factors~~growing ~~affecting~~business ~~our~~needs ~~operating~~as ~~results,~~a ~~past~~result ~~financial performance should not be considered an indicator~~ of ~~future performance, and investors should not use~~the ~~historical~~increased ~~trends to anticipate results or trends in future periods~~revenues.

~~Item~~Excluding ~~3—Quantitative~~the impact of the one time recovery of bad debt, we believe SG&A expenditures may decrease as GoVideo has taken steps to reorganize certain aspects of its business. Subsequent to September 30, 2004, GoVideo has undertaken cost reduction efforts, including reducing staff, realigning the roles and ~~Qualitative~~responsibilities ~~Disclosures~~of ~~About~~management ~~Market~~and ~~Risk:~~ reducing other operating expenses in an attempt to return to profitability and become cash flow positive.

~~Interest~~Research ~~Risk. Our~~and ~~exposure~~development to(R&D). R&D ~~market~~expenses ~~risk~~consist ~~for changes in interest rates relates~~ primarily toof ~~our~~personnel ~~investment~~costs ~~portfolio.~~of ~~We do~~employees ~~not~~engaged ~~use derivative financial instruments~~ in ~~our~~research, ~~investment~~design ~~portfolio.~~and Wedevelopment ~~place~~activities ~~our~~and, ~~investments~~to ~~with~~a ~~high~~lesser ~~credit quality issuers and~~extent, design byprototype ~~policy,~~material ~~limit~~expenditures ~~the~~and ~~amount~~equipment ofand ~~credit~~supplies ~~exposure~~required to ~~any one issuer.~~ Wedevelop ~~are~~new ~~averse~~products ~~to principal loss~~ and ~~ensure~~enhance ~~the~~existing ~~safety~~products. The ~~and~~decrease ~~preservation~~in ofR&D ~~invested~~expenses ~~funds~~for bythe ~~limiting~~three months ~~default~~ended ~~risk~~September 30, ~~market~~2004 ~~risk,~~as ~~and~~compared ~~reinvestment~~to ~~risk.~~the Wethree ~~mitigate~~months ~~default~~ended ~~risk~~September 30, 2003 bywas ~~investing~~directly inrelated ~~only~~to the ~~safest~~ ~~and~~shut ~~highest~~down ~~credit~~of ~~quality~~Correlant’s ~~securities~~historical operations. Correlant ~~and~~had byno ~~constantly~~R&D expenses ~~positioning~~during ~~our~~the ~~portfolio~~three tomonths ~~respond~~ended ~~appropriately~~September 30, to2004 aas ~~significant~~compared ~~reduction in a credit rating of any investment issuer or guarantor.~~to ~~The~~$997,000 ~~portfolio~~during ~~includes~~the ~~only~~three ~~corporate~~months ~~debt~~ended ~~securities~~September 30, ~~and municipal bonds~~2003.

~~Foreign~~We ~~Currency~~continue ~~Risk. Although~~to ainvest ~~large portion of our business is transacted~~ in ~~Taiwan,~~ the ~~functional~~future ~~currency~~by offunding ~~our Taiwan~~product ~~branch~~development ~~is the U.S. dollar. Only a small number of transactions are denominated in the Taiwan dollar~~ and ~~exposed to foreign currency exchange rate risk. Therefore, we do not have any hedging or~~ ~~similar foreign currency contracts~~enhancement. ~~To date~~ However, weresearch ~~have not experienced any material foreign currency exchange rate gains or losses associated with transactions denominated in the Taiwan dollar~~ and do ~~not~~development ~~expect~~expenditures ~~any~~may ~~significant~~decrease ~~changes~~as ina ~~foreign~~result ~~currency~~of ~~exposure~~GoVideo’s inreorganization efforts ~~the~~discussed ~~near future~~above.

17Other Income (Expense)

~~PART~~Other II income (expense) consists of interest income, interest expense, foreign exchange gain (loss) and other non-operating items. We experienced net other income during the three months ended September 30, 2004 as a result of settling a legal dispute with one of Correlant’s previous customers as discussed above, resulting in a one time gain of $774,000. Additionally, Opta settled a dispute with this same Correlant customer, a stockholder of Opta, which resulted in a one time gain of $88,000. These gains were somewhat offset by the increased interest expense incurred

~~OTHER INFORMATION~~ 15

~~Item~~as ~~1—Legal~~a ~~Proceedings:~~ result of GoVideo’s line of credit, accrued at a higher default interest rate attributable to GoVideo’s non-compliance with certain debt covenants, and other subordinate debt. Interest income remained fairly constant as a result of the slightly decreased cash and cash equivalents and short term investment balances offset by the slight increase in fixed income interest rates.

TheLiquidity Companyand isCapital not currently a party to any legal proceedings required to be disclosed under Item 103 of Regulation S-K. We may, from time to time, become party to ordinary routine litigation incidental to our business. Resources

~~Item~~The ~~5—Other~~Company incurred ~~Information:~~ a net loss of $3,784,000 during the three months ended September 30, 2004. Additionally, cash used by operating activities was $3,269,000 during the three months ended September 30, 2004. At September 30, 2004, the Company had an accumulated deficit of $109,395,000 and the Company’s sole operating subsidiary, GoVideo, was, and still is, in default under certain debt covenant provisions of its line of credit. GoVideo is currently under a forbearance agreement with its lender which commenced March 1, 2005 and is due to expire on August 31, 2005.

