UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 December 31, 2003
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period from:
Commission File Number 0-21422
OPTi Inc.
(exact name of registrant as specified in this charter)
| California | 77-0220697 | |
| (State or other jurisdiction of incorporated or organization) |
(I.R.S. Employer Identification No.) | |
| 880 Maude Avenue, Suite A, Mountain View, CA | 94043 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code (650) 625-8787
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 proceeding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filings requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 126-2 of the Exchange Act). Yes ¨ No x
The number of shares outstanding of the registrant’s common stock as of January 31, 2004 was 11,633,903.
OPTi Inc.
Form 10-Q
For the Quarterly Period Ended December 31, 2003
| Page | ||||
| Part I. |
Financial Information | |||
| Item 1. Financial Statements (Unaudited) | ||||
| 3 | ||||
| b) Condensed Consolidated Balance Sheets as of December 31, 2003 and March 31, 2003 |
4 | |||
| c) Condensed Consolidated Statements of Cash Flows for the nine-months ended December 31, 2003 and 2002 |
5 | |||
| 6 | ||||
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 11 | |||
| Item 3. Quantitative and Qualitative Disclosure About Market Risks | 15 | |||
| Item 4. Controls and Procedures | 16 | |||
| Part II. |
Other information | |||
| Item 1. Legal Proceedings | 17 | |||
| Item 2. Changes in Securities | 17 | |||
| Item 3. Defaults in Senior Securities | 17 | |||
| Item 4. Submission of Matters to a Vote of Shareholders | 17 | |||
| Item 5. Other Information | ||||
| Item 6. Exhibits and Reports on Form 8-K | 17 | |||
| 18 | ||||
OPTi Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(000’s omitted, except per share data)
| Three Months Ended December 31, |
Nine Months Ended December 31, |
||||||||||||||
| 2003 |
2002 |
2003 |
2002 |
||||||||||||
| Revenue |
|||||||||||||||
| Product |
$ | — | $ | — | $ | — | $ | 2,249 | |||||||
| License and royalties |
171 | 281 | 907 | 556 | |||||||||||
| Net Sales |
171 | 281 | 907 | 2,805 | |||||||||||
| Costs and expenses |
|||||||||||||||
| Cost of sales |
— | — | — | 1,289 | |||||||||||
| Selling, general and administrative |
273 | 341 | 762 | 1,520 | |||||||||||
| Total costs and expenses |
273 | 341 | 762 | 2,809 | |||||||||||
| Operating income (loss) |
(102 | ) | (60 | ) | 145 | (4 | ) | ||||||||
| Interest and other income, net |
337 | 53 | 404 | 1,711 | |||||||||||
| Income (loss) before income tax provision (benefit) |
235 | (7 | ) | 549 | 1,707 | ||||||||||
| Income tax provision (benefit) |
— | — | — | (165 | ) | ||||||||||
| Net income (loss) |
$ | 235 | $ | (7 | ) | $ | 549 | $ | 1,872 | ||||||
| Basic net income (loss) per share |
$ | 0.02 | $ | (0.00 | ) | $ | 0.05 | $ | 0.16 | ||||||
| Diluted net income (loss) per share |
$ | 0.02 | $ | (0.00 | ) | $ | 0.05 | $ | 0.16 | ||||||
| Shares used in computing basic per share amounts |
11,634 | 11,634 | 11,634 | 11,634 | |||||||||||
| Shares used in computing diluted per share amounts |
11,634 | 11,634 | 11,634 | 11,634 | |||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
OPTi Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
| December 31, 2003 |
March 31, 2003 | |||||
| Unaudited | (*) | |||||
| (000’s omitted) | ||||||
| Assets |
||||||
| Current assets |
||||||
| Cash and cash equivalents |
$ | 15,598 | $ | 14,996 | ||
| Short-term investments |
— | 12 | ||||
| Accounts receivable, net |
171 | 268 | ||||
| Other current assets |
89 | 113 | ||||
| Total current assets |
15,858 | 15,389 | ||||
| Property and equipment, net |
10 | 4 | ||||
| Other assets |
14 | — | ||||
| Total assets |
$ | 15,882 | $ | 15,393 | ||
| Liabilities and Shareholders’ Equity |
||||||
| Current Liabilities |
||||||
| Accounts payable |
$ | 4 | $ | 49 | ||
| Accrued expenses |
187 | 196 | ||||
| Accrued employee expenses |
2 | 5 | ||||
| Total current liabilities |
193 | 250 | ||||
| Commitments and contingencies |
||||||
| Shareholders’ equity |
||||||
| Preferred stock, no par value |
||||||
| Authorized shares – 5,000 |
||||||
| No shares issued or outstanding |
— | — | ||||
| Common stock, no par value |
||||||
| Authorized shares – 50,000 |
||||||
| Issued and outstanding – 11,634 at December 31, and March 31, 2003 |
15,053 | 15,053 | ||||
| Accumulated other comprehensive income |
— | 3 | ||||
| Retained earnings |
636 | 87 | ||||
| Total shareholders’ equity |
15,689 | 15,143 | ||||
| Total liabilities and shareholders’ equity |
$ | 15,882 | $ | 15,393 | ||
| * | The balance sheet of March 31, 2003 has been derived from the audited financial statements at that date. |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
OPTi Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Nine Months Ended December 31, |
||||||||
| 2003 |
2002 |
|||||||
| (000’s omitted) | ||||||||
| Operating Activities: |
||||||||
| Net income |
$ | 549 | $ | 1,872 | ||||
| Adjustments: |
||||||||
| Depreciation |
3 | 26 | ||||||
| Impairment on short-term investments |
