Attached files
file | filename |
---|---|
EXCEL - IDEA: XBRL DOCUMENT - OPTI INC | Financial_Report.xls |
EX-31 - OPTI INC | ex32-1.htm |
EX-32 - OPTI INC | ex32-2.htm |
EX-31 - OPTI INC | ex31-1.htm |
EX-31 - OPTI INC | ex31-2.htm |
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
¾¾¾¾¾¾¾¾¾¾¾¾¾¾¾
FORM
10-Q
x QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For
the Quarterly Period Ended June 30, 2012
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For
the Transition Period from ____________to___________
________________________
Commission
File Number 0-21422
OPTi
Inc.
(Exact
name of registrant as specified in its charter)
________________________
CALIFORNIA
|
77-0220697
|
|
(State
or other jurisdiction of incorporation or
organization)
|
(I.R.S.
Employer Identification No.)
|
|
One
First Street, Suite 14 Los Altos,
California
|
94022
|
|
(Address
of principal executive office)
|
(Zip
Code)
|
Registrant's
telephone number, including area code (650)
213-8550
________________________
Indicate
by check mark whether the registrant (1) has filed all
reports 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 xNo
o
Indicate
by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was
required to submit and post such files).
Yes
o No
o
Indicate
by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer or a
smaller reporting company. See definitions of
"large accelerated filer", "accelerated filer",
"non-accelerated filer", and "smaller reporting company" in
Rule 12b-2 of the Exchange Act.
Large-accelerated
filer
|
o
|
Accelerated
filer
|
o
|
Non-accelerated
filer
|
o(Do
not check if smaller reporting company)
|
Smaller
reporting company
|
x
|
Indicate
by check mark whether the registrant is a shell company (as
defined in Rule 12(b)-2 of the Exchange Act).
Yes
o No
x
The
number of shares outstanding of the registrant's common
stock as of July 31, 2012 was 11,645,903.
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INDEX
Page
#
|
||
ITEM
1:
|
FINANCIAL
STATEMENTS
|
3 |
Condensed
Consolidated Balance Sheet
|
3 | |
Condensed
Consolidated Statement of Net Assets in
Liquidation
|
4 | |
Condensed
Consolidated Statement of Changes in Net Assets in
Liquidation
|
5 | |
Condensed
Consolidated Statements of Operations
|
6 | |
Condensed
Consolidated Statements of Cash Flows
|
7 | |
Notes
to Condensed Consolidated Financial
Statements
|
8 | |
ITEM
2:
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF
OPERATIONS
|
12 |
Overview
|
12 | |
Results
of Operations
|
12 | |
Liquidity
and Capital Resources
|
13 | |
ITEM
3:
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
14 |
ITEM
4:
|
CONTROLS
AND PROCEDURES
|
14 |
PART
II: OTHER INFORMATION
|
15 | |
ITEM
1:
|
LEGAL
PROCEEDINGS
|
15 |
ITEM
1A:
|
RISK
FACTORS
|
15 |
ITEM
2:
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
17 |
ITEM
3:
|
DEFAULTS
UPON SENIOR SECURITIES
|
17 |
ITEM
4:
|
MINE SAFETY
DISCLOSURES
|
17 |
ITEM
5:
|
OTHER
INFORMATION –
NEW ANNUAL MEETING DATE FOR 2012
|
17 |
ITEM
6:
|
EXHIBITS
|
18 |
SIGNATURES
|
PAGE
2
PART
I: FINANCIAL INFORMATION
OPTi
INC.
CONDENSED
CONSOLIDATED BALANCE SHEET
(Going
Concern Basis)
(in
thousands)
March
31,
2012
|
||||
(audited)
|
||||
ASSETS
|
||||
Current
assets:
|
||||
Cash
and cash equivalents
|
$ | 21,922 | ||
Income
tax receivable
|
1,392 | |||
Prepaid
expenses and other current assets
|
24 | |||
Total
current assets
|
23,338 | |||
Property
and equipment, at cost
|
||||
Machinery
and equipment
|
32 | |||
Furniture
and fixtures
|
17 | |||
49 | ||||
Accumulated
depreciation
|
(41 | ) | ||
8 | ||||
Other
assets
|
||||
Deposits
|
5 | |||
Total
other assets
|
5 | |||
Total
assets
|
$ | 23,351 | ||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||
Current
liabilities:
|
||||
Accounts
payable
|
$ | 163 | ||
Accrued
expenses
|
204 | |||
Accrued
employee compensation
|
10 | |||
Total
current liabilities
|
377 | |||
Other
liabilities:
|
||||
Non-current
taxes payable
|
3,816 | |||
Total
liabilities
|
4,193 | |||
Stockholders’
equity:
|
||||
Preferred
stock, no par value
|
||||
Authorized
shares – 5,000
|
||||
No
shares issued or outstanding
|
— | |||
Common
stock
|
||||
Authorized
shares – 50,000
|
||||
Issued
and outstanding – 11,646
|
13,544 | |||
Retained
earnings
|
5,614 | |||
Total
stockholders’ equity
|
19,158 | |||
Total
liabilities and stockholders’ equity
|
$ | 23,351 |
*
The balance sheet as of March 31, 2012 has been derived
from the audited financial statements.