InAdditionally, in ~~connection~~June 2003 ~~with~~GoVideo borrowed substantial funds from TCL Industries, the majority ~~preparation~~stockholder of ~~the~~Opta, ~~quarterly~~and ~~financial~~Asia ~~statements~~Focus Industrial Ltd., ~~the~~an ~~Company~~entity affiliated ~~discovered~~with ~~that~~TCL Industries. The purpose of the ~~financial~~loans ~~statements~~was ~~for~~to ~~the~~fund ~~years~~inventory ~~ended~~purchases ~~June 30~~and operating expenses. Both loans, which are subordinate to GoVideo’s ~~2001~~line of credit, became due during fiscal year 2004. GoVideo was unable to pay off the loans and extended ~~2000~~the ~~had~~due ~~not~~date ~~accounted~~three times. The current due date for ~~certain~~the ~~stock~~loan ~~options~~with ~~properly.~~TCL Industries is July 24, 2005. The ~~Company~~current isdue indate for the ~~process~~loan ofwith ~~restating~~Asia Focus ~~and~~Industrial ~~resubmitting~~Ltd. tois ~~the~~August 11, ~~SEC~~2005. Both ~~all~~loans ~~related~~are ~~annual~~collateralized by 100% of the Common and ~~quarterly~~Preferred ~~financial~~Series D ~~statements~~stock of Correlant Communications owned by Opta. There ~~The~~can be no assurance that GoVideo will ~~financial~~be ~~statements~~able ~~included~~to ~~herein~~pay ~~reflect~~the ~~restated~~loans ~~financial~~when ~~statements~~they ~~for~~mature ~~all~~or ~~previous~~that ~~periods.~~another extension can be successfully negotiated.

~~Item~~During ~~6—Exhibits~~fiscal 2004, Opta entered into a financing agreement with TCL Industries. Opta ultimately loaned the funds to GoVideo to fund inventory purchases and ~~Reports~~operating onexpenses. The ~~Form~~financing agreement has been extended three times with a new maturity date of July ~~8-K:~~ 21, 2005. The loan is collateralized by 100% of the Common and Preferred Series D stock of Correlant Communications owned by Opta.

~~None~~The above matters raise substantial doubt about the Company’s ability to continue as a going concern. Although Opta expects to incur additional losses during the remainder of fiscal 2005, the Company believes that it will have sufficient resources to continue normal operations. The Company has taken steps to reorganize certain aspects of its business. GoVideo replaced its Chief Executive Officer with the Chief Operating Officer of Opta on an interim basis to further evaluate the ongoing operations of GoVideo. Additionally, GoVideo has undertaken cost reduction efforts, including reducing staff, realigning the roles and responsibilities of management and reducing other operating expenses in an attempt to return to profitability. If the Company is unable to return to profitability as a result of this realignment, additional steps including, but not limited to, further cost reductions and eliminating some of its current activities, may be necessary.

The ~~Company~~ ~~filed~~following atable ~~Current~~summarizes ~~Report~~our oncash ~~Form 8-K~~flows ~~dated~~for ~~December 18, 2001 to report under Item 5~~ the ~~sale~~three ~~of approximately 70% of the outstanding shares of Arescom. The Company~~months ~~retains~~ended ~~approximately 11% of the outstanding shares of Arescom. The same Current Report on Form~~September ~~8-K dated December 18~~30, ~~2001~~2004 ~~reports~~compared ~~under~~to ~~Item 5~~ the ~~merging~~three ofmonths ~~Acumen Technology,~~ended ~~a wholly-owned subsidiary of the Company, into the Company effective December~~September 1130, 2003 ~~2001.~~(in thousands):

	September 30, 2004			September 30, 2003

Net cash used by operating activities	$	(3,269	)	$	(3,184	)
Net cash used by investing activities	(856		)	(4,346		)
Net cash provided by financing activities	4,582			317

As of September 30, 2004, our principal source of liquidity included cash and cash equivalents and short-term investments of ~~SIGNATURE~~ $21,942,000. The net cash used by operating activities during the three months ended September 30, 2004 was primarily to fund the operating loss for the three months ended September 30, 2004. The consumer electronics industry typically experiences an increase in revenues from September through December. As a result, our accounts receivable increased as GoVideo customers purchased product from us to ramp up for the fourth quarter of calendar 2004. Additionally, our accounts payables increased also as a result of GoVideo ramping up for sales during the fourth quarter of calendar 2004. We expect future cash provided (used) by operating activities to

~~Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.~~ 16

		LOTUS PACIFIC, INC (REGISTRANT)
DATE: FEBRUARY 14, 2002		By:	/s/ YONG YAN Yong Yan President, CEO, CFO and Secretary (Principal Executive and Accounting Officer)

fluctuate, primarily as a result of fluctuations in our operating results, the timing of product shipments, accounts receivable collections, inventory management and the timing of vendor payments.

19For the three months ended September 30, 2004, our principal investing activities included the purchase of short-term investments with excess cash and the net purchase of property and equipment.

