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

Washington, D.C.FORM 2054910-Q

~~FORM~~|X| ~~10-Q~~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 the quarterly period ended March 31, 2005

Commission File No. 000-24999OR

~~OPTA~~|_| ~~CORPORATION~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~(Exact~~For ~~name~~the oftransition ~~registrant~~period ~~as specified~~from in_______ ~~its~~to ~~charter)~~_______

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

Commission File No. 000-24999

~~Indicate~~OPTA ~~by check mark whether the Registrant~~ CORPORATION (~~1) has filed all reports~~Exact ~~required~~name ~~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~~as ~~required~~specified ~~to file~~in ~~such~~its ~~reports~~charter)~~, and (2) has been subject to such filing requirements for the past 90 days. (1) Yes o No ý (2) Yes ý No o~~

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes o No ý

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

~~The~~1350 ~~number~~Bayshore Highway, ofSuite ~~shares~~740, ofBurlingame, ~~Common Stock~~CA ~~outstanding~~94010 (Address as of ~~March 31,~~principal ~~2005~~executive ~~was 50~~offices,~~037,538.~~ zip code)

~~FORM~~Registrant’s telephone 10number, including area code: (650) 579-~~Q INDEX~~3610

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

        Indicate 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 such reports), and (2) has been subject to such filing requirements for the past 90 days.
        (1) Yes |X| No |_|
        (2) Yes |X| No |_|

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes |_| No |X|

~~PART~~ The number ~~I. FINANCIAL~~of ~~INFORMATION~~shares of Common Stock outstanding as of May 16, 2005 was 50,037,538.

ItemFORM 1 10-Q Financial Statements:INDEX

OPTA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS

		Page
PART I	FINANCIAL INFORMATION
Item 1	Financial Statements
	Condensed Consolidated Balance Sheets as of March 31, 2005
	(unaudited) and June 30, 2004	3
	Condensed Consolidated Statements of Operations (unaudited)
	for the Three and Nine Months Ended March 31, 2005 and 2004	4
	Condensed Consolidated Statements of Cash Flows (unaudited)
	for the Nine Months Ended March 31, 2005 and 2004	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2	Management's Discussion and Analysis of Financial Condition
	and Results of Operations	13
Item 3	Quantitative and Qualitative Disclosure About Market Risk	25
Item 4	Controls and Procedures	25
PART II	OTHER INFORMATION
Item 1	Legal Proceedings	25
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3	Defaults Upon Senior Securities	26
Item 4	Submission of Matters to a Vote of Security Holders	26
Item 5	Other Information	26
Item 6	Exhibits	26
SIGNATURE		28

~~(in thousands)~~ - 2 -

	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

PART I. FINANCIAL INFORMATION

TheItem accompanying1 notes— areFinancial an integral part of these unaudited condensed consolidated financial statements.Statements:

3OPTA CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)

OPTA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	March 31, 2005 (Unaudited)			June 30, 2004
ASSETS
Current assets:
Cash and cash equivalents	$	1,947		$	3,037
Short-term investments		17,045			17,643
Accounts receivable, net		17,376			25,528
Inventories, net		18,458			18,004
Income tax receivable		909			909
Prepaid expenses and other current assets		2,086			2,270


Total current assets		57,821			67,391


Property and equipment, net		1,070			1,083
Tradename		2,420			2,420
Other assets		232			226


Total assets	$	61,543		$	71,120


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit	$	13,975		$	15,833
Notes and interest payable to related parties		10,873			10,795
Accounts payable and accrued expenses		22,150			14,262
Accounts payable to related parties		--			170
Accrued restructuring charges		--			796
Warranty reserve		490			490


Total current liabilities		47,488			42,346


Non-controlling interest in subsidiaries		6,438			8,425


Stockholders' equity:
Preferred stock, Series A $.001 par value, 100 authorized,		--			--
4 shares issued and outstanding at March 31, 2005
and June 30, 2004
Common stock $.001par value, 100,000 authorized,
64,241 shares issued and 50,037 outstanding at March 31, 2005
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 March 31, 2005 and		(2,478	)		(2,410	)
13,517 at June 30, 2004
Accumulated deficit		(118,243	)		(105,611	)
Accumulated other comprehensive loss		(168	)		(125)
Total stockholders' equity		7,617			20,349


Total liabilities and stockholders' equity	$	61,543		$	71,120

~~(in~~The accompanying notes ~~thousands,~~are ~~except~~an ~~per~~integral ~~share~~part ~~amounts)~~of these unaudited condensed consolidated financial statements.

	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

- 3 -

TheOPTA accompanyingCORPORATION notesCONDENSED areCONSOLIDATED anSTATEMENTS integralOF partOPERATIONS of(UNAUDITED) these(in unaudited condensedthousands, consolidatedexcept financialper statements.share amounts)

	Three Months Ended March 31,						Nine Months Ended March 31,
	2005			2004			2005			2004
Net revenues:
Products	$	18,980		$	31,932		$	108,521		$	89,168
Products - related party		--			--			--			163



Total net revenues		18,980			31,932			108,521			89,331


Cost of net revenues:
Products		20,850			29,332			109,129			80,959
Products - related party		--			--			--			92



Total cost of net revenues		20,850			29,332			109,129			81,051


Gross profit (loss)		(1,870	)		2,600			(608	)		8,280
Operating expenses:
Selling, general and administrative		2,712			2,910			8,769			10,741
Research and development		621			394			1,923			2,435
Impairment of assets		--			--			--			36


Total operating expenses		3,333			3,304			10,692			13,212


Loss from operations		(5,203	)		(704	)		(11,300	)		(4,932	)


Other income (expense):
Interest income		105			112			316			450
Interest expense		(570	)		(216	)		(1,901	)		(676	)
Equity in loss of joint venture		--			2,380			--			1,733
Other		--			5			859			1,243


Total other income (expense), net		(465	)		2,281			(726	)		2,750


Income (loss) before income taxes and non-		(5,668	)		1,577			(12,026	)		(2,182	)
controlling interest
Provision (benefit) for income taxes		--			(9	)		--			1


Income (loss) before non-controlling interest		(5,668	)		1,586			(12,026	)		(2,183	)
Non-controlling interest in (income) loss
of consolidated subsidiaries		(9	)		(2,224	)		(606	)		(1,300	)



Net loss	$	(5,677	)	$	(638	)	$	(12,632	)	$	(3,483	)


Net loss per common share - basic and
diluted:	$	(0.11	)	$	(0.01	)	$	(0.25	)	$	(0.06	)


Weighted average common shares
outstanding - basic and diluted:		50,038			51,860			50,193			55,002

~~OPTA~~The ~~CORPORATION~~accompanying ~~CONDENSED~~notes are ~~CONSOLIDATED~~an ~~STATEMENTS~~integral OFpart ~~CASH~~of ~~FLOWS~~these ~~(UNAUDITED)~~unaudited condensed consolidated financial statements.

~~(in thousands)~~- 4 -

	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

OPTA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)

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

	Nine Months Ended March 31,
	2005			2004
Operating activities
Net loss	$	(12,632	)	$	(3,483	)
Adjustments to reconcile net loss to net cash used in operating
activities:
Reserve for excess and obsolete inventory		3,346			1,885
Gain on treasury stock obtained during settlement		(842	)		(179	)
Gain on sale of joint venture		--			(1,053	)
Equity in loss of joint venture		--			647
Depreciation and amortization		378			352
Stock compensation expense (reversal) recorded by subsidiary		--			(104	)
Impairment of assets		--			36
Non-controlling interest in income (loss) subsidiary		606			(1,080	)
Non-cash recovery of bad debt		(1,946	)		--
Non-cash reversal of restructuring over accrual		(78	)		--
Changes in operating assets and liabilities:
Accounts receivable, net		8,152			(16,779	)
Accounts receivable from related parties, net		--			(63	)
Inventories, net		(3,800	)		(5,488	)
Prepaid expenses and other current assets		184			(1,197	)
Income tax receivable		--			2,218
Other assets		(6	)		(93	)
Accrued restructuring charges		(718	)		564
Accounts payable and accrued expenses		7,888			(677	)
Accounts payable to related parties		--			97
Interest payable to related parties		78			148
Warranty reserve		--			(198	)


Cash provided (used) by operating activities		610			(24,447	)


Investing activities
Purchases of property and equipment		(395	)		(442	)
Proceeds from sale of property and equipment		30			--
Payments received on notes receivable from related parties		--			1,592
Proceeds from sale of short-term investments		1,523			--
Proceeds from sale of joint venture		--			3,762
Purchase of short-term investments		(981	)		(2,283	)


Cash provided by investing activities		177			2,629

Financing activities
Proceeds from advances on line of credit		117,178			73,319
Payments on line of credit		(119,036	)		(59,634	)
Purchase of treasury stock		--			(2,006	)
Purchase of treasury stock by subsidiary		(19	)		--
Proceeds from issuance of stock by subsidiary		--			1
Proceeds from notes payable		--			4,500


Cash provided (used) by financing activities		(1,877	)		16,180


Net increase (decrease) in cash and cash equivalents		(1,090	)		(5,638	)
Cash and cash equivalents at beginning of period		3,037			12,044


Cash and cash equivalents at end of period	$	1,947		$	6,406

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

~~OPTA~~- ~~CORPORATION~~5 ~~AND~~- ~~SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

NoteOPTA 1CORPORATION -AND BasisSUBSIDIARIES ofNOTES PresentationTO CONSOLIDATED FINANCIAL STATEMENTS

~~The~~Note ~~accompanying~~1 ~~unaudited~~— ~~condensed~~Basis 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 rules and regulations of ~~the Securities and Exchange Commission~~ ~~(“SEC”). Certain~~Presentation information and footnote disclosures normally included in financial statements, prepared in accordance with accounting principles generally accepted in the 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 should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended June 30, 2004, which was filed with the SEC on February 18, 2005.