The
accompanying notes are an integral part of these condensed
consolidated financial statements.
PAGE
3
OPTi
INC.
(Liquidation
Basis)
(in
thousands)
(Unaudited)
June
30,
2012
|
||||
Assets:
|
||||
Cash
and cash equivalents
|
$ | 8,474 | ||
Income
tax receivable
|
1,576 | |||
Prepaid
expenses and other current assets
|
58 | |||
Property
and equipment
|
7 | |||
Deposits
|
5 | |||
Total assets
|
$ | 10,120 | ||
Liabilities:
|
||||
Accounts
payable
|
$ | 140 | ||
Accrued
expenses
|
194 | |||
Accrued
employee compensation
|
3 | |||
Non-current
taxes payable
|
3,903 | |||
Other
accrued liabilities
|
5,442 | |||
Total
liabilities
|
9,682 | |||
Net
assets in liquidation
|
$ | 438 |
Because of the unpredictability of any settlement amounts
and of a ruling in favor of the Company, the Company is
currently unable to estimate the net realizable value of
any proceeds for the ongoing litigation against VIA and
SIS. Accordingly, the Company has not recorded any
receivables for such litigation. If the Company is
successful in its litigation efforts, it will record the
amount of any settlement or final judgment at the time
thereof, resulting in an increase to the net assets.
The
accompanying notes are an integral part of these condensed
consolidated financial statements.
PAGE
4
OPTi
Inc.
CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN
LIQUIDATION
(Liquidation
Basis)
(In
thousands)
(Unaudited)
For
the One Month
Period
ended June 30, 2012
|
||||
Stockholder’s
equity at May 31, 2012
|
$ | 18,928 | ||
Accrued
liquidation cost
|
(5,680 | ) | ||
Net
assets in liquidation as of June 1, 2012
|
$ | 13,248 | ||
Liquidating
distribution
|
(12,810 | ) | ||
Adjustments
to accrued liquidation costs during the month ended
June 30, 2012
|
─
|
|||
Net
assets in liquidation as of June 30, 2012
|
$ | 438 |
Because
of the unpredictability of any settlement amounts and of
a ruling in favor of the Company, the Company is
currently unable to estimate the net realizable value of
any proceeds for the ongoing litigation against VIA and
SIS. Accordingly, the Company has not recorded any
receivables for such litigation. If the Company is
successful in its litigation efforts, it will record the
amount of any settlement or final judgment at the time
thereof, resulting in an increase to the net
assets.
The
accompanying notes are an integral part of these condensed
consolidated financial statements.
PAGE
5
OPTi
Inc.
|
||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
(Going
Concern Basis)
|
||||||||
(in
thousands, except for per share data)
|
||||||||
(unaudited)
|
||||||||
Two
Months Ended
May
31,
2012
|
Three
Months Ended
June
30,
2011
|
|||||||
Sales
|
||||||||
License
and royalties
|
$ | — | $ | — | ||||
Net
sales
|
— | — | ||||||
Costs
and expenses
|
||||||||
Selling,
general and administrative
|
265 | 873 | ||||||
Total
costs and expenses
|
265 | 873 | ||||||
Operating
loss
|
(265 | ) | (873 | ) | ||||
Interest
and other income, net
|
2 | 4 | ||||||
Loss
before provision for income taxes
|
(263 | ) | (869 | ) | ||||
Income
tax benefit
|
(34 | ) | (294 | ) | ||||
Net
loss
|
$ | (229 | ) | $ | (575 | ) | ||
Basic
and diluted net loss per share
|
$ | (0.02 | ) | $ | (0.05 | ) | ||
Shares
used in computing basic and diluted per share
amounts
|
11,646 | 11,646 |
The
accompanying notes are an integral part of these condensed
consolidated financial statements.
PAGE
6
OPTi INC.
(Going
Concern Basis)
(in
thousands)
(unaudited)
Two
Months
Ended
May 31,
2012
|
Three
Months
Ended
June 30,
2011
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
$ | (229 | ) | $ | (575 | ) | ||
Adjustments
to reconcile net income (loss) to net used in
operating activities:
|
||||||||
Depreciation
|
1 | 1 | ||||||
Deferred
income taxes
|
— | 349 | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Prepaid
expenses and other current assets
|
(40 | ) | 33 | |||||
Income
taxes receivable
|
(92 | ) | (1,370 | ) | ||||
Accounts
payable
|
44 | 88 | ||||||
Accrued
expenses
|
(75 | ) | 250 | |||||
Accrued
employee compensation
|
(7 | ) | (683 | ) | ||||
Income
taxes payable
|
59 | — | ||||||
Net
cash used in operating activities
|
(339 | ) | (1,907 | ) | ||||
Net
increase (decrease) in cash and cash
equivalents
|
(339 | ) | (1,907 | ) | ||||
Cash
and cash equivalents, beginning of period
|
21,922 | 25,779 | ||||||
Cash
and cash equivalents, end of period
|
$ | 21,583 | $ | 23,872 |
The
accompanying notes are an integral part of these condensed
consolidated financial statements.
PAGE
7
OPTi
Inc. (In
Liquidation)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June
30, 2012
(Unaudited)
Since
May 31, 2012, the Company has been in liquidation pursuant
to a Plan of Liquidation approved by its shareholders on
that date.