— | 11 | ||||||
| Gain on Tripath Technology distribution |
(306 | ) | (1,544 | ) | ||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
97 | (32 | ) | |||||
| Inventories |
— | 258 | ||||||
| Other assets |
10 | 529 | ||||||
| Accounts payable |
(45 | ) | (49 | ) | ||||
| Accrued expenses |
(9 | ) | (389 | ) | ||||
| Accrued employee expenses |
(3 | ) | (323 | ) | ||||
| Net cash provided by operating activities |
296 | 359 | ||||||
| Investing Activities: |
||||||||
| Purchase of equipment |
(9 | ) | — | |||||
| Proceeds from sell of Tripath Technologies, Inc. stock |
315 | — | ||||||
| Net cash provided by investing activities |
306 | — | ||||||
| Financing Activities: |
||||||||
| Net cash provided by financing activities |
— | — | ||||||
| Net increase in cash and cash equivalents |
602 | 359 | ||||||
| Cash and cash equivalents at beginning of period |
14,996 | 14,332 | ||||||
| Cash and cash equivalents at end of period |
$ | 15,598 | $ | 14,691 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
OPTi Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
(Unaudited)
| 1. | Basis of Presentation |
The information at December 31, 2003 and for the three and nine-month periods ended December 31, 2003 and 2002, are unaudited, but include all adjustments (consisting of normal recurring accruals) 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, 2003.
Sale of the Product Fabrication, Distribution and Sales Operations
On September 30, 2002, the Company announced that it had sold its product fabrication, distribution and sales operations to Opti Technologies, Inc., an unrelated third party. As part of the transaction Opti Technologies was to pay the Company $275,000 in licensing fees and acquire the existing inventory at cost. The Company received $344,000 ($275,000 for the licensing fees and partial payment on the purchase of inventory) in September and the balance of $350,000, for inventory, on October 1, 2002. The Company is also entitled to quarterly royalty payments for the sale of it core logic and USB products by Opti Technologies. The Company is to receive 20% of net sales for the USB products and 40% of net sales for the core logic products. As of December 31, 2003, the Company has received approximately $1,133,000 and accrued an additional $171,000 in license and royalty payments from Opti Technologies. The maximum license and royalty payments that the Company can receive from the agreement with Opti Technologies is $1,500,000.
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.
Stock-based compensation
The Company accounts for stock-based compensation arrangements in accordance with the provisions of APB No. 25 (“APB No. 25”), “Accounting for Stock Issued to Employees” and complies with the provisions of Statement of Financial Accounting Standard No. 123 (“SFAS No. 123”), “Accounting for Stock-Based Compensation”. Under APB No. 25, compensation cost is, in general, recognized based on the excess, if any, of the fair market value of the Company’s stock on the date of grant over the amount an employee must pay to acquire the stock. Equity instruments issued to non-employees are accounted for in accordance with the provisions of SFAS No. 123 and Emerging Issues Task Force 96-18.
SFAS No. 123 pro forma disclosures
Had compensation cost for the Company’s option plans been determined using the fair value at the grant dates, as prescribed in SFAS No. 123, the Company’s net income (loss) would have been as follows (in thousands, except per share amounts):
| Three- Months December 31, |
Nine- Months December 31, | ||||||||||||||
| 2003 |
2002 |
2003 |
2002 | ||||||||||||
| Net income (loss): |
|||||||||||||||
| As reported |
$ | 235 | $ | (7 | ) | $ | 549 | $ | 1,872 | ||||||
| Less: Total stock-based employee compensation expense under the fair value based methods for all awards, net of related tax effects |
(3 | ) | — | (3 | ) | — | |||||||||
| Pro forma net income (loss) |
$ | 232 | $ | (7 | ) | $ | 546 | $ | 1,872 | ||||||
| Pro forma basic net income (loss) per share |
$ | 0.02 | $ | 0.00 | $ | 0.05 | $ | 0.16 | |||||||
| Pro forma diluted net income (loss) per share |
$ | 0.02 | $ | 0.00 | $ | 0.05 | $ | 0.16 | |||||||
| 2. | Net Income (Loss) Per Share |
Basic net income (loss) per share and diluted net loss per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income per share is calculated using the weighted average number of common and dilutive common equivalent shares outstanding during the period. Common equivalents shares consist of stock options. At December 31, 2003, options for 150,666 shares at exercise prices ranging from $1.27 to $7.50 were outstanding.
The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except per share amounts):
| Three-Months ended December 31, |
Nine- Months ended December 31, | |||||||||||
| 2003 |
2002 |
2003 |
2002 | |||||||||
| Net income (loss) |
$ | 235 | ($7 | ) | $ | 549 | $ | 1,872 | ||||
| Weighted average number of common shares outstanding |
11,634 | 11,634 | 11,634 | 11,634 | ||||||||
| Basic and diluted net income (loss) per share |
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