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 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 should be read in conjunction with the consolidated financial statements ~~contain~~and ~~all~~notes ~~adjustments,~~thereto ~~consisting~~included ~~only~~in ofour ~~normal~~Annual Report ~~recurring~~on ~~adjustments,~~Form ~~necessary~~10-K for athe ~~fair~~year ~~presentation~~ended ofJune ~~our~~30, ~~financial position~~2004, ~~results~~which ofwas ~~operations~~filed ~~and~~with ~~cash~~the ~~flows~~SEC on February 18, 2005.

~~The~~In ~~results of operations for~~ the ~~three~~opinion ~~months~~of ~~ended September 30~~management, ~~2004~~ ~~are not necessarily indicative of~~ the ~~results of operations that may be~~ ~~reported~~unaudited ~~for~~condensed ~~any~~consolidated ~~other interim period or for the entire year ending June 30, 2005. The balance sheet at June 30, 2004 has been derived from the audited~~ financial statements atcontain ~~that~~all ~~date~~adjustments, ~~but~~consisting ~~does~~only ~~not include all~~ of ~~the~~normal ~~information~~recurring ~~and~~adjustments, ~~footnotes~~necessary ~~required~~for bya ~~accounting principles~~fair ~~generally~~presentation ~~accepted~~of inour ~~the United States for complete~~ financial ~~statements~~position, asresults ~~permitted~~of byoperations ~~SEC rules~~ and ~~regulations~~cash ~~for interim reporting~~flows. ~~Certain~~ ~~prior period amounts have been reclassified to conform to the current period presentation. Such reclassifications had no effect on the results of operations.~~

The ~~accompanying~~ ~~condensed~~results ~~consolidated~~of ~~financial~~operations ~~statements~~for ~~include~~ the ~~accounts~~ ofinterim ~~Opta~~periods ~~and~~presented ~~its~~are ~~subsidiaries. All significant~~not ~~intercompany~~necessarily ~~transactions~~indicative ~~and~~of ~~balances~~the ~~have~~results ~~been~~of ~~eliminated. Subsidiaries~~operations inthat may ~~which~~be ~~Opta~~reported ~~owns~~for atany ~~least~~other ~~50% are~~interim ~~consolidated,~~period ~~except~~or for ~~investments~~the ~~where~~entire ~~control~~year isending ~~deemed~~June to30, be2005. ~~temporary,~~The inbalance ~~which~~sheet ~~case~~at ~~the~~June ~~equity~~30, ~~method~~2004 ofhas ~~accounting~~been isderived ~~used. Equity~~from ~~investments~~the inaudited ~~which~~financial ~~Opta~~statements at ~~owns~~that ~~at least~~date, ~~20%~~but ofdoes ~~the~~not ~~voting~~include ~~securities~~all ~~are~~of ~~accounted~~the ~~for~~information ~~using~~and ~~the~~footnotes ~~equity~~required ~~method,~~by ~~except~~accounting ~~for~~principles ~~investments~~generally ~~that~~accepted in the ~~Company~~United isStates ~~not~~for ~~able~~complete tofinancial statements, ~~exercise~~as ~~significant influence~~permitted ~~over~~by ~~the~~SEC ~~investee,~~rules inand ~~which~~regulations ~~case,~~for ~~the~~interim ~~cost~~reporting. ~~method~~Certain ofprior period ~~accounting~~amounts ishave ~~used. The~~been ~~cost~~reclassified ~~method~~to ofconform ~~accounting~~to isthe ~~used~~current ~~for~~period ~~all~~presentation. Such ~~investments~~reclassifications inhad ~~which~~no ~~Opta~~effect ~~owns~~on ~~less~~the ~~than~~results ~~20%~~of operations.

AsThe ofaccompanying ~~September 30,~~condensed consolidated ~~2004,~~financial ~~our~~statements ~~only~~include ~~significant~~the ~~operating subsidiary~~accounts ~~was~~of Opta ~~Systems,~~and ~~LLC~~its asubsidiaries. ~~Delaware~~All significant ~~LLC~~intercompany ~~(“Opta~~transactions ~~Systems”~~and orbalances ~~“GoVideo”). GoVideo,~~have ~~established~~been ineliminated. ~~1984,~~Subsidiaries ~~designs and~~in ~~manufactures~~which ~~product~~Opta ~~lines~~owns inat ~~the~~least ~~consumer~~50% ~~electronics~~are ~~industry~~consolidated, ~~including digital~~except ~~video~~for ~~disc~~investments ~~(“DVD”)~~where ~~players,~~control ~~portable~~is deemed ~~DVDs,~~to ~~DVD-Video~~be ~~Cassette Recorder (“VCR”) Combos~~temporary, ~~Dual-Deck~~in ~~VCRs,~~which ~~DVD~~case ~~Recorders,~~the ~~DVD~~equity ~~Recorder~~method +of ~~VCRs,~~accounting ~~and~~is ~~LCD TVs~~used. ~~GoVideo~~Equity investments ~~holds~~in ~~various~~which ~~patents~~Opta ~~covering~~owns ~~Dual-Deck~~at ~~technology~~least as20% ~~well~~of ~~as other~~the ~~electronics~~voting ~~products~~securities ~~and~~are ~~systems.~~accounted ~~GoVideo~~for using ~~was~~the ~~purchased~~equity asmethod, ~~part~~except offor investments that the Company’s ~~strategic~~is ~~direction~~not ofable ~~investing~~to inexercise significant ~~companies~~influence ~~which~~over ~~will~~the ~~benefit~~investee, ~~from the~~in ~~Company’s~~which ~~strategic~~case, ~~relationships~~the ~~with~~cost ~~Asian~~method ~~consumer~~of ~~electronic~~accounting is ~~manufacturers~~used. We ~~owned~~The ~~100%~~cost method of ~~GoVideo during~~accounting is used for all ~~periods~~investments ~~presented~~in which Opta owns less than 20%.

As of ~~September 30~~March 31, ~~2004~~2005, weour ~~had one~~ only significant ~~non-~~operating subsidiary, ~~Correlant~~was ~~Communications~~Opta Systems, ~~Inc. (formerly~~LLC ~~TurboNet~~a ~~Communications,~~Delaware ~~Inc.)~~LLC (“~~Correlant~~Opta Systems” or “GoVideo”). In ~~March 1999~~GoVideo, ~~the~~established ~~Company~~in ~~acquired 94.5%~~1984, ofdesigns ~~the~~and manufactures ~~issued~~product ~~and~~lines ~~outstanding~~in ~~common~~the ~~shares~~consumer ofelectronics ~~Correlant~~industry, ~~representing~~including ~~an 81%~~MP3 ~~ownership~~Rave ~~interest. Correlant~~MP ~~designed~~branded players, ~~developed~~digital ~~and~~video ~~marketed~~disc ~~telecommunications~~(“DVD”) ~~products~~players, toportable ~~cable operators~~DVDs, DVD-Video ~~network~~Cassette ~~service~~Recorder ~~providers~~(“VCR”) Combos, ~~and~~Dual-Deck ~~communications~~VCRs, ~~network~~DVD ~~users~~Recorders, inDVD ~~the~~Recorder ~~United~~+ ~~States~~VCRs, and ~~Asian~~LCD ~~countries~~TVs. As aGoVideo ~~result of~~holds ~~declining~~various ~~margins~~patents ~~and~~covering ~~demand~~Dual-Deck ~~for~~technology ~~its~~as ~~products,~~well ~~Correlant’s~~as other ~~Board~~electronics ~~of Directors~~products ~~approved~~and ~~the~~systems. ~~wind~~GoVideo ~~down~~was ~~and~~purchased ~~cessation~~as part of ~~Correlant~~the Company’s ~~historical~~strategic ~~operations in~~direction ~~the~~of ~~cable~~investing ~~modem~~in ~~business~~companies ~~effective~~which ~~December 23,~~will ~~2003. Correlant,~~benefit ~~together~~from ~~with Opta, will continue~~the toCompany’s ~~explore~~strategic ~~either~~relationships ~~acquiring~~with orAsian ~~investing~~consumer inelectronic ~~other businesses to utilize its assets~~manufacturers. As ~~of September 30, 2004,~~We we owned ~~73.6~~100% of ~~Correlant’s~~GoVideo ~~outstanding~~during ~~common~~all ~~stock,~~periods ~~which represented a 62~~presented.5% ~~ownership interest.~~

As of March 31, 2005, 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 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 March 31, 2005, we owned 73.6% of Correlant’s outstanding common stock, which represented a 62.5% ownership interest.