1. Basis
of Presentation
The
information, as of June 30, 2012 and for the three month
periods ended June 30, 2012 and 2011, are unaudited, but
includes all adjustments (consisting of normal recurring
adjustments) which the Company’s management believes
to be necessary for the fair presentation of the financial
position, results of operations and cash flows for the
periods presented. Interim results are not
necessarily indicative of results for a full year.
The
accompanying financial statements should be read in
conjunction with the Company’s audited financial
statements for the year ended March 31, 2012, which are
included in the annual report on Form 10-K filed by the
Company with the Securities and Exchange Commission.
Liquidating
Basis of Accounting
Basis of
Consolidation – As a result of the
shareholders' approval of the Plan of Liquidation, the
Company adopted the liquidation basis of accounting
effective May 31, 2012. This basis of accounting
is considered appropriate when liquidation of a company is
imminent. Under the liquidation basis of
accounting, assets are valued at their net realizable
value, which is the non-discounted amount of cash, or
its equivalent, into which an asset is expected to be
converted in the due course of business less direct
costs. Liabilities are stated at their estimated
settlement amount, which is the non-discounted amount of
cash, or its equivalent, expected to be paid to liquidate
an obligation in the due course of business, including
direct costs.
Accrued
Cost of Liquidation
The
Company accrued the estimated costs expected to be incurred
during the dissolution period, as of June 1,
2012. The dissolution period estimate provides
time for the Company to complete the remaining litigation,
make final distributions (if any), and file its certificate
of dissolution. In determining its total
estimated costs to liquidate, the Company estimated that it
will incur costs through March 31, 2016 as follows (in
thousands):
Salaries,
wages and benefits
|
$ | 1,117 | ||
Lease
expense
|
205 | |||
Legal,
accounting, board and other professional
fees
|
1,407 | |||
Litigation
related expenses
|
2,100 | |||
Outside
services and other expenses
|
538 | |||
Insurance
|
313 | |||
Total
liquidation accrual
|
$ | 5,680 |
The
estimates were based on prior history, known future events,
contractual obligations and the estimated time to complete
liquidation. The Company has recorded total
accrued liabilities of $5.4 million on the statement of net
assets as of June 30, 2012. The actual costs
associated with carrying out the Plan of Liquidation may
depend on factors beyond the control of the Company and
differ materially from the accrued amounts because of the
Plan's inherent uncertainty. See "Risk Factors"
below.
PAGE
8
Because
of the unpredictability of any settlement amounts or a
ruling in favor of the Company, the Company is currently
unable to estimate the net realizable value of any proceeds
for the ongoing litigation against VIA and
SIS. Accordingly, the Company has not recorded
any receivables for such litigation. If the
Company is successful in its litigation efforts, it will
record the amount of any settlement or final judgment at
the time thereof, resulting in an increase to the net
assets.
Use
of Estimates
The
preparation of financial statements in accordance with
accounting principles generally accepted in the United
States requires management to make estimates and
assumptions that affect the amounts reported in the
financial statements and accompanying
notes. Actual results could differ from those
estimates under different assumptions or conditions.
These differences may be material. See "Risk Factors"
below.
Summary
of Significant Accounting Policies, Income Taxes
Income
taxes are calculated under Accounting Standard Codification
Topic 740 “Accounting for Income
Taxes”. Under ASC 740, the liability
method is used in accounting for income taxes, which
includes the effects of deferred tax assets or
liabilities. Deferred tax assets or liabilities
are recognized for the expected tax consequences of
temporary differences between the financial statement and
tax bases of assets and liabilities using the enacted tax
rates that will be in effect when these differences
reverse. The Company provides a valuation allowance to
reduce deferred tax assets to the amount that is expected,
based on whether such assets are more likely than not to be
utilized.
2. Net
Income (Loss) Per Share
Basic
net income (loss) per share is computed by dividing net
income (loss) by the average number of common shares
outstanding during the period.
Diluted
net income (loss) per share is computed by dividing net
income (loss) by the weighted average number of common
shares that would be outstanding if all convertible
securities were converted into common stock.
The
Company had no stock options outstanding as of May 31,
2012. The Company has excluded options for the
purchase of 4,000 shares of common stock from the
calculation of diluted net (loss) per share for the three
month period ended June 30, 2011, because such securities
were anti-dilutive.
3. Taxes
As
part of the process of preparing the unaudited condensed
consolidated financial statements, the Company is required
to estimate its income taxes in each of the jurisdictions
in which it operates. This process involves
estimating the current tax liability under the most recent
tax laws and assessing temporary differences resulting from
differing treatment of items for tax and accounting
purposes. These differences result in deferred
tax assets and liabilities, which are included in the
unaudited condensed consolidated balance sheet.
Income
tax benefit for the two months ended May 31, 2012 was
$34,000, or 13% of pre-tax income as compared to a benefit
of $0.3 million, or 34% of pre-tax income for the quarter
ended June 30, 2011. The effective tax rate for
the two months ended May 31, 2012 differs from the U.S.
federal statutory rate of 34% primarily due to the
unfavorable impact of current federal and state income
taxes.