~~QuickLinks~~Financing activities for the three months ended September 30, 2004 consisted almost entirely of our subsidiary GoVideo receiving advances, and making payments on its available line of credit. The net increase to GoVideo’s line of credit was a result of purchasing additional inventory in anticipation of increased revenues during the fourth quarter of calendar 2004.

Cash and Working Capital Requirements

At September 30, 2004, we had working capital of $19,362,000 compared to $25,045,000 at June 30, 2004. The majority of the decrease in working capital was attributable to GoVideo’s increased borrowings to fund its operations, discussed in detail below, and to a lesser extent to fund our consolidated net loss.

In July 2003, GoVideo entered into a financing agreement last amended and restated in May 2004. The original maximum line of credit available was $40,000,000 limited by a borrowing base determined by specific inventory and receivable balances, and provides for cash loans, letters of credit and acceptances. The financing agreement, as amended, states that the line of credit will mature July 21, 2007. Interest was originally charged at prime plus 1/2 percent. The line of credit is collateralized by all of GoVideo’s assets and up to $5,000,000 of the credit facility is guaranteed by Opta. Under the current credit facility, GoVideo is required to comply with certain financial covenants and conditions including minimum levels of net income. GoVideo was unable to comply with the financial covenants by not earning the required minimum net income. As a result, on June 1, 2004, interest began accruing at the default rate of prime plus 3 1/2%.

On November 1, 2004, GoVideo entered a forbearance agreement (“Agreement”) with its line of credit lender. See Agreement details discussed at Note 20 of our Annual Report on Form 10-K filed with the SEC on February 18, 2005. GoVideo was unable to cure the existing defaults under the terms of the original Agreement, which expired February 28, 2005, and was forced to extend the forbearance agreement (“Amended Agreement”) until August 31, 2005. In the Amended Agreement, GoVideo agreed to the following significant conditions:

• To pay all the lender’s costs and expenses associated with existing default;

• To pay $100,000, in installments, for forbearance and other accommodations provided by the lender under the Amended Agreement;

• To pay no more than $100,000 toward any subordinate indebtedness; and

• To not incur capital expenditures in excess of $150,000.

The Agreement also called for the following modifications:

• A reduction of the maximum line to $20,000,000;

• A change to the minimum net income (loss) per month requirement for the period of February 1, 2005 through August 31, 2005; and

• A reduction in the borrowing base as determined by specific inventory and receivable balances.

The reduction of the maximum line to $20,000,000 could limit GoVideo’s ability to expand. However, this most likely will not impact GoVideo as the current operating plan does not contemplate further growth until the current operating levels return to profitability.

As a result of GoVideo successfully extending its forbearance agreement through August 31, 2005, the current forecast shows the Company will have enough working capital to continue as a going concern for the 12 months following the date of this filing. However, GoVideo may need to extend its forbearance agreement beyond the current expiration date of August 31, 2005 if the Company does not successfully execute its current cost reduction efforts. If GoVideo requires an additional extension on its forbearance agreement, but is unable to obtain the extension, GoVideo will have to take steps towards liquidating significant assets in order to repay its lender. This will likely lead to significant losses on the liquidation of these assets. Additionally, should our capital requirements

exceed cash available from operations we cannot assure that additional sources of financing would be available to us on commercially favorable terms, if at all.

Contractual Obligations

The following table summarizes our contractual obligations at September 30, 2004, and the effect such obligations are expected to have on our liquidity and cash flows in future periods (in thousands):

	Total		Less Than One Year		Greater Than One Year

Operating lease obligations	$	1,432	$	862	$	570
Capital lease obligations	—		—		—
Inventory purchase obligations	33,272		33,272		—
Total contractual cash obligations	$	34,704	$	34,134	$	570

The above inventory purchase obligations relate to our subsidiary GoVideo and are generally subject to renegotiation or cancellation at any time.

All our operating lease obligations are building leases. On November 4, 2004 Correlant entered a lease termination agreement for its San Diego facility. Correlant agreed to pay a termination payment of $370,000, a consideration fee of $4,000 and surrender all claims to the security deposit of $43,000. Because the lease termination was entered subsequent to September 30, 2004, the amounts set forth above include Correlant’s original lease obligation.

Off-Balance Sheet Arrangements

At September 30, 2004, we did not have any relationship with unconsolidated entities or financial partnerships, which other companies have established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes as defined in Item 303(a)(4)(ii) of SEC Regulation S-K. Therefore, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Significant Trends

The following is a description of the most significant recent trends in our consumer electronic business segment:

Traditional consumer electronics continues to be exposed to downward price pressure. We have responded, and will continue to respond to this negative trend through the introduction of new value-added products and models in home entertainment including MP3 players, DVD-related products and LCD displays and by increasing the number of unit sales. The difficulty of this trend is managing through price decreases as we outsource all manufacturing. Generally, we are able to obtain competitive pricing in all product categories. However, managing the timing of future price decreases and obtaining forward pricing to protect our inventory as well as our customer’s inventory has been challenging.