~~Note~~- 26 –- ~~Delays in Reporting~~

ThisOPTA QuarterlyCORPORATION ReportAND onSUBSIDIARIESNOTES Form 10-QTO forCONSOLIDATED theFINANCIAL 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.STATEMENTS

Note 32 – Liquidity and Going Concern

The Company incurred a net loss of $312,~~784~~632,000 during the ~~three~~nine months ended ~~September 30, 2004. Additionally,~~March ~~cash used by operating activities was $3~~31,~~269,000~~ ~~during~~2005. ~~the~~At ~~three~~March ~~months ended September 30~~31, ~~2004. At~~ ~~September 30~~2005, ~~2004,~~ the ~~Company~~ Company had an accumulated deficit of $~~109~~118,~~395~~243,000 and the Company’s sole ~~operating~~ 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~~ which commenced March 1, 2005 and is due to expire on August 31, 2005. See note 1110.

Additionally, in June 2003 GoVideo borrowed substantial funds from T.C.L. Industries Holdings (H.K.) Limited (“TCL Industries”), the majority stockholder of Opta, and Asia Focus Industrial Ltd., an entity affiliated with TCL Industries. The purpose of the loans was to fund ~~inventory~~ inventory purchases and operating expenses. Both loans, which are subordinate to GoVideo’s line of credit, became due during fiscal year 2004. GoVideo was unable to pay off the loans and extended the due date three times. The current due date for the loan with TCL ~~Industries~~ Industries is July 24, 2005. The current due date for the loan with Asia Focus Industrial Ltd. is August 11, 2005. Both loans are collateralized by 100% of the Common and Preferred Series D stock of Correlant Communications owned by Opta. There can be no assurance that GoVideo will be able to pay the loans when they mature or that another extension can be successfully negotiated.

During fiscal 2004, Opta entered into a financing agreement with TCL Industries. Opta ultimately loaned the funds to GoVideo to to fund inventory purchases and operating expenses. The financing agreement has 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.

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 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 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.

Note 43 – Recently Issued ~~Issues~~ Accounting Standards

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 production facilities. SFAS 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. We do not believe the adoption of SFAS 151 will have a material impact on our financial statements.

7In 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.

~~production~~- ~~facilities.~~7 ~~SFAS~~- ~~151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. We do not believe the adoption of SFAS 151 will have a material impact on our financial statements.~~

InOPTA December 2004,CORPORATION theAND 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.SUBSIDIARIES

TheNOTES CompanyTO currentlyCONSOLIDATED utilizesFINANCIAL 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.STATEMENTS

The Company currently ~~expects~~utilizes a standard option pricing model (i.e., Black-Scholes) to ~~adopt~~measure the fair value of stock options granted to Employees. While SFAS 123R ~~effective~~permits ~~July 1,~~entities to continue to use such a ~~2005. However~~model, ~~because~~the standard also permits the use of a “lattice” model. The Company has not yet determined which ofmodel ~~the aforementioned adoption methods~~ it will use, to measure the ~~Company~~fair ~~has~~value ~~not~~of ~~yet~~employee ~~determined~~stock options upon the ~~impact~~adoption of ~~adopting~~ SFAS 123R.

~~Note~~The 5Company –currently ~~Stock-Based~~expects ~~Compensation~~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.

~~SFAS 123,~~Note ~~Accounting~~4 ~~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 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.

InSFAS 123, Accounting for ~~accordance~~Stock-Based ~~with~~Compensation (“SFAS ~~148~~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 ~~following~~value ~~table~~method ~~illustrates~~prescribed in APB 25 and related Interpretations. Under APB 25 and the ~~effect~~intrinsic onvalue method, the exercise price of the Company’s ~~net~~employee ~~loss~~stock options ~~and~~equals ~~loss~~the ~~per~~market ~~share~~price asof ifthe underlying stock on the date of grant or, in the case of the Company’s ~~had~~employee ~~applied~~stock purchase plans since the ~~fair~~plans are ~~value~~non-compensatory, ~~recognition~~no ~~provisions~~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 ~~its~~require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation ~~awards,~~ and ~~recognized~~the ~~expense~~effect ~~over~~of the ~~applicable~~method ~~award~~used ~~vesting~~on ~~period~~reported ~~(in~~results. ~~thousands, except per share amounts):~~

	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	)

In accordance with SFAS 148, the following table illustrates the effect on the Company’s net loss and loss per share as if the Company had applied the fair value recognition provisions of SFAS 123 to its stock-based employee compensation awards, and recognized expense over the applicable award vesting period (in thousands, except per share amounts):

	Three Months Ended March 31,					Nine Months Ended March 31,
	2005			2004		2005			2004
Net loss, as reported	$	(5,677	)	$ (638	)	$	(12,632	)	$	(3,483	)

Add: Stock-based employee compensation
expense (reversal) included in reported net loss		--		--			--			(76	)

Less: Stock-based employee compensation
(expense) reversal determined under
fair value based method for all awards,
net of related tax effects		--		(23	)		--			180


Pro-forma net loss	$	(5,677	)	$ (661	)	$	(12,632	)	$	(3,379	)



Basic and diluted net loss per share, as
reported	$	(0.11	)	$ (0.01	)	$	(0.25	)	$	(0.06	)


Pro-forma basic and diluted net loss per
share	$	(0.11	)	$ (0.01	)	$	(0.25	)	$	(0.06	)

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.

~~Note~~- 68 –- ~~Basic and Diluted Net Income (Loss) Per Share~~

BasicOPTA netCORPORATION incomeAND (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock and common stock equivalents outstanding during the period. There were no employee stock options, common stock warrants or employee stock options outstanding as of September 30, 2004 or 2003. There were 3,000 and 579,000 shares contingently issuable in connection with share exchange agreements, as of September 30, 2004 and 2003, respectively, which were not considered in calculating diluted net loss per common share as their effect 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.SUBSIDIARIES

NoteNOTES 7TO –CONSOLIDATED ComprehensiveFINANCIAL Income (Loss)STATEMENTS

~~Comprehensive~~Note ~~income~~5 ~~(loss)~~– ~~consists~~Basic ~~of net income (loss)~~ and ~~other~~ ~~gains~~Diluted ~~(losses)~~Net ~~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”~~Loss)~~. Other~~ ~~comprehensive~~Per ~~income(loss) includes~~Share ~~unrealized gains (losses) on marketable securities and foreign currency translation adjustments. The following table computes the Company’s comprehensive loss (in thousands):~~

	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	)

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock and common stock equivalents outstanding during the period. There were no employee stock options, common stock warrants outstanding or shares contingently issuable in connection with share exchange agreements as of March 31, 2005 or 2004.