PAGE
9
As
of June 30, 2012, the Company’s total gross
unrecognized tax benefit did not materially change compared
with the balance as of March 31, 2012. The
Company has provided a liability of approximately $3.5
million representing unrecognized tax benefits relating to
federal and state R&D credit. All of this
amount would impact the Company’s effective rate, if
recognized. Penalty and interest of
approximately $0.4 million has been accrued in income tax
expense.
4. Cash
and Cash Equivalents
The
following is a summary as of June 30 and March 31, 2012 (in
thousands):
June
30,
|
March
31,
|
|||||||
2012
|
2012
|
|||||||
Cash
|
$ | 100 | $ | 100 | ||||
Money
market funds
|
8,374 | 21,822 | ||||||
$ | 8,474 | $ | 21,922 |
The
accounting standard for fair value establishes a framework
for measuring fair value and requires disclosures about
fair value measurements by establishing a hierarchy that
prioritizes the inputs to valuation techniques used to
measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1
measurements) and lowest priority to unobservable inputs
(Level 3 measurements). The three levels of the
fair value hierarchy are described below:
Level
I
|
—
|
Observable
inputs such as quoted prices in active
markets;
|
Level
II
|
—
|
Inputs
other than the quoted prices in active markets that
are observable either directly or indirectly;
and
|
Level
III
|
—
|
Unobservable
inputs in which there is little or no market data,
which requires the Company to develop its own
assumptions. This hierarchy requires the Company to
use observable market data, when available, and to
minimize the use of unobservable inputs when
determining fair value. On a recurring basis, the
Company measures its investments and marketable
securities at fair value.
|
As
of June 30, 2012, and March 31, 2012, the Company had
investments in money market funds of $8.4 million and $21.8
million, respectively, in cash equivalents classified as
Level I of the fair market hierarchy and no Level II or
Level III investments.
PAGE
10
5. Commitments
The
Company leases its facility under a non-cancelable
operating lease that expires in January 2014.
Rental
expense for the operating lease amounted to $12,000 and
$29,000, respectively, for the three months ended June 30,
2012 and June 30, 2011.
Future
minimum lease commitments by fiscal year for all facility
leases are as follows:
March
31, 2013
|
$ | 35,753 | ||
March
31, 2014
|
40,950 | |||
Total
lease commitment
|
$ | 76,703 |
6. Subsequent
Events
On
June 4, 2012, the Company announced a liquidating
distribution of $12.8 million or $1.10 per share of the
Company’s stock pursuant to the Plan of Liquidation.
The $12.8 million was transferred to our transfer agent on
June 29, 2012, and is netted against an equal amount of
liquidating distribution payable resulting in a zero net
balance as of June 30, 2012. The distribution was
paid on July 3, 2012, to shareholders of record as of the
close of business on June 26, 2012.
PAGE
11
Item
2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Information
set forth in this report may include forward-looking
statements made within the meaning of Section 27A of the
Security Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which involve
risks and uncertainties. The Company’s actual results
may differ significantly from the results discussed in the
forward-looking statements as a result of a number of
factors. Readers are encouraged to review
“Risk Factors” set forth below.
On
May 31, 2012, the shareholders of OPTi approved a Plan of
Liquidation pursuant to which the Company is winding up and
dissolving. The Company anticipates that its
liquidation will be complete by March 31,
2016. During the winding up period, the Company
has ceased to carry on business except to the extent
necessary for the beneficial winding up
thereof. Please see Part 1, Item 1 of Form 10-K
for the fiscal year ended March 31, 2012, for background
regarding the Plan of Liquidation.
The
Company intends to continue to conduct its ongoing
litigation against VIA Technologies, Inc. and Silicon
Integrated Systems Corp. during the Liquidation
Period. A trial date has been set for May
2013. See "Legal Proceedings" below.
In
addition, the Company may be compelled to defend itself and
its directors against litigation initiated by its
shareholders or others in connection with the Plan of
Liquidation and the winding up of the Company. See below
“Risk Factors - Uncertainty Over Winding Up and
Dissolution of the Company.
Critical
Accounting Policies
General. Our
discussions and analysis of our financial condition and
results of operations are based upon our consolidated
financial statements, which have been prepared in
accordance with accounting principles generally accepted in
the United States. The preparation of these
financial statements requires that we make estimates and
judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure
of contingent assets and liabilities. On an
on-going basis, we evaluate our estimates based on
historical experience and on various other assumptions that
we believe to be reasonable under the circumstances, the
results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual
results may differ from these estimates under different
assumptions or conditions.
We
believe that, of the significant accounting policies used
in preparation of our consolidated financial statements
(see Note 1 of Notes to Condensed Consolidated Financial
Statements), the following are critical accounting
policies, which may involve a higher degree of judgment and
complexity.
Revenue
Recognition Revenue
from license arrangements is recognized when persuasive
evidence of an arrangement exists, delivery has occurred
and there are no future performance obligations, fees are
fixed or determinable and collectability is reasonably
assured.
Litigation and
Contingencies From time to time, we
receive various inquiries or claims in connection with
patent and other intellectual property
rights. We estimate the probable outcome of
these claims and accrue estimates of the amounts that we
expect to pay upon resolution of such matters, if
needed. Should we not be able to secure the
terms we expect, these estimates may change and may result
in increased accruals, resulting in decreased
profits.