GoVideo, as well as the consumer electronics industry in general, has been subject to substantial price competition. In addition, consumer electronics companies in Asia, particularly those from Korea and China, pose a severe threat through price competition. We anticipate this trend to continue. And as a result, the Company realigned management’s roles and responsibilities to have better control and more closely manage GoVideo’s products which should allow for more efficient responses to market opportunities and threats.

DVD players and recorders. As a result of the dramatic expansion of the DVD market, DVD players have become commodity products and suffer from significant price competition. The DVD Recorder + VCR has been one of our fastest growing product areas recently and we believe we are positioned to face the competition because of our strategic relationships with manufacturers, our expected reduction of manufacturing costs and our efforts to introduce new innovative, high-end and value-added products.

LCD displays. The large-screen display market for LCD displays has been expanding in recent years. As the market has increased so has the number of companies that compete with our products. Each company is increasing investment and expanding production. As the number of companies entering this market increases, it is expected that the unit price will continue to decrease due to intensifying competition. As a result of this trend, we have taken a cautious approach to this market and have limited our activity to only a few models until such time as we believe the volatility in this market can be safely managed.

MP3 Players. We continue to capitalize on the increased demand for digital consumer electronics by introducing our Rave MP3 players both domestically and internationally.

We will continue to invest in product development and the manufacturing process as we believe these are both critical to facilitate innovation of new and improved products and technologies. We will also continue to improve our distribution network reach our targeted customers more efficiently.

Business Outlook

Since we filed our Annual Report on Form 10-K for the year ended June 30, 2004 with the SEC on February 18, 2005, we have focused, and will continue to focus on current operations, namely GoVideo, in an attempt to become a profitable company with the ability to generate a positive cash flow from operations.

Following the takeover of the Board of Directors of the Company on June 29, 2001,our primary strategy for business operations has been to restructure our unprofitable businesses, acquire undervalued companies (such as GoVideo) and focus on growth. We aggressively sold, restructured or shutdown our businesses which were either not consistently generating cash from operations or which could have required future significant cash investments to become consistently cashflow positive. As a result of this effort, we currently have one subsidiary with operations (GoVideo) and one subsidiary with no operations (Correlant) but with significant cash and short term investments.

We purchased GoVideo out of bankruptcy and have successfully grown GoVideo’s revenues since the purchase date. Now that GoVideo has grown and has a larger market presence, our future focus will be to manage GoVideo’s current operations in an attempt to generate a profit and positive cash flow. Looking into the future with respect to GoVideo, we expect to incur additional losses for the remainder of fiscal 2005. As previously discussed, GoVideo has taken steps to reorganize certain aspects of its business and has undertaken cost reduction efforts, including reducing staff, realigning the roles and responsibilities of management and reducing other operating expenses in an attempt to return to profitability. We will continue to focus on our current reorganization efforts. If GoVideo is unable to return to profitability as a result of the current realignment, additional steps including, but not limited to, further cost reductions and the elimination of some of GoVideo’s current activities, may be necessary.

We successfully shut down Correlant’s historical operations in the unprofitable cable modem business, which reduced the cash outflow and preserved Correlant’s significant assets. Looking into the future with respect to Correlant, we expect to maintain the current level of assets during the remainder of fiscal 2005 as Correlant has no current operations. We will continue to seek market opportunities that can utilize Correlant’s significant assets to complement and improve the returns on our current operations.

Certain Factors That May Affect Future Results

Forward Looking Statements. This Quarterly Report on Form 10-Q contains certain statements that are forward looking within the meaning of Section 27A of the Securities and Exchange Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, that involve risks and uncertainties. Any statements contained herein (including, without limitation, statements to the effect that the Company or management “estimates,” “expects,” “anticipates,” “plans,” “believes,” “projects,” “continues,” “may,” or “will” or statements concerning “potential” or “opportunity” or variations thereof or comparable terminology or the negative thereof), that are not statements of historical fact should be construed as forward looking statements. All statements that address operating performance, events or developments that our management expects or anticipates to incur in the future, including statements relating to sales and earnings growth or statements expressing general optimism about future operating results, are forward-looking statements. These forward-looking statements are based on our management’s current views and assumptions regarding future events and operating performance. Many factors

could cause actual results to differ materially from estimates contained in our management’s forward-looking statements including the factors listed at pages 20 - 22. The differences may be caused by a variety of factors, including but not limited to adverse economic conditions, competitive pressures, inadequate capital, unexpected costs, lower revenues, net income and forecasts, the possibility of fluctuation and volatility of our operating results and financial condition, inability to carry out marketing and sales plans and loss of key executives, among other things. Because of these and other factors that may affect our operating results, past performance should not be considered an indicator of future performance and investors should not use historical results to anticipate results or trends in future periods.

GoVideo may need additional capital resources. We believe GoVideo’s cash flow from operations, borrowings under its credit facility and related party debt are sufficient to fund existing operations for the foreseeable future. See “Liquidity and Capital Resources.” However, GoVideo may need additional capital to operate if:

• Market conditions change;

• Business plans or assumptions change;

• Material increases in working capital become necessary; or

• GoVideo’s lender calls or accelerates the repayment of its line of credit due to noncompliance with debt covenants as previously discussed.