Note 86 – Comprehensive ~~Restructuring~~Income ~~Charges~~(Loss)

~~During~~Comprehensive ~~the~~income ~~second quarter~~(loss) consists of ~~fiscal~~net ~~2004,~~income ~~Correlant’s~~(loss) ~~board~~and ofother ~~directors~~gains ~~approved~~(losses) ~~the~~affecting ~~wind~~shareholders’ ~~down~~equity that, ~~and~~under ~~cessation~~generally ofaccepted ~~Correlant’s~~accounting ~~historical~~principles ~~operations~~are inexcluded ~~the~~from ~~cable~~net ~~modem~~income ~~and~~(loss) ~~CMTS~~in ~~business. In~~accordance ~~connection~~ with ~~the~~SFAS ~~shut down~~130, ~~Correlant~~Reporting ~~recorded~~Comprehensive aIncome ~~restructuring~~(“SFAS ~~charge~~130”). Other ofcomprehensive ~~$1,845,000~~income ~~during~~(loss) ~~fiscal 2004. The~~includes ~~following~~unrealized ~~table~~gains ~~summarizes~~(losses) ~~the~~on marketable ~~activity~~securities inand ~~Correlant’s~~foreign ~~reserves~~currency ~~associated~~translation ~~with~~adjustments. ~~its~~The ~~shut~~following ~~down~~table ofcomputes ~~historical~~the ~~operations~~Company’s comprehensive loss (in thousands):

		Three Months Ended March 31,						Nine Months Ended March 31,
	Separation costs for terminated employees and contractors			Facilities closing			Other			Total restructuring charges
Balance at June 30, 2003	$	—		$	—		$	—		$	—
		2005			2004			2005			2004
Fiscal 2004 restructuring charges	890			583			372			1,845
Net loss, as reported		$	(5,677	)	$	(638	)	$	(12,632	)	$	(3,483	)
Cash payments	(628		)	(49		)	(372		)	(1,049		)
Opta's portion of the change in Correlant's unrealized
Balance at June 30, 2004	262			534			—			796
gain (loss) on short term investments			(53	)		33			(43	)		(5	)
Cash payments	(131		)	(125		)	—			(256		)
Comprehensive loss		$	(5,730	)	$	(605	)	$	(12,675	)	$	(3,488	)
Balance at September 30, 2004	$	131		$	409		$	—		$	540

9Note 7 – Restructuring Charges

~~Note~~During 9the ~~–Litigation~~second ~~Settlement~~quarter of fiscal 2004, Correlant’s board of directors approved the wind down and cessation of Correlant’s historical operations in the cable modem and CMTS business. In connection with the shut down, Correlant recorded a restructuring charge of $1,845,000 during fiscal 2004. The following table summarizes the activity in Correlant’s reserves associated with its shut down of historical operations (in thousands):

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.

	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		(262	)		(456	)		--			(718	)
Reversal of over accrual		--			(78	)		--			(78	)


Balance at March 31, 2005	$	--		$	--		$	--		$	--

OnNote ~~August 31,~~8 ~~2004 Opta reached a~~–Litigation ~~settlement~~Settlement agreement with TurboComm. Under the agreement, TurboComm agreed to pay Opta $20,000 and deliver 686,000 shares of Opta, constituting all shares owned by TurboComm. Both parties mutually agreed to release and discharge any and all claims that each may have against the other party. This transaction resulted in an $88,000 gain included in Other income (expense) on the consolidated statement of operations for the three months ended September 30, 2004.

~~Note~~On 10July 30, –2004, ~~Segment~~Correlant reached a settlement agreement with one of its stockholders and major vendors, TurboComm ~~Geographic~~Technologies, ~~Information~~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 nine months ended March 31, 2005.

~~SFAS~~- ~~131,~~9 Disclosures about Segments of an Enterprise and Related Information (“SFAS 131”), establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available and is evaluated regularly by the chief operating decision maker, or decision making group. Our chief operating decision maker is the Chief Executive Officer. We are organized geographically and by line of business. While the Chief Executive Officer evaluates results in a number of different ways, the primary basis for which the allocation of resources and financial results are assessed is product type. During the three months ended September 30, 2004 we operated in one segment through our subsidiary GoVideo, which was the distribution of innovative, high performance consumer electronic products. During the three months ended September 30, 2003, we operated in an additional segment through our subsidiary Correlant, which was the development, manufacture and distribution of products used for broadband Internet access, including data-~~over-cable~~ equipment and digital subscriber line (“DSL”) access and networking devices and development. The following table presents a summary of the Company’s businesses and operating segments (in thousands):

	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

OPTA CORPORATION AND SUBSIDIARIES

10NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~Disclosed~~On inAugust 31, ~~the~~2004 ~~table~~Opta ~~below~~reached a issettlement ~~the~~agreement ~~reconciliation~~with ofTurboComm. Under the ~~loss~~agreement, ~~from~~TurboComm ~~operations~~paid Opta $20,000 ~~attributable~~and todelivered ~~operating~~686,000 ~~segments~~shares toof ~~loss~~Opta, ~~from~~constituting ~~continuing~~all ~~operations~~shares ~~before~~owned by TurboComm. Both ~~income~~parties ~~taxes~~mutually agreed to release and ~~non-controlling~~discharge ~~interest~~any and ~~total~~all ~~assets~~claims ~~attributable~~that toeach may have ~~operating~~against ~~segments~~the toother ~~total~~party. ~~assets~~This (transaction resulted in ~~thousands~~ an $88,000 gain included in Other income (expense): on the consolidated statement of operations for the nine months ended March 31, 2005.

	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

Note 9 – Line of Credit

~~Geographic~~On ~~Information~~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 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:

~~During~~• ~~the~~To ~~three~~pay ~~months~~all ~~ended September 30, 2004 and 2003, we recorded net revenues throughout~~ the ~~U.S.,~~lender's ~~Asia~~costs and ~~Europe~~expenses ~~as determined~~associated bywith the ~~final~~existing ~~destination of the product. The following table summarizes total net revenues attributable to significant countries (in thousands):~~default;

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

•

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

~~Presented~~• ~~below~~To ispay ~~information regarding~~no ~~identifiable~~more ~~assets~~than ~~from~~$100,000 ~~continuing~~toward ~~operations,~~any ~~classified~~subordinate ~~by operations~~indebtedness; ~~located~~and ino ~~the~~To ~~U.S.~~not ~~and~~incur ~~Asia~~capital (expenditures in ~~thousands):~~excess of $150,000.

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

The Agreement also called for the following modifications:

~~Note~~• 11A –reduction ~~Subsequent~~of ~~Events~~the maximum line to $20,000,000;

On• ~~November 1,~~A ~~2004,~~change ~~GoVideo~~to ~~entered~~the aminimum ~~forbearance agreement~~net income (~~“Agreement”~~loss) ~~with~~per ~~its~~month ~~line~~requirement offor ~~credit~~the ~~lender. See~~period ~~Agreement details discussed at Note 20~~ of ~~our~~ ~~Annual Report on Form 10-K as filed with the SEC on~~ February 18 1, 2005~~. GoVideo~~ ~~was~~through ~~unable~~August ~~to cure the existing defaults under the terms of the Agreement~~31, ~~which~~2005; ~~expired~~and

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

~~February~~The ~~28,~~reduction ~~2005,~~of ~~and~~the ~~was~~maximum ~~forced~~line to $20,000,000 ~~extend~~could ~~the forbearance~~limit ~~agreement~~GoVideo’s ~~(“Amended~~ability ~~Agreement”)~~to ~~until~~expand. ~~August 31~~However, ~~2005. In~~this ~~the~~most ~~Amended~~likely ~~Agreement,~~will not impact GoVideo ~~agreed~~as tothe current operating plan does not contemplate further growth until the ~~following~~current ~~significant~~operating ~~conditions:~~levels return to profitability.

~~• To pay~~Note ~~all~~10 ~~the~~– ~~lender’s costs~~ Segment and ~~expenses~~Geographic ~~associated~~Information ~~with the existing default;~~

~~• To~~SFAS 131, Disclosures about ~~pay~~Segments ~~$100~~of an Enterprise and Related Information (“SFAS 131”),~~000~~ establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available and is evaluated regularly by the chief operating decision maker, or decision making group. Our chief operating decision maker is the Chief Executive Officer. We are organized geographically and by line of business. While the Chief Executive Officer evaluates results in ~~installments~~a number of different ways, the primary basis for ~~forbearance~~which the allocation of resources and ~~other~~financial ~~accommodations~~results are assessed is product type. During the ~~provided~~three byand nine months ended March 31, 2005 we operated in one segment through our subsidiary GoVideo, which was the ~~lender~~distribution ~~under~~of innovative, high performance consumer electronic products. During the ~~Amended~~three ~~Agreement;~~and nine months ended March 31, 2004, we operated in an additional segment through our subsidiary Correlant, which was the development, manufacture and distribution of products used for broadband Internet access, including data-over-cable equipment and digital subscriber line (“DSL”) access and networking devices and development.