Accrual for
Costs of Liquidation We expect it will
take approximately forty-six months to complete the Plan of
Liquidation. Accordingly, we had to estimate
expenses for the liquidation period based on historical
information and known future events. The actual costs
associated with carrying out the Plan of Liquidation may
depend on factors beyond the control of the Company and may
differ materially from the accrued amounts because of the
Plan's inherent uncertainty. See "Risk Factors"
below.
PAGE
12
Results
of Operations for the Two Months Ended May 31, 2012
Compared
to the Three Months Ended June 30, 2011
Revenues
The
Company had no license revenue for the two-month period
ended May 31, 2012 and the three-month period ended June
30, 2011.
General
and Administrative
General
and administrative expenses for the two months ended May
31, 2012 were $265,000 as compared to $873,000 for the
quarter ended June 30, 2011. The decrease in
general and administrative costs for the two-month period
ended June 30, 2012, as compared to the comparable period
ended June 30, 2011, was mainly attributable to a two-month
period in FY 2013 versus a three-month period in FY 2012,
as well as a decrease in litigation costs.
Interest
and Other Income, Net
Net
interest and other income for the two-month period ending
May 31, 2012 was $2,000 as compared to $4,000 for the
three-months ended June 30, 2011. The decrease
in net interest and other income in the two-month period
ended May 31, 2012 as compared to the comparable period in
2011 was due to lower cash balances.
Income
Taxes
As
part of the process of preparing the unaudited condensed
consolidated financial statements, the Company is required
to estimate its income taxes in each of the jurisdictions
in which it operates. This process involves
estimating the current tax liability under the most recent
tax laws and assessing temporary differences resulting from
differing treatment of items for tax and accounting
purposes. These differences result in deferred
tax assets and liabilities, which are included in the
unaudited condensed consolidated balance sheet.
Income
tax benefit for the two months ended May 31, 2012 was
$34,000, or 13% of pre-tax income as compared to a benefit
of $0.3 million, or 34% of pre-tax income for the quarter
ended June 30, 2011. The effective tax rate for
the two months ended May 31, 2012 differs from the U.S.
federal statutory rate of 34% primarily due to the
unfavorable impact of current federal and state income
taxes.
As
of June 30, 2012, the Company’s total gross
unrecognized tax benefit did not materially change compared
with the balance as of March 31, 2012. The
Company has provided a liability of approximately $3.5
million representing unrecognized tax benefits relating to
federal and state R&D credit. All of this
amount would impact the Company’s effective rate, if
recognized. Penalty and interest of
approximately $0.4 million has been accrued in income tax
expense.
Liquidity
and Capital Resources
Cash
and cash equivalents decreased to $8.5 million at June 30,
2012 from $21.9 million at March 31, 2012. The
decrease in cash and cash equivalents of approximately
$13.4 million from March 31, 2012, to June 30, 2012,
primarily relates to the liquidating distribution of
approximately $12.8 million paid in July 2012 and the net
loss for the period. Working capital as of June
30, 2012, decreased to $9.8 million from $23.0 million at
March 31, 2012. The Company had investing
activity of $12.8 million in the quarter ended June 30,
2012 relating to the $1.10 per share liquidating
distribution paid on July 3, 2012. The Company
had no investing activity for the period ended June 30,
2011. The Company had no financing activities for the three
month periods ended June 30, 2012 and 2011.
PAGE
13
As
of June 30, 2012, the Company’s principal sources of
liquidity included cash and cash equivalents of
approximately $8.5 million. The Company believes
that the existing sources of liquidity will satisfy the
Company’s projected working capital and other cash
requirements during the Plan of Liquidation.
The
Company’s current building lease agreement is
scheduled to end in January 2014. The total
remaining commitment under the lease at June 30, 2012 is
approximately $77,000.
Contractual
Obligations
There
was no material change as of June 30, 2012, to our
contractual obligations as compared to those at March 31,
2012, as disclosed in our Annual Report on Form 10-K for
the year ended March 31, 2012.
Off
Balance Sheet Arrangements
None
Item
3. Quantitative and Qualitative Disclosures
about Market Risk
Interest
Rate Sensitivity
We
maintain our cash and cash equivalents primarily in money
market funds. We do not have any derivative
financial instruments. As of June 30, 2012, all
of our investments mature in less than one
month. Accordingly, we do not believe that our
investments have significant exposure to interest rate
risk.
Item
4. Controls and Procedures
(a) We
carried out an evaluation, under the supervision and with
the participation of our management, including our Chief
Executive Officer and our Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure
controls and procedures pursuant to Securities Exchange Act
Rules 13a-15 and 15d-15 as of the end of the
Company’s quarter ended June 30,
2012. Based upon that evaluation, our Chief
Executive Officer along with our Chief Financial Officer
concluded that our disclosure controls and procedures are
effective at the reasonable assurance level.
(b) There
have been no material changes (including corrective actions
with regard to significant deficiencies or material
weaknesses) in our internal controls or in other factors
that could significantly affect these controls subsequent
to the date of the evaluation referenced in paragraph (a)
above.