The Company has experienced a history of recurring operating losses and may not have liquidity necessary to execute its strategy and return to profitability. GoVideo is under a forbearance agreement with its lender on its line of credit due to financial covenant violations with respect to net losses incurred by GoVideo. The Company recently successfully negotiated an extension of the forbearance period from the current expiration date of February 28, 2005 to August 31, 2005. We believe this six month extension will allow the Company to execute its strategy of returning the Company to profitability. Should the Company be unable to execute its strategies to return to profitability or should the Company need, but be unable to obtain, an extension beyond August 31, 2005, the Company may not have the liquidity to continue as a going concern.

The restatement and reaudit of our financial statements, the additional delays in subsequent filings and the potential for review of our financial disclosure could materially impact our business and results of operations. Following the replacement of prior management, the new management began reviewing various transactions undertaken by old management prior to June 29, 2001. During its preliminary investigation, new management identified certain material transactions undertaken by prior management that impact reported financial and operating results with respect to its consolidated financial statements for the fiscal years ended June 30, 2001, 2000 and 1999. Due to the preliminary results, the Company dismissed the then existing independent accountants, hired new independent accountants and reaudited all periods under investigation. The Company completed the restatement of previously reported financial statement in its Annual Report on Form 10-K for fiscal 2002 filed with the SEC on April 16, 2004. Since the restatement and reaudit of our financial statements, we have been unable to become current with respect to all SEC required filings.

As a result of the restatement and reaudit of our financial statements for fiscal 2001, 2000 and 1999 and the resulting delay in filing SEC reports, the SEC or other governmental authorities may choose to review our SEC filings. We received an SEC comment letter on March 8, 2005 with respect to our Form 10-K for the year ended June 30, 2004, and subsequently addressed all SEC comments. In the future we may be required to take additional actions with respect to other filings. If we are required to take other actions in response to, arising out of, or relating to the restatement and reaudit of our financial statements or other late filings, such actions may require significant attention and resources of management and, regardless of the outcome, could materially impact our business and results of operations.

If we become subject to such heightened scrutiny, this could adversely affect investor confidence, our ability to access the capital markets and cause the trading price for our securities to decline. In addition, we cannot assure you that we will not have to further restate earnings or further revise our reports for prior periods as a result of any SEC review. Any such restatement could further impact investor confidence, our ability to access the capital markets and the trading price of our securities.

We and our independent auditors have identified a number of material weaknesses related to our internal control over financial reporting, which could continue to impact our ability to report our results of operations and financial condition accurately and in a timely manner. The Company has had significant financial reporting issues to address since the restatement of its June 30, 2001, 2000 and 1999 financial statements. As a result, on January 19, 2005, the Company’s external auditors informed the board of a “reportable condition” that constituted a “material weakness” in our internal control over financial reporting. While we are implementing steps to ensure the effectiveness of our internal control over financial reporting, failure to restore the effectiveness of our internal control over financial reporting could continue to negatively impact our ability to report our financial condition and results of operations accurately and could have a material adverse effect on our business, results of operations, financial condition and liquidity.

If the Company is unable to take the necessary corrective action to strengthen its disclosure controls, its ability to report its financial results on a timely and accurate basis may be adversely affected. Based upon the evaluation of our control weaknesses as discussed above, we concluded that our disclosure controls and procedures need to be strengthened and are not sufficiently effective. We have taken various steps to maintain the accuracy of our financial disclosures, and based on these measures and other significant work, management believes there are no material inaccuracies or omissions of material fact in our financial statements and other reports filed with the SEC. However, material weaknesses in our internal controls over financial reporting could further adversely impact our current inability to report timely financial information. If the current inability to report timely is exacerbated by weak disclosure controls, this could result in further accounting restatements or other accounting related problems and we could face greater scrutiny from the SEC.

The Company faces tough competition. The Company’s only operating subsidiary GoVideo plays a unique niche in a highly competitive industry: consumer electronics. GoVideo competes against many well established companies including many original equipment manufacturers (“OEM”) who have substantially greater financial and other resources than the Company. Additionally, the consumer electronics industry is empirically facing a trend of declining gross margin resulted from emerging global market and competition. Although GoVideo was profitable in fiscal 2003, it was not profitable during fiscal 2004 nor during the three months ended September 30, 2004. The competitive nature of the industry may further negatively affect the Company’s earnings if GoVideo is unable to quickly adapt to the technological and market changes of the industry.

GoVideo’s customers have the ability to go straight to the contract manufacturer. GoVideo has no manufacturing capabilities. All products are purchased from contract manufacturers. Because of this, there is nothing stopping GoVideo’s customers from purchasing products direct from these contract manufacturers.

We may not be able to produce sufficient quantities of our products as we obtain components from, and depend on, a limited number of key suppliers. All our TV and DVD player products contain one or more components that are available from a single supply source and other components that are available from limited sources. We depend on these sources to meet our production requirements. We do not have any long term supply contracts. Although we do not presently anticipate a disruption in this source of supply, if it is necessary for us to obtain these key components from an alternative supplier, it could take several months before receiving adequate supplies, and during this time we would be unable to satisfy our customers’ demands. In such event, prolonged delays could result in the cancellation of orders and the loss of customers.