~~• To pay~~- no10 ~~more~~- ~~than $100,000 toward any subordinate indebtedness; and~~

• To notOPTA incurCORPORATION capitalAND expenditures in excess of $150,000.SUBSIDIARIES

TheNOTES AgreementTO alsoCONSOLIDATED calledFINANCIAL for the following modifications:STATEMENTS

~~• A~~ The ~~reduction~~following table presents a summary of the ~~maximum~~Company’s ~~line~~businesses toand ~~$20,000,000;~~operating segments (in thousands):

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

	Three Months Ended March 31,						As of or for the Nine Months Ended March 31,
	2005			2004			2005			2004

Broadband Internet access products:
Net revenues	$	--		$	87		$	--		$	604

Cost of net revenues		--			18			--			259



Gross profit		--			69			--			345
Income (loss) from operations	$	(69	)	$	(683	)	$	1,510		$	(4,273	)


Total assets							$	18,006		$	19,774


Consumer electronics:
Net revenues		18,980			31,845			108,521			88,727
Cost of net revenues		20,850			29,314			109,129			80,792


Gross profit		(1,870	)		2,531			(608	)		7,935
Income (loss) from operations	$	(4,616	)	$	592		$	(11,246	)	$	1,310


Total assets							$	42,589		$	40,812


Total operating segments:
Net revenues	$	18,980		$	31,932		$	108,521		$	89,331
Cost of net revenues		20,850			29,332			109,129			81,051


Gross profit (loss)		(1,870	)		2,600			(608	)		8,280
Income (loss) from operations attributable to operating
Segments	$	(4,685	)	$	(91	)	$	(9,736	)	$	(2,963	)


Total assets attributable to operating segments							$	60,595		$	60,587

~~• A reduction~~Disclosed in the ~~borrowing~~table ~~base~~below asis ~~determined~~the reconciliation byof ~~specific~~the ~~inventory~~loss from operations attributable to operating segments to loss from continuing operations before income taxes and non-controlling interest and total assets ~~receivable~~attributable ~~balances.~~to operating segments to total assets (in thousands):

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.

	Three Months Ended March 31,				As of or for the Nine Months Ended March 31,
	2005	2004			2005			2004
Income (loss) from operations attributable to operating	$ (4,685)	$	(91	)	$	(9,736	)	$	(2,963	)
segments
Corporate general and administrative expenses	518		615			1,564			1,969
Total other income (expense), net	(465)		2,283			(726	)		2,750

Income (loss) before income taxes and non-controlling
interest	$ (5,668)	$	1,577		$	(12,026	)	$	(2,182	)

Total assets attributable to operating segments					$	60,595		$	60,587
Total assets attributable to non-reporting segments						948			3,676

Total assets					$	61,543		$	64,263

12Geographic Information

~~Item~~During 2the -three ~~Management’s~~and ~~Discussion~~nine months ended March 31, 2005 and ~~Analysis~~2004, ofwe ~~Financial~~recorded ~~Condition~~ net revenues throughout the U.S., Asia and Europe ~~Results~~as determined by the final destination of ~~Operations:~~the product.

You should read the following discussion in conjunction with Opta Corporation’s (“Opta”) 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~~11 ~~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 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.

WeOPTA ~~begin~~CORPORATION ~~Management’s~~AND ~~Discussion~~SUBSIDIARIES and Analysis of Financial Condition and Results of Operations (“MD&A”) with an executive overview and description of Opta’s business. This is followed by a discussion of why we were unable to timely file our Form 10-Q for the three months ended September 30, 2004. The next discussion relates to our results of operations for the three months ended September 30, 2004 compared to the three months ended September 30, 2003.

~~After~~NOTES ~~the~~TO ~~results of~~CONSOLIDATED ~~operations,~~FINANCIAL weSTATEMENTS 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 our results of operations.

~~Executive~~The ~~Overview~~following ~~and~~table ~~Description~~summarizes oftotal net ~~Business~~revenues attributable to significant countries (in thousands):

Opta, a Delaware corporation, is a holding company and we 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.

	Three Months Ended March 31,				Nine Months Ended March 31,
	2005		2004		2005		2004
Asia	$	283	$	47	$	519	$	378
U.S.		18,697		32,799		108,002		89,780

Europe and other
		--		40		--		127


	$	18,980	$	32,886	$	108,521	$	90,285

~~Our~~Presented ~~business~~below ~~strategy in the consumer electronic segment~~ is ~~to leverage~~information ~~our~~regarding ~~significant~~identifiable ~~experience~~assets infrom ~~the~~continuing ~~consumer electronics market~~operations, ~~increase~~classified ~~the GoVideo brand recognition~~ by ~~introducing~~operations ~~products~~ located in ~~Asia,~~the U.S. and ~~continue~~Asia ~~our product~~(in ~~development~~thousands): ~~to bring to our customers compelling new products with superior quality and ease-of-use.~~

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.

	March 31,
	2005		2004
U.S.	$	61,090	$	63,889
Asia		453		374

	$	61,543	$	64,263

~~The~~- ~~consumer~~12 electronics industry is constantly facing new trends and challenges, the most prominent of which is severe price competition. We expect competition to intensify in the future. Our strategy to combat the price competition is to continue to focus on the development of lower-~~cost~~ ~~consumer electronics, continue the evaluation of potential new products and work with our contract manufacturers to reduce the purchase price of our products.~~

13Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations:

~~Explanatory~~You should read the following ~~Note~~discussion –in ~~Changes~~conjunction with Opta Corporation’s (“Opta”) unaudited condensed consolidated financial statements and notes included herein. The results described below are not necessarily indicative of the results to be expected in ~~Management~~any future period. Certain statements in this discussion and ~~Delays~~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 ~~Reporting~~the forward-looking 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.

OnWe ~~June 29,~~begin ~~2001,~~Management’s aDiscussion ~~majority~~and Analysis of ~~our~~Financial ~~stockholders,~~Condition ~~led~~and byResults ~~TCL,~~of ~~were~~Operations ~~successful~~(“MD&A”) ~~in a solicitation to~~with ~~gain~~an ~~control~~executive ofoverview ~~Opta~~ and ~~replace~~description ~~prior management~~ of ~~the~~Opta’s ~~Company~~business. On ~~June 29,~~The ~~2001,~~next ~~new~~discussion ~~directors and~~relates ~~officers~~to ~~were appointed and the then existing directors and officers were immediately removed from office. Following the termination of~~ our ~~relationship~~results ~~with prior independent accountants, new management concluded that a reaudit~~ of ~~the~~operations ~~financial statements~~ for ~~fiscal~~the ~~2001,~~three ~~2000~~ and ~~1999~~nine ~~was~~months ~~required. Effective~~ended ~~July 24,~~March ~~2002~~31, we2005 ~~engaged our~~compared ~~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~~three ~~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,~~nine ~~which~~months ~~were~~ended ~~filed~~March ~~August 24~~31, 2004 ~~and February 18, 2005, respectively, to also be late~~.

~~Results~~After the results of ~~Operations~~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 March 31, 2005. 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 our results of operations.

~~The following~~Executive ~~table~~Overview ~~summarizes~~and Description ~~certain aspects~~ of ~~our~~Business ~~results of operations for the three months ended September 30, 2004 compared to the three months ended September 30, 2003 (in thousands):~~

	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	%

Opta, a Delaware corporation, is a holding company and we 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 MP3 Rave MP branded players, 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 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.

~~Revenues~~Our business strategy in the consumer electronic segment is to leverage our significant experience in the consumer electronics market, increase the GoVideo brand recognition by introducing products in Asia, and continue our product development to bring to our customers compelling new products with superior quality and ease-of-use.

~~The~~Two ~~increase~~of inthe ~~overall~~major ~~revenues~~challenges ~~for~~facing Opta ~~the~~are ~~three~~managing ~~months~~liquidity and rapid product price declines. Liquidity has been, and will ~~ended~~continue ~~September 30~~to be, ~~2004~~an issue for us as ~~compared~~we tohave ~~the~~grown ~~three~~our ~~months~~subsidiary, ~~ended~~GoVideo, ~~September 30~~out of bankruptcy. Our majority shareholder, TCL Industries Holdings (H.K.) Limited (“TCL ~~2003~~Industries”), ~~was~~has ~~primarily~~been ~~attributable~~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 ~~following~~with ~~factors:~~our majority shareholder by sourcing more products from them. This will be a challenging and important part of GoVideo’s strategy to manage liquidity.

~~• GoVideo’s~~The consumer electronics industry is ~~increased~~constantly ~~product~~facing ~~offerings~~new trends and challenges, ~~primarily~~the most prominent of which is severe price competition. We expect competition to intensify in the ~~DVD~~future. ~~Recorder~~The +rapid ~~VCR~~price declines experienced during fiscal 2005 strained our operations and financial resources. Therefore, another ~~which~~challenge ~~was~~facing ~~introduced~~GoVideo during periods of rapidly declining product sales price, is managing inventory while balancing the ~~second~~need ~~quarter~~to meet the demands of ~~fiscal~~ ~~2004~~our customers quickly. ~~Revenues~~ ~~attributable~~Our strategy to combat the price competition is to continue to focus on the development of lower-cost consumer electronics, continue the evaluation of potential new products ~~DVD~~and ~~Recorder~~work +with ~~VCR~~our ~~totaled~~contract ~~$11,455,000~~manufacturers ~~during~~to reduce the ~~three~~purchase ~~months~~price ~~ended~~of ~~September 30,~~our ~~2004~~products.

~~• GoVideo’s increased~~- ~~ability~~13 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.