We
intend to review and evaluate the design and effectiveness
of our disclosure controls and procedures on an ongoing
basis and to improve our controls and procedures over time
and to correct any deficiencies that we may discover in the
future. Our goal is to ensure that our senior
management has timely access to all material financial and
non-financial information concerning our
business. While we believe the present design of
our disclosure controls and procedures is effective to
achieve our goal, future events affecting our business may
cause us to significantly modify our disclosure controls
and procedures.
There
were no changes in our internal controls over financial
reporting during our last quarter that have materially
affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
PAGE
14
OPTi
Inc.
Part
II. Other
Information
Item
1. Legal Proceedings
On
August 2, 2010, the Company announced that it had filed a
patent infringement lawsuit on July 30, 2010, in the United
States District Court for the Eastern District of Texas
against VIA Technologies, Inc. (“VIA”) and
Silicon Integrated Systems Corp. (“SIS”) for
infringement of two U.S. patents. The two
patents at issue in the lawsuit are U.S. Patent No.
5,710,906 and U.S. Patent No. 6,405,291; both entitled
“Predictive Snooping of Cache Memory for
Master-Initiated Accesses”. The complaint
alleges that VIA and SIS infringe the patents by
making, selling, and offering for sale CPUs and core logic
products based on and incorporating Predictive Snooping
technology and inducing and contributing to the
infringement of the patents by others. OPTi has
requested a jury trial in this matter. The
Company, in its case against VIA and SIS, is seeking
damages or other monetary relief, including pre-judgment
interest and awarding OPTi’s attorney
fees. A trial date has been set for May
2013.
The
outcome in the VIA and SIS legal actions could have
significant effects on the Company’s distributions to
its shareholders which cannot be predicted.
Item
1A. Risk Factors
Please
see Part I, Item 1A of Form 10-K for the fiscal year ended
March 31, 2012, for previously disclosed risk
factors.
Shareholder
and Third Party Actions
While
the Company’s shareholders have approved the Plan of
Liquidation, there can be no assurances that the
Company’s shareholders and/or third parties will not
take actions that may delay or derail the Company’s
winding up and dissolution. For example, on
February 9, 2012 a class action was filed in Federal
District Court for the Northern District of California
alleging that the directors of the Company breached their
fiduciary duties in approving the Plan of Liquidation and
violated Section 14 (a) of the Securities Exchange Act of
1934, as amended, and Rule 14a-9 in allegedly issuing a
consent solicitation statement with the intention of
obtaining shareholder approval. The complaint
also alleged that the Company aided and abetted the
directors’ breach of fiduciary duty. The Company
believes that this action was without merit. The
complaint was voluntarily dismissed without prejudice on
February 24, 2012, but other actions could be taken by the
same plaintiff or others. Defending such actions
could reduce the assets of the Company available for
distribution to its shareholders.
Challenges
to Plan of Liquidation
Despite
the approval of the Company’s shareholders of the
Plan of Liquidation, certain shareholders may attempt to
challenge implementation of the Plan. In
addition, shareholders may petition a California Superior
Court to take jurisdiction over the dissolution of the
Company, resulting in uncertainty as to the method and
timing of the Company’s dissolution and future
distributions. There can be no assurance that
the dissolution will proceed smoothly or on time as a
result of future events.
PAGE
15
Uncertainty
of Future Distributions to Shareholders
The
amount and frequency of future distributions to
shareholders depend upon a number of factors including, but
not limited to, the Company’s ability to achieve
future revenues from its pending patent infringement
litigation and the amount of the Company’s operating
costs. Certain shareholders may attempt to
challenge implementation of the Plan, as indicated by the
litigation noted above. Accordingly, there can
be no assurance regarding the amount or frequency of future
distributions or whether they may occur at all.
Since the Company must maintain adequate reserves in order
to pursue the pending litigation and defend itself and its
directors against new litigation, the Company may not be
able to make further distributions to shareholders.
Takeover
Attempts
Since
the Company’s only assets are cash and the pending
litigation, the Company may become a target for potential
takeover attempts. However, the Company believes
that pursuant to applicable California law, any attempt to
reverse the Company’s election to wind up and
dissolve after payment of the liquidating distribution on
July 3, 2012 would be very difficult, if not impossible, to
achieve.
Lengthy
Winding-Up Period
The
Company’s final liquidating distribution, if
any, is not anticipated to be made until on or about
March 31, 2016. Aside from potentially prevailing in its
pending litigation against VIA and SIS referred to below,
the Company does not anticipate any revenue during the
Company’s winding up period. However, the
Company is subject to claims, both known and unknown,
during the winding up period which may adversely affect
future distributions to shareholders.
Possible Extension of
Winding-Up Period
The Company anticipates that
dissolution will be complete on or about March 31,
2016. The duration of the liquidation period was
determined in light of the Company's ongoing litigation, as
the Board was concerned with the Company having sufficient
time to prosecute currently pending litigation.
However, it is possible that appeals could delay the
conclusion of the pending litigation beyond March 31, 2016,
necessitating the extension of the liquidation
period.