GoVideo purchases products from countries in Asia, including China, South Korea and Taiwan, where there are risks associated with the potential change in social, political and regulatory and economic conditions. Significant changes in the social, political and regulatory and economic conditions could adversely affect GoVideo through increased costs, unavailability of goods or increased tariffs. As a result of trade disputes, the US has occasionally imposed tariffs, regulatory procedures and importation bans on certain products. Trade sanctions or regulatory procedures involving a country in which we conduct a substantial amount of business could have a material adverse effect on our operations.

GoVideo is responsible for product warranties and defects. Although GoVideo outsources all product manufacturing, it provides limited labor and parts warranties on certain of its products for a maximum of one year. Therefore, GoVideo is highly dependent upon the quality of its suppliers.

Our new products may not be well accepted. Our future success depends on GoVideo’s ability to continue to design and develop and win acceptance of its products and services, which are offered in highly competitive markets

characterized by continual product introductions, rapid development in technology, and subjective and changing consumer preferences.

The introduction or expected introduction of new products or technologies may depress sales of existing products and technologies. As GoVideo maintains a substantial investment in product inventory, the introduction of new products may force us to charge less for our existing inventory and cause such existing inventory to become obsolete. Such declining prices and inventory obsolescence could have a material adverse effect on our business and financial results.

We are exposed to the risks associated with the recent decision to cease cable modem-related business by Correlant, our subsidiary. The Company is actively seeking a viable business model for Correlant to maximize our stockholders’ interest. Even if a viable business model is found that will correspond with Correlant’s available cash size, there is still no guarantee the model will succeed. We successfully reduced Correlant’s cash burn rate by winding down Correlant’s historical operations in the cable modem industry. However, since shutting down the operations, which was substantially completed March 2004, we have been unable to identify and secure a viable business plan that will utilize Correlant’s assets.

Our stock price may not come back. The Company’s stock was removed from OTC Bulletin Board as a result of the Company’s failure to timely submit its Annual Report on Form 10-K for fiscal 2002, 2003 and 2004. Although we filed our Annual Reports on Form 10-K for fiscal 2002, 2003 and 2004 on April 16, 2004, August 24, 2004 and February 18, 2005, respectively, we are not eligible to trade on the OTC Bulletin Board until we become current in all our required filings or until we file a Form 10 and clear all comments with the SEC. The current trading of the Company’s stock is sporadic and minimal and there is no established public trading market for our common stock. In addition, the stock market has experienced extreme price and volume fluctuations that have affected the market price of many technology companies, in particular, and that have often been unrelated to the operating performance of these companies. These factors, as well as general economic and political conditions, may materially adversely affect the market price of our common stock in the future. Additionally, volatility or a lack of positive performance in our stock price may adversely affect our ability to retain key employees.

Our executive officers and key personnel are critical to our business and the loss of their services could disrupt our operations and our customer relationships. Our success depends to a significant degree upon the continuing contributions of our key management, technical, marketing and sales employees. There can be no assurance that we will be successful in retaining our key employees or that we can attract and retain additional skilled personnel as required. The loss of the services of key personnel could significantly harm our results of operations and business.

Because of these and other factors affecting our operating results, past financial performance should not be considered an indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based on the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires estimates and assumptions that affect the reported amounts and disclosures.

We believe the following, among others, to be critical accounting policies. That is, they are both important to the portrayal of our financial condition and results of operations, and they require critical management judgments and estimates about matters that are inherently uncertain. Although we believe our judgments and estimates are appropriate and correct, actual future results may differ from our estimates.

• Revenue recognition. We recognize revenue upon passage of title of our product in accordance with the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin 101, Revenue Recognition in Financial Statements (“SAB 101”), as amended by SAB 101A and 101B. At the time revenue is recognized, GoVideo records an allowance for estimated sales returns based on estimates derived from historical trends. Sales returns are recorded with net revenues. GoVideo also establishes an allowance for

estimated payment term discounts expected to be taken by customers based on analysis of historical trends. Payment term discounts granted are recorded in net revenues.

• Warranty Reserves. Go Video provides limited labor and parts warranties on certain of its products for a maximum of one year. Go Video records a warranty reserve based upon historical experience and an estimate of total exposure associated with products sold to consumers through retail outlets.

• Bad debt reserves. We conduct business and extend credit based on an evaluation of our customers’ financial condition generally without requiring collateral. Exposure to losses on trade receivables is expected to vary by customer due to the financial condition of each customer. We monitor exposure to credit losses and maintain allowances for anticipated losses considered necessary under the circumstances. Delinquent notes and trade accounts receivable are charged against the allowance for doubtful accounts once uncollectibility has been determined. The allowance is determined through an analysis of the aging of accounts receivable and assessments of risk based on historical trends and an evaluation of the impact of current and projected economic conditions. We evaluate the past-due status of our notes and related parties and trade receivables based on contractual terms of sale. If the financial condition of our customers were to deteriorate, this could result in an impairment of ability to make payments, and additional allowances may be required.

• Related party transactions. We have significant related party transactions and agreements; many of which are complex. We believe such transactions have been accounted for at fair value. We utilized our best estimate of the value of these transactions and agreements. Had alternative assumptions been used, the values obtained may have been different.