~~Nearly 100% of our revenues were generated from domestic sales during~~ ~~the~~Results ~~quarters ended September 30, 2004 and 2003. We expect this trend to continue as the majority~~ of ~~our~~Operations ~~revenues are attributable to GoVideo.~~

~~Gross~~The ~~Profit~~following ~~(loss)~~table ~~including~~summarizes certain ~~Cost~~aspects of our results of operations for the three and nine months ended March 31, ~~Revenues~~2005 compared to the three and nine months ended March 31, 2004 (in thousands):

The decrease in gross profit dollars and gross profit percentage for the three months ended September 30, 2004 as compared to the three months ended September 30, 2003 was due to the liquidation of GoVideo’s significantly overstocked and overpriced inventory of DVD recorders and DVD Recorders + VCRs. During the quarter, GoVideo had committed outstanding orders to purchase DVD recorders and DVD Recorders + VCRs as the prices of these products began to drop substantially. Although GoVideo was able to cancel and/or renegotiate some

	Three Months Ended March 31,											Nine Months Ended March 31,
	2005			2004		$ Change			% Change			2005			2004		$ Change			% Change
Revenues	$	18,980		$	31,932	$	(12,952	)		(41	%)	$	108,521		$	89,331	$	19,190			21	%
Gross profit (loss)		(1,870	)		2,600		(4,470	)		(172	%)		(608	)		8,280		(8,888	)		(107	%)
As a percentage of revenues		(10%	)		8%								(1%	)		9%
Selling, general and administrative		2,712			2,910		(198	)		(7	%)		8,769			10,741		(1,972	)		(18	%)
Research and development		621			394		227			58	%		1,923			2,435		(512	)		(21	%)
Other income (expense)		(465	)		2,281		(2,746	)		(120	%)		(726	)		2,750		(3,476	)		(126	%)

14Revenues

~~outstanding~~In ~~orders~~the consumer electronics industry, revenues itgenerated ~~was~~during ~~not~~the ~~sufficient~~first tocalendar ~~mitigate~~quarter ~~the~~of ~~substantial price~~any ~~drop. As~~year aare ~~result~~typically the weakest, ~~DVD~~due ~~recorders were~~largely ~~liquidated~~to atthe aseasonally ~~negative~~high ~~16%~~purchases ~~gross~~during ~~profit~~the ~~while~~fourth ~~DVD~~calendar ~~Recorders~~quarter. However, +in ~~VCRs~~addition ~~were liquidated~~to atthe atypical ~~negative~~decrease, 5%revenues ~~gross~~were ~~profit.~~ down substantially during the ~~These~~three ~~two~~months ~~products~~ended ~~represent~~March ~~approximately~~31, ~~27%~~2005 ofas ~~our~~compared to revenues ~~for~~generated during the ~~three~~ three months ended ~~September 30~~March 31, 2004. as a result of:

~~Although~~- we14 ~~anticipate~~- continued pressure on the selling prices of our different consumer electronics products, we are taking steps to counter the impact of this price erosion by continuing to implement cost reduction efforts in the manufacture of our products and by introducing new, lower cost technology driven products to the market.

~~Operating~~• ~~Expenses~~The continual pricing pressures that are traditional in the consumer electronics market;

~~Selling,~~• ~~general~~The ~~and~~inability ~~administrative~~to ~~(SG&A). SG&A~~negotiate ~~expense~~a ~~consists~~competitive ~~primarily of personnel costs for our sales, administrative and support staff, allowance for doubtful accounts, legal and accounting fees and advertising and~~ product ~~promotional~~purchase ~~expenses. The~~price ~~decrease~~from incontract ~~SG&A~~manufacturers; ~~expenses for the three months ended September 30, 2004 as compared to September 30, 2003 was due to the following:~~and

• ~~The~~ ~~shut~~Customers ~~down~~going ofstraight ~~Correlant’s historical operations which contributed $159,000~~ to ~~SG&A~~contract ~~during~~manufacturers ~~the three months ended September 30, 2004 as compared~~ to ~~$660,000~~purchase ~~during the three months ended September 30, 2003~~products.

• The decrease discussed above was ~~one~~somewhat ~~time~~offset ~~recovery~~by GoVideo’s increased product offerings, primarily the MP3 Rave MP branded product (“MP3”) which was introduced during the first quarter of ~~bad~~fiscal 2005. ~~debt~~Net ~~associated~~revenues ~~with~~attributable ~~settling~~to athe ~~legal~~MP3 ~~dispute~~totaled $2,097,000 during the three months ended ~~September 30,~~March ~~2004~~31, ~~with~~2005 ~~one~~as ofcompared ~~Correlant’s previous~~to ~~customers. The~~no ~~recovery~~net ~~totaled $1~~revenue during the three months ended March 31,~~946,000~~ 2004.

The ~~above~~increase ~~decrease~~in overall revenues for the nine months ended March 31, 2005 as compared to the nine months ended March 31, 2004, was ~~slightly~~primarily ~~offset~~attributable byto GoVideo’s increased product offerings most notably the ~~following:~~DVD Recorder + VCR, which was introduced during the second quarter of fiscal 2004 and the MP3 product discussed above. Net revenues attributable to the new DVD Recorder + VCR totaled $27,643,000 during the nine months ended March 31, 2005 as compared to $11,900,000 for the nine months ended March 31, 2004. Net revenues attributable to the MP3 totaled $22,558,000 during the nine months ended March 31, 2005 as compared to no net revenue during the nine months ended March 31, 2004.

~~• Increased~~The increase in overall revenues for the nine months ended March 31, 2005 as compared to the nine months ended March 31, 2004 discussed above, was somewhat offset by the decrease in other existing product sales, including ~~and~~the ~~marketing~~DVD ~~efforts~~recorder. ~~expended~~Net revenues attributable to ~~launch~~the DVD recorder decreased $10,771,000 to $47,235,000 during the ~~new~~nine ~~MP3~~months ~~brand~~ended March 31, ~~Rave~~2005 ~~MP3~~from $58,006,000 during the ~~three~~nine months ended ~~September 30~~March 31, 2004;.

~~• $200~~Nearly 100% of our revenues were generated from domestic sales during the three and nine months ended March 31,~~000~~ 2005 and ~~increased~~2004. ~~bad~~We ~~debt~~expect ~~allowance~~this ~~related~~trend to continue as long as GoVideo’s ~~slow~~sales ~~paying~~are ~~customers;~~our main source of revenues. Gross Profit (loss) including Cost of Revenues

~~• Increased~~The decrease in gross profit (loss) ~~sales~~dollars and ~~marketing~~gross ~~dollars~~profit ~~offered~~(loss) topercentage ~~customers~~for asthe anthree ~~incentive~~and tonine ~~purchase GoVideo~~months ~~brand~~ended ~~products~~March 31, 2005 as ~~opposed~~compared to ~~competitor’s~~the ~~product~~three ~~that~~and ~~already~~nine ~~exists in~~months ~~the~~ended ~~market;~~March ~~and~~31, 2004 was due to the following:

• ~~Increased headcount~~ toThe ~~support~~liquidation of GoVideo’s ~~growing~~significantly ~~business~~overstocked ~~needs~~and overpriced inventory of DVD recorders, DVD Recorders + VCRs and MP3 players. At certain times during both the three and the nine months ended March 31, 2005 GoVideo had committed outstanding orders as the prices of these products began to drop substantially. Although GoVideo was able to cancel and/or renegotiate some outstanding orders, it was not sufficient to mitigate the substantial price drop. As a result, GoVideo had to liquidate a substantial amount of ~~the increased~~inventory ~~revenues~~at negative gross profit.

~~Excluding~~• ~~the impact of the one time recovery of bad debt~~$890,000 wereserve ~~believe~~for ~~SG&A~~noncancellable ~~expenditures may~~purchase ~~decrease~~commitments asduring ~~GoVideo~~the ~~has~~nine ~~taken~~months ~~steps~~ended toMarch ~~reorganize certain aspects of its business. Subsequent to September 30~~31, ~~2004,~~ 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 and become cash flow positive.2005;

~~Research~~• ~~and development (R&D). R&D expenses consist primarily of personnel costs of employees engaged in research~~$1, ~~design and development activities and~~082,000 ~~to a lesser extent, design prototype material expenditures~~ and ~~equipment and supplies required to develop new products and enhance existing products. The decrease in R&D expenses for the three months ended September 30~~$1, ~~2004 as compared to the three months ended September 30~~696, ~~2003~~000 ~~was~~net ~~directly~~increase ~~related~~ to the ~~shut~~inventory ~~down~~valuation ~~of Correlant’s historical operations. Correlant had no R&D expenses~~ during the three ~~months~~and ~~ended~~nine ~~September 30, 2004 as compared to $997,000 during the three~~ months ended ~~September 30~~March 31,2005, ~~2003.~~respectively; and

We• ~~continue~~The tocontinual ~~invest~~downward inprice ~~the~~pressure ~~future~~experienced by ~~funding~~the ~~product~~overall ~~development~~consumer ~~and enhancement. However,~~electronics ~~research and development expenditures may decrease as a result of GoVideo’s reorganization efforts discussed above~~market.