Shareholders
Liability for Debts Not Paid or Provided For
Shareholders
may be liable for claims with respect to the
Company’s debts and liabilities which were not paid
or adequately provided for, even if such debts and
liabilities are unknown. Shareholder
liability is limited to the lesser of each
shareholder’s pro rata share of the claim or to the
amount of corporate assets distributed to
it. Claims against shareholders may be commenced
before the expiration of the applicable statute of
limitations or within 4 years of the Company’s final
dissolution, whichever is earlier.
Uncertain
Outcome of VIA and SIS Legal Actions
On
August 2, 2010, the Company announced that it had filed a
patent infringement lawsuit on July 30, 2010, in the United
States District Court for the Eastern District of Texas
against VIA Technologies, Inc. (“VIA”) and
Silicon Integrated Systems Corp. (“SIS”) for
infringement of two U.S. patents. The two
patents at issue in the lawsuit are U.S. Patent No.
5,710,906 and U.S. Patent No. 6,405,291; both entitled
“Predictive Snooping of Cache Memory for
Master-Initiated Accesses”. The complaint
alleges that VIA and SIS infringe the patents by making,
selling, and offering for sale CPUs and core logic products
based on and incorporating Predictive Snooping technology
and inducing and contributing to the infringement of the
patents by others. OPTi has requested a jury
trial in this matter. The Company, in its case
against VIA and SIS, is seeking damages or other monetary
relief, including pre-judgment interest and awarding
OPTi’s attorney fees. A trial date has
been set for May 2013. The outcome in the VIA
and SIS legal actions could have significant effects on the
Company’s distributions to its shareholders which
cannot be predicted.
No
Additional Infringement Claims Likely
As
noted above, the Company has only one legal action pending,
and the Company does not anticipate initiating any other
infringement claims in the future.
Success of Litigation
Cannot be Predicted
It is possible that the Company's pending litigation
against VIA and SIS may be unsuccessful, and the Company's
remaining assets could be substantially or completely
depleted in pursuing such litigation.
PAGE
16
Uncertain
Revenue Stream
Although
the Company has commenced legal action against VIA and SIS
relating to the unauthorized use of its intellectual
property, there can be no assurances whether or when
revenues will result from the pursuit of such claims. It is
possible the Company’s announced liquidation could
negatively affect the amount and timing of recovery on such
claims.
OTC
Bulletin Board
The
Company’s common stock is currently traded on the OTC
Bulletin Board. Some investors may be less likely to invest
in stocks that are not traded on recognized national
markets and listing services such as NASDAQ. Therefore,
investors in our common stock may experience reduced
liquidity when attempting to trade shares of our common
stock. Implementation of the Plan of Liquidation could also
reduce liquidity in the Company’s common stock
because investors may not be interested in buying shares of
a company in liquidation with limited future
prospects.
Limited
Trading Volume
Daily
trading volume in our shares has varied from zero to over
one hundred thousand shares during the last two years.
Therefore, investors in our stock may find liquidity in our
shares to be limited and difficult to predict. Liquidity in
the Company’s shares may be further reduced due to
the Company’s announcement of its liquidation and
payment of the initial liquidating distribution.
Volatility
of Stock Price
There
can be no assurances as to the Company’s operating
results in any given period. The Company expects
that the trading price of its common stock will continue to
be subject to significant volatility. For
example, the Company’s recent liquidating
distribution resulted in a significant reduction in the
trading price of its common stock.
Item
2. Unregistered
Sale of Equity Securities and Use of Proceeds
Not
applicable and has been omitted.
Item
3. Defaults
Upon Senior Securities
Not
applicable and has been omitted.
Item
4. Mine
Safety Disclosures
Not
applicable and has been omitted.
Item
5. Other
Information – New Annual Meeting Date for 2012
The
Company’s Annual Meeting will be held on November 26,
2012, rather than during the last week of May 2012, as
originally anticipated. The record date for the
Annual Meeting will be October 7, 2012.
Because the 2012 Annual Meeting will be held more than 30
days from the anniversary of the 2011 Annual Meeting,
pursuant to Rule 14a-8 under the Securities Exchange Act of
1934, as amended, the Company has set September 17, 2012,
as the new deadline for shareholder proposals, which it
deems to be reasonable under the circumstances.
Proposals
of shareholders intended to be presented at the 2012 Annual
Meeting must be received at the Company’s offices by
certified mail, not later than September 17, 2012.
Such proposals must also satisfy the other requirements for
shareholder proposals as set forth in Rule 14a-8.
PAGE
17
Item
6. Exhibits
Exhibit
Number
|
Description
|
3.1
|
Registrant’s
Articles of Incorporation, as amended (1)
|
3.2
|
Registrant’s
Bylaws (1)
|
10.1
|
1993
Stock Option Plan, as amended (1)
|
10.2
|
1993
Director Stock Option Plan (1)
|
10.3
|
Form
of Indemnification Agreement Between Registrant and
its Officers and Directors (1)
|
10.4
|
1996
Employee Stock Purchase Plan (2)
|
10.5
|
1995
Employee Stock Option Plan, as amended
|
10.6
|
Patent
License Agreement between Intel Corporation and
OPTi Inc. (4)
|
10.7
|
OPTi
Inc. Technology License Agreement between OPTi Inc.