• Inventories. GoVideo’s inventory consists of mostly finished goods, some of which are in transit from its contract manufacturer. Inventories are stated at the lower of cost or market with cost being determined on a first-in, first-out basis. We write down our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of the inventory and the estimated market value based upon assumptions about future demand and market conditions.

• Investments. Our investments consist primarily of corporate debt and government securities. Investments are stated at fair value based on quoted market prices obtained from an independent banker. Investments are classified as available-for-sale based on management’s intended use. As of September 30, 2004 the cost of our investments approximated fair value.

• Impairment of other long-lived assets. Other long-lived assets, such as property and equipment, are amortized or depreciated over their estimated useful lives. These assets are reviewed for impairment whenever events or circumstances provide evidence that suggest that the carrying amount of the asset may not be recoverable, with impairment being based upon an evaluation of the identifiable undiscounted cash flows. If the asset has been impaired, the resulting charge reflects the excess of the asset’s carrying cost over its fair value.

Recently Issued Accounting Standards

In December 2004, the FASB issued SFAS 123R, Share-Based Payment (“SFAS 123R”) which is a revision of SFAS 123 and supersedes Accounting Principles Board (“APB”) 25, Accounting for Stock Issued to Employees (“APB 25”). Among other items, SFAS 123R eliminates the use of APB 25 and the intrinsic value method of accounting, and requires companies to recognize the cost of employee services received in exchange for awards of equity instruments, based on the grant date fair value of those awards, in the financial statements. The effective date of SFAS 123R is the first reporting period beginning after June 15, 2005. SFAS 123R permits companies to adopt its requirements using either a “modified prospective” method, or a “modified retrospective” method. Under the “modified prospective” method, compensation cost is recognized in the financial statements beginning with the effective date, based on the requirements of SFAS 123R for all share-based payments granted after that date, and based on the requirements of SFAS 123 for all unvested awards granted prior to the effective date of SFAS 123R. Under the “modified retrospective” method, the requirements are the same as under the “modified prospective” method, but also permits entities to restate financial statements of previous periods based on proforma disclosures made in accordance with SFAS 123.

The Company currently utilizes a standard option pricing model (i.e., Black-Scholes) to measure the fair value of stock options granted to Employees. While SFAS 123R permits entities to continue to use such a model, the standard also permits the use of a “lattice” model. The Company has not yet determined which model it will use to measure the fair value of employee stock options upon the adoption of SFAS 123R.

The Company currently expects to adopt SFAS 123R effective July 1, 2005. However, because the Company has not yet determined which of the aforementioned adoption methods it will use, the Company has not yet determined the impact of adopting SFAS 123R.

Item 3 – Quantitative and Qualitative Disclosures About Market Risk:

Interest Risk. Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio. We do not use derivative financial instruments in our investment portfolio. We place our investments with high credit quality issuers and, by policy, limit the amount of credit exposure to any one issuer. We are averse to principal loss and ensure the safety and preservation of invested funds by limiting default risk, market risk, and reinvestment risk. We minimize our risk by investing in only the safest and highest credit quality securities and by constantly positioning our portfolio to respond appropriately to a significant reduction in a credit rating of any investment issuer or guarantor. Our portfolio includes only corporate debt and government securities.

Foreign Currency Risk. The majority of our transactions are denominated in the U.S. dollar. Therefore, we do not have any hedging or similar foreign currency contracts. To date, we have not experienced any material foreign currency exchange rate gains or losses associated with foreign currency transactions and do not expect any significant changes in foreign currency exposure in the near future.

Item 4 – Controls and Procedures:

In connection with the audit of our financial statements for the year ended June 30, 2004, Hein & Associates LLP (“Hein”), our independent auditors, informed the Board of Directors on January 19, 2005 of a “reportable condition” that constituted a “material weakness” in our internal control over financial reporting under standards established by the American Institute of Certified Public Accountants (“AICPA”), as previously reported in our Annual Report on Form 10-K for the year ended June 30, 2004.

Although the communication from our independent auditors did not specifically mention a weakness with respect to “disclosure controls and procedures,” management, including the Chief Executive Officer, Chief Financial Officer and Chief Operating Officer concluded, that the material weakness conditions described in our Annual Report on Form 10-K for the year ended June 30, 2004 also relate to our disclosure controls and procedures as of September 30, 2004. The interim and longer term steps described in our Annual Report on Form 10-K for the year ended June 30, 2004 are applicable to improving the effectiveness of our disclosure controls and procedures. We created a Disclosure Committee to ensure compliance with the disclosure controls and procedures and to evaluate the effectiveness of those controls and procedures on a regular basis. Subsequent to the formation of the Disclosure Committee, Opta adopted a Disclosure Committee Charter (“Charter”). The Company will provide a copy of our Charter, free of charge, upon written request sent to our principal executive office.

(b) Changes in internal control over financial reporting. There were no changes in our internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act rules 13a-15 or 15d-15 that occurred during the three months ended September 30, 2004 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. However, as a result of receiving notification of a “material weakness” from Hein, we are currently in the process of taking a number of steps to improve the effectiveness of our internal control, as previously reported in our annual Report on Form 10-K for the year ended June 30, 2004.