~~Other~~We ~~Income~~anticipate ~~(Expense)~~continued pressure on the selling prices of GoVideo’s different consumer electronics products for the foreseeable future.

~~Other~~Operating ~~income~~Expenses (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

15Selling, general and administrative (SG&A). SG&A expense consists primarily of personnel costs for our sales, administrative and support staff, allowance for doubtful accounts, legal and accounting fees and advertising and product promotional expenses. The decrease in SG&A expenses for the three and nine months ended March 31, 2005 as compared to the three and nine months ended March 31, 2004 was due to the following:

as• aThe ~~result~~shut down of ~~GoVideo~~Correlant’s ~~line of~~historical ~~credit,~~operations ~~accrued~~which atcontributed a$69,000 ~~higher~~and ~~default~~$436,000 ~~interest rate attributable~~ to ~~GoVideo’s non-compliance~~SG&A ~~with~~during ~~certain~~the ~~debt~~three ~~covenants,~~ and ~~other~~nine ~~subordinate~~months ~~debt. Interest~~ended ~~income~~March ~~remained~~31, ~~fairly~~2005, ~~constant~~respectively as ~~a result~~compared ofto ~~the~~$622,000 ~~slightly~~and ~~decreased~~$3,015,000 ~~cash~~during ~~and~~the ~~cash~~three ~~equivalents~~ and ~~short~~nine ~~term investment~~months ~~balances~~ended ~~offset~~March by31, ~~the~~2004, ~~slight increase in fixed income interest rates~~respectively.

~~Liquidity~~• ~~and~~The ~~Capital~~one ~~Resources~~time recovery of bad debt associated with settling a legal dispute, during the nine months ended March 31, 2005, with one of Correlant’s previous customers. The recovery totaled $1,946,000.

The ~~Company incurred~~above adecrease ~~net~~was ~~loss of $3,784,000 during the three months ended September 30,~~slightly ~~2004. Additionally,~~offset ~~cash used~~ by ~~operating~~ ~~activities was $3,269,000 during~~ the ~~three~~following: 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.

~~Additionally, in~~• ~~June 2003~~Increased ~~GoVideo~~sales ~~borrowed substantial funds from TCL Industries, the majority stockholder of Opta,~~ and ~~Asia~~marketing ~~Focus~~efforts ~~Industrial~~expended ~~Ltd.,~~to anlaunch ~~entity affiliated with TCL Industries. The purpose of~~ the ~~loans~~new ~~was~~MP3 ~~to fund inventory purchases and operating expenses. Both loans~~brand, ~~which~~Rave ~~are subordinate to GoVideo’s line of credit~~MP3, ~~became due~~ during ~~fiscal year 2004. GoVideo was unable to pay off~~ the ~~loans~~three and ~~extended~~ ~~the~~nine ~~due~~months ~~date~~ended ~~three~~March ~~times. The current due date for the loan with TCL Industries is July 24~~31, 2005. The current due date for the loan with Asia Focus Industrial Ltd. is August 11, 2005. Both loans are collateralized by 100% of the Common and Preferred Series D stock of Correlant Communications owned by Opta. There can be no assurance that GoVideo will be able to pay the loans when they mature or that another extension can be successfully negotiated.;

~~During~~• ~~fiscal 2004,~~Increased ~~Opta~~sales ~~entered~~and ~~into~~marketing adollars ~~financing~~offered ~~agreement~~to ~~with~~customers ~~TCL~~as ~~Industries. Opta~~an ~~ultimately~~incentive ~~loaned the funds~~ to purchase GoVideo to ~~fund~~brand ~~inventory~~products ~~purchases~~as ~~and~~opposed ~~operating~~to ~~expenses. The~~competitor’s ~~financing~~product ~~agreement~~that ~~has~~already ~~been~~exists ~~extended three~~in ~~times with a new 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.~~market;

~~The~~• ~~above matters~~Increased ~~raise~~headcount ~~substantial~~to ~~doubt~~support ~~about the Company~~GoVideo’s ~~ability~~growing 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~~needs 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,~~the ~~additional~~increased ~~steps~~revenues; ~~including, but not limited to, further cost reductions~~ and ~~eliminating some of its current activities, may be necessary.~~

~~The~~• ~~following~~$611,000 ~~table~~increase ~~summarizes~~in ~~our~~GoVideo’s ~~cash~~bad ~~flows~~debt ~~for~~related to past due customers during the ~~three~~nine months ended ~~September 30~~March 31, ~~2004~~2005 as compared to ~~the~~March ~~three months ended September 30~~31, ~~2003~~ ~~(in thousands):~~2004.

	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

Excluding 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. 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 and become cash flow positive.

AsResearch and development (R&D). R&D expenses consist primarily of ~~September 30~~personnel costs of employees engaged in research, design ~~2004~~and development activities and, ~~our~~to ~~principal~~a ~~source~~lesser ofextent, ~~liquidity~~design prototype material ~~included~~expenditures ~~cash~~and equipment and ~~cash~~supplies ~~equivalents~~required ~~and~~to ~~short-term~~develop ~~investments~~new ofproducts and enhance ~~$21,942,000~~existing products. The ~~net~~increase ~~cash~~in ~~used~~R&D byexpense during the three months ended March 31, ~~operating~~2005 ~~activities~~as ~~during~~compared to the three months ended ~~September 30~~March 31, 2004 was ~~primarily~~ attributable to ~~fund~~ the increased ~~operating~~personnel ~~loss~~costs ~~for~~to ~~the~~support ~~three~~GoVideo’s ~~months~~expanded ~~ended~~product ~~September 30, 2004~~offerings. The decrease ~~consumer~~in ~~electronics~~R&D ~~industry typically~~expenses ~~experiences~~for anthe ~~increase~~nine inmonths ~~revenues~~ended ~~from~~March ~~September through December. As~~31, a2005 ~~result,~~as ~~our~~compared ~~accounts~~to the ~~receivable~~nine ~~increased~~months asended ~~GoVideo~~March ~~customers~~31, ~~purchased~~2004 ~~product~~was ~~from~~directly usrelated to ~~ramp up for~~ the ~~fourth~~shut ~~quarter~~down of ~~calendar~~Correlant’s historical ~~2004~~operations. ~~Additionally,~~ ~~our~~Correlant ~~accounts~~incurred ~~payables~~no ~~increased~~R&D ~~also~~expenses asduring athe ~~result~~nine ofmonths ended ~~GoVideo~~March ~~ramping~~31, up2005 ~~for~~as ~~sales~~compared to $1,603,000 during the ~~fourth~~nine ~~quarter~~months ofended ~~calendar~~March 31, 2004. We ~~expect~~This decrease ~~future~~was ~~cash~~somewhat ~~provided~~offset ~~(used)~~ by ~~operating~~ ~~activities~~the increased R&D expense attributable to GoVideo’s expanded product offerings as previously discussed.

16- 15 -

~~fluctuate,~~We ~~primarily~~continue asto ainvest ~~result of fluctuations~~ in ~~our~~the ~~operating~~future ~~results,~~by ~~the~~funding ~~timing~~product ofdevelopment ~~product~~and ~~shipments~~enhancement. However, ~~accounts~~research ~~receivable~~and ~~collections,~~development ~~inventory~~expenditures ~~management~~may ~~and~~decrease ~~the~~as ~~timing~~a result of ~~vendor~~GoVideo’s ~~payments~~reorganization efforts discussed above.

~~For~~Other ~~the~~Income ~~three~~(Expense) ~~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.~~

~~Financing~~Other income (expense) consists of ~~activities~~interest ~~for~~income, interest expense, foreign exchange gain (loss) and other non-operating items. We experienced net other expense during the three and nine months ended ~~September 30~~March 31, 2005 ~~2004~~as ~~consisted~~a ~~almost entirely~~result of ~~our~~interest ~~subsidiary~~expense related to GoVideo’s ~~receiving~~debt. ~~advances,~~GoVideo’s interest expense increased during the three and ~~making~~nine ~~payments~~months onended March 31, 2005 as ~~its~~compared ~~available~~to ~~line~~the three and nine months ended March 31, 2004 as a result of ~~credit~~GoVideo’s increased average debt principal. ~~The~~ ~~net~~Additionally, interest expense was incurred at a higher ~~increase~~default interest rate attributable to GoVideo’s ~~line~~non-compliance ofwith ~~credit~~certain debt covenants. The interest expense was somewhat offset by settling a ~~result~~legal dispute with one of ~~purchasing~~Correlant’s ~~additional~~previous customers as discussed above, resulting in a one time gain of ~~inventory~~$774,000. Additionally, Opta settled a dispute with this same Correlant customer, a stockholder of Opta, which resulted in ~~anticipation~~a one time gain of ~~increased~~$88,000. ~~revenues~~Both gains were realized during the ~~fourth~~three ~~quarter~~months ended September 30, 2004. Interest income remained fairly constant during all periods presented as a result of the slightly decreased cash and cash ~~calendar~~equivalents ~~2004~~and short term investment balances offset by the slight increase in fixed income interest rates.