and Opti Technologies Inc. dated as of
September 30, 2002 (5)
|
10.8
|
Lease
Agreement with John Arrillaga, Trustee, or his
Successor Trustee UTA dated 7/20/77 (JOHN ARRILLAGA
SURVIVOR’S TRUST) as amended, dated as of
November 21, 2006
|
10.9
|
Employment
Agreement with Bernard T. Marren, dated as of
November 27, 2007 (7)
|
10.10
|
Employment
Agreement with Michael M. Mazzoni, dated as of
November 7, 2007 (7)
|
10.11
|
Dismissal
and License Option Agreement with Broadcom, dated
December 23, 2008 (8)
|
10.12
|
Standstill
and Option Agreement with Renesas Technology Corp.
and Renesas Technology America, Inc., dated as of
January 23, 2009 (9)
|
10.13
|
Settlement
and License Agreement with VIA Technologies, Inc.,
dated as of October 1, 2009 (10)
|
10.14
|
Amendment
No. 1 to Lease Agreement with John Arrillaga,
Trustee, or his Successor Trustee UTA dated 7/20/77
(JOHN ARRILLAGA SURVIVOR’S TRUST) as amended,
dated as of December 11, 2009 (11)
|
10.15
|
Litigation
Settlement and License Agreement with Advanced
Micro Devices, Inc., dated as of April 30, 2010
(13)
|
10.16
|
Settlement
and License Agreement with Advanced Micro Devices,
Inc., dated as of April 30, 2010 (13)
|
10.17
|
Pre-Snoop
Patent License and Arbitration Settlement Agreement
with NVIDIA Corporation, dated as of September 28,
2010 (14)
|
10.18
|
Settlement
and License Agreement with Apple Inc., dated as
December 6, 2010 (15)
|
10.19
|
Patent
License Agreement with Exar Corporation, dated
March 14, 2011 (16)
|
31.1
|
Section
302 Certification of Chief Executive Officer
|
31.2
|
Section
302 Certification of Chief Financial Officer
|
32.1
|
Section
906 Certification of Chief Executive Officer
|
32.2
|
Section
906 Certification of Chief Financial Officer
|
(1)
|
Incorporated
by reference to Registrants Statement on Form S-1
(File No. 33-59978) as declared effective by the
Securities and Exchange Commission on May 11,
1993.
|
(2)
|
Incorporated
by reference to the Registration Statement on Form
S-8 (File No. 333-15181) as filed with the
Securities and Exchange Commission on October 1,
1996.
|
(3)
|
Incorporated
by reference to Registration Statement on Form S-8
(File No. 333-17299) as filed with the Securities
and Exchange Commission on December 5, 1996.
|
(4)
|
Incorporated
by reference to the Annual Report on Form 10-K for
the Fiscal Year Ended December 31, 1999, of OPTi
Inc., (File No. 000-21422).
|
(5)
|
Incorporated
by reference to the Current Report on Form 8-K
filed with the Securities and Exchange Commission
on October 18, 2002 (File No. 000-21422).
|
(6)
|
Incorporated
by reference to the Quarterly Report on Form 10-Q
for the Quarter Ended December 31, 2006, of OPTi
Inc. (File No. 000-21422).
|
(7)
|
Incorporated
by reference to the Definitive Proxy Statement
Filed Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 on October 29, 2007 (File No.
000-21422).
|
(8)
|
Incorporated
by reference to the Quarterly Report on Form 10-Q
for the Quarter Ended December 31, 2008, of OPTi
Inc. (File No. 000-21422).
|
PAGE
18
(9)
|
Incorporated
by reference to the Quarterly Report on Form 10-Q
for the Quarter Ended June 30, 2009, of OPTi Inc.
(File No. 000-21422).
|
(10)
|
Incorporated
by reference to the Quarterly Report on Form 10-Q
for the Quarter Ended September 30, 2009, of OPTi
Inc. (File No. 000-21422).
|
(11)
|
Incorporated
by reference to the Quarterly Report on Form 10-Q
for the Quarter Ended December 31, 2009, of OPTi
Inc., as amended (File No. 000-21422).
|
(12)
|
Incorporated
by reference to the Current Report on Form 8-K
filed with the Securities and Exchange Commission
on May 4, 2010 (File No. 000-21422).
|
(13)
|
Incorporated
by reference to the Quarterly Report on Form 10-Q
for the Quarter Ended September 30, 2010, of OPTi
Inc. (File No. 000-21422).
|
(14)
|
Incorporated
by reference to the Annual Report on Form 10-K for
the Fiscal Year Ended March 31, 2005, of OPTi Inc.
(File No. 000-21422).
|
(15)
|
Incorporated
by reference to the Current Report on Form 8-K
filed with the Securities and Exchange Commission
on December 9, 2010 (File No. 000-21422).
|
(16)
|
Incorporated
by reference to the Annual Report on Form 10-K for
the Fiscal Year Ended March 31, 2011, of OPTi Inc.
(File No. 000-21422).
|
PAGE
19
OPTi
Inc.
Signatures
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 hereunto duly authorized.
OPTi
Inc.
|
|
Date: August
20, 2012
|
/s/
Michael Mazzoni
|
Michael
Mazzoni
|
|
Signed
on behalf of the Registrant and as
|
|
Chief
Financial Officer
|