PART II. OTHER INFORMATION

Item 1 - Legal Proceedings:

From time to time we may be involved in various disputes and litigation matters arising in the normal course of business. As of March 31, 2005, we are not involved in any legal proceedings that are expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows. However, litigation is subject to inherent uncertainties. Were an unfavorable ruling to occur, there exists the possibility of a material adverse impact on our results of operations of the period in which the ruling occurs. Our estimate of the potential impact on our financial position or overall results of operations for new legal proceedings could change in the future.

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

There were no sales of unregistered securities by the Company during the quarter ended September 30, 2004.

Issuer Purchases of Equity Securities

Date of Purchase	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs
July 1 through July 31, 2004	None	—		None	None
August 1 through August 31, 2004	686,066		*	None	None
September 1 through September 30, 2004	None	—		None	None

* Pursuant to the terms of a settlement agreement reached with TurboComm, TurboComm delivered 686,066 shares of Opta, constituting all shares of Opta owned by TurboComm.

The Company has not publicly announced any plans to purchase Opta stock. In the past, the Board of Directors reviewed and approved repurchases of its common stock on a case by case basis. In addition, the Company has no plans in the future to publicly announce any stock repurchase plans. The Board of Directors plans to continue to review potential repurchases of its common stock and will continue to approve the repurchase transactions on a case by case basis.

Item 3 - Defaults Upon Senior Securities		Not Applicable

Item 4 - Submission of Matters to a Vote of Security Holders		Not Applicable

Item 5 - Other Information

On April 5, 2005, Steve Davis tendered his resignation as chief financial officer of Opta. Effective as of April 5, 2005, Sean Wang, Opta’s current chief operating officer, will serve as interim chief financial officer of Opta until Opta has completed a search for a new chief financial officer.

Sean Wang, 41, served as the Chief Financial Officer, from 2002 to 2004, of PacificNet, Inc., a company in Minneapolis, Minnesota whose shares are traded on NASDAQ (Symbol: PACT). PacificNet, Inc., through its subsidiaries, invests, operates and provides value-added telecom services and products solutions in China. From 1993 to 2002, Mr. Wang served as a managing director of Thian Bing Investments PTE, Ltd. in Singapore, an investment company in oil seeds planting, edible oil processing, packing materials and the other related industries. Mr. Wang graduated from Hamline University in St. Paul, Minnesota with a Bachelor of Science in 1986 and from the University of Minnesota with a Masters of Business Administration in 1989. Mr. Wang is not related to any members of the Board of Directors or executive officers of Opta and is not a party to any interested transactions with Opta, Correlant or GoVideo.

Item 6 - Exhibits

Exhibit Number	Description of Exhibit	Method of Filing
3.1	Certificate of Incorporation, as amended	Incorporated by reference to Exhibit 3.1 to Form 10-K, filed February 18, 2005
3.2	Amended and Restated Bylaws	Incorporated by reference to Exhibit 3.2 to Form 10, filed October 27, 1998
3.3	Amendment to Bylaws	Incorporated by reference to Exhibit 99.1 to Form 8-K, filed July 2, 2001
10.1	2000 Equity Incentive Plan	Incorporated by reference to Exhibit A to Proxy Statement on Schedule 14A filed April 4, 2000
10.2	Opta Executive Employment Agreement	Incorporated by reference to Exhibit 10.11 to Form 10-K, filed October 15, 2001
10.3	Opta Systems, LLC dba GoVideo Executive Employment Agreement	Incorporated by reference to Exhibit 10.4 to Form 10-K, filed April 16, 2004
10.4	Opta LLC Interest Purchase Agreement between Registrant and Carmco Investment, LLC, dated April 17, 2003	Incorporated by reference to Exhibit 10.8 to Form 10-K, filed April 16, 2004
10.5	Sale agreement of TCL Digital dated December 20, 2003	Incorporated by reference to Exhibit 10.9 to Form 10-K, filed April 16, 2004
10.6	Current Lease – GoVideo Office Lease	Incorporated by reference to Exhibit 10.10 to Form 10-K, filed April 16, 2004
10.7	Current Lease – Go Video Lease for Commercial Space	Incorporated by reference to Exhibit 10.11 to Form 10-K, filed April 16, 2004
10.8	Current Lease – Opta Corporation Executive Office Lease	Incorporated by reference to Exhibit 10.9 to Form 10-K, filed February 18, 2005
10.9	Debt agreement between GoVideo and T.C.L. Industries Holdings (H.K.) Limited, dated June 28, 2003, as amended	Incorporated by reference to Exhibit 10.10 to Form 10-K, filed February 18, 2005
10.10	Debt agreement between GoVideo and Asia Focus Industrial Ltd., dated June 12, 2003, as amended	Incorporated by reference to Exhibit 10.11 to Form 10-K, filed February 18, 2005
10.11	Debt agreement between Opta and T.C.L. Industries Holdings (H.K.) Limited, dated October 21, 2003, as amended	Incorporated by reference to Exhibit 10.12 to Form 10-K, filed February 18, 2005
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

32.1

Certification Pursuant to Section 1350 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	OPTA CORPORATION
	(Registrant)


Date: April 8, 2005	By:	/s/ YAN, Vincent Yong
		YAN, Vincent Yong
		President, Chief Executive Officer, Director

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