~~Cash~~Liquidity and ~~Working~~ Capital Resources ~~Requirements~~

The Company incurred a net loss of $12,632,000 during the nine months ended March 31, 2005. At ~~September 30~~March 31, ~~2004~~2005, wethe Company had ~~working~~an ~~capital~~accumulated deficit of $19118,~~362~~243,000 ~~compared~~and tothe ~~$25~~Company’s sole operating subsidiary,~~045~~ GoVideo,~~000~~ atwas, ~~June 30~~and still is, ~~2004. The~~ ~~majority~~in ofdefault ~~the~~under ~~decrease~~certain indebt covenant provisions ~~working~~of ~~capital~~its ~~was~~line ~~attributable~~of tocredit. GoVideo’s ~~increased~~is ~~borrowings~~currently tounder ~~fund~~a forbearance agreement with its lender ~~operations,~~which ~~discussed~~commenced inMarch ~~detail below~~1, 2005 and tois adue ~~lesser extent~~ to ~~fund~~expire ~~our consolidated~~on ~~net~~August ~~loss~~31, 2005.

InAdditionally, ~~July~~ in June 2003, GoVideo ~~entered~~borrowed ~~into~~substantial afunds ~~financing~~from ~~agreement~~TCL ~~last~~Industries, ~~amended~~the ~~and~~majority ~~restated~~stockholder inof ~~May~~Opta, ~~2004. The~~and ~~original~~Asia Focus ~~maximum~~Industrial ~~line~~Ltd., ofan ~~credit~~entity ~~available was~~affiliated ~~$40,000,000~~with ~~limited~~TCL byIndustries. aThe ~~borrowing~~purpose ~~base~~of ~~determined~~the byloans was ~~specific~~to fund inventory ~~and~~ ~~receivable~~purchases ~~balances,~~ and ~~provides~~operating ~~for~~expenses. ~~cash~~Both loans, ~~letters~~which are subordinate to GoVideo’s line of credit, ~~and acceptances~~became due during fiscal year 2004. ~~The~~ ~~financing~~GoVideo ~~agreement,~~was asunable ~~amended,~~to ~~states~~pay ~~that~~off the ~~line~~loans ofand ~~credit~~extended ~~will~~the ~~mature~~due ~~July 21,~~date ~~2007~~three times. ~~Interest~~ ~~was~~The ~~originally~~current ~~charged~~due atdate ~~prime~~for ~~plus~~the ~~1/2~~loan ~~percent. The~~with ~~line~~TCL ofIndustries ~~credit~~ is ~~collateralized~~ byJuly ~~all~~24, of2005. ~~GoVideo’s~~The ~~assets~~current ~~and~~due update tofor ~~$5,000,000~~the ofloan ~~the~~with ~~credit~~Asia ~~facility~~Focus isIndustrial ~~guaranteed by Opta~~Ltd. ~~Under the~~ ~~current~~is ~~credit~~August ~~facility~~11, ~~GoVideo~~2005. isBoth ~~required~~loans toare ~~comply~~collateralized ~~with~~by ~~certain financial~~100% ~~covenants~~of the Common and ~~conditions~~Preferred ~~including~~Series ~~minimum~~D ~~levels~~stock of ~~net~~Correlant ~~income. GoVideo~~Communications ~~was~~owned ~~unable~~by toOpta. ~~comply~~There ~~with the~~can ~~financial~~be ~~covenants~~no byassurance ~~not~~that ~~earning~~GoVideo ~~the~~will ~~required~~be ~~minimum~~able ~~net~~to ~~income. As~~pay athe ~~result,~~loans onwhen ~~June 1,~~they ~~2004,~~mature ~~interest~~or that ~~began~~another ~~accruing~~extension atcan ~~the~~be ~~default~~successfully ~~rate of prime plus 3 1/2%~~negotiated.

OnDuring ~~November 1,~~fiscal 2004, ~~GoVideo~~Opta entered ainto ~~forbearance~~a financing agreement ~~(“Agreement”)~~ with ~~its~~TCL ~~line of credit lender~~Industries. ~~See~~ ~~Agreement~~Opta ~~details~~ultimately ~~discussed~~loaned atthe ~~Note~~funds 20to ofGoVideo to ~~our~~fund ~~Annual~~inventory ~~Report~~purchases onand ~~Form~~operating ~~10-K~~expenses. ~~filed~~The ~~with~~financing ~~the~~agreement ~~SEC~~has onbeen ~~February 18,~~extended ~~2005. GoVideo~~three ~~was~~times ~~unable~~with toa ~~cure~~new ~~the existing~~maturity ~~defaults~~date ~~under the terms~~ of ~~the~~July ~~original Agreement~~21, ~~which expired February 28,~~ 2005,. ~~and~~The ~~was~~loan ~~forced~~is tocollateralized ~~extend~~by 100% of the ~~forbearance~~Common ~~agreement~~and ~~(“Amended~~Preferred ~~Agreement”) until~~Series ~~August 31,~~D ~~2005. In~~stock ~~the Amended~~of ~~Agreement,~~Correlant ~~GoVideo~~Communications ~~agreed~~owned toby ~~the~~Opta. ~~following significant conditions:~~

~~• To~~The above matters raise substantial ~~pay~~doubt ~~all~~about the ~~lender~~Company’s ~~costs~~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 ~~associated~~in ~~with~~an ~~existing~~attempt ~~default;~~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.

~~• To pay~~- ~~$100,000,~~16 in- ~~installments, for forbearance and other accommodations provided by the lender under the Amended Agreement;~~

~~• To~~The following table summarizes our ~~pay~~cash noflows ~~more~~for ~~than~~the ~~$100~~nine months ended March 31,~~000~~ ~~toward~~2005 ~~any~~compared ~~subordinate~~to ~~indebtedness;~~the ~~and~~nine months ended March 31, 2004 (in thousands):

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

	March 31, 2005			March 31, 2004
Net cash provided (used) by operating activities	$	610		$	(24,447	)
Net cash provided (used) by investing activities		177			2,629
Net cash provided (used) by financing activities		(1,877	)		16,180

As of March 31, 2005, our principal source of liquidity included cash and cash equivalents and short-term investments of $18,992,000. The ~~Agreement~~net ~~also~~cash ~~called~~provided ~~for~~by operating activities during the ~~following~~nine ~~modifications:~~months ended March 31, 2005 was primarily due to the collection of customer accounts receivables and increased accounts payable as a result of managing GoVideo’s liquidity, offset by the consolidated operating loss. We expect future cash provided (used) by operating activities to 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.

~~• A~~For the nine months ended March 31, ~~reduction~~2005, our principal investing activities included the net sales of short-term investments and the ~~maximum~~net ~~line~~purchase toof ~~$20,000,000;~~property and equipment.

~~• A change~~Financing toactivities for the ~~minimum~~nine months ~~net~~ended ~~income~~March ~~(loss)~~31, ~~per~~2005 ~~month~~consisted ~~requirement~~almost ~~for~~entirely ~~the~~of ~~period~~our ofsubsidiary GoVideo receiving ~~February 1~~advances, ~~2005~~and ~~through~~making ~~August 31,~~payments ~~2005;~~on ~~and~~its available line of credit. The net decrease to GoVideo’s line of credit was a result of paying down the principal as GoVideo received payments from customers.

~~• A reduction~~Cash inand ~~the~~Working ~~borrowing base as determined by specific inventory and~~Capital ~~receivable~~Requirements ~~balances.~~

~~The~~At ~~reduction~~March of31, ~~the~~2005, ~~maximum~~we ~~line~~had toworking capital of $2010,333,000 compared to $25,045,000 ~~could~~at ~~limit~~June 30, 2004. The majority of the decrease in working capital was attributable to (a) the decrease in GoVideo’s ~~ability~~accounts receivable due to ~~expand. However,~~lower ~~this~~revenues ~~most likely~~during ~~will~~the ~~not~~quarter ~~impact~~ended ~~GoVideo~~March as31, 2005, (b) the increase ~~current~~in ~~operating~~GoVideo’s ~~plan~~accounts ~~does~~payable ~~not contemplate~~as ~~further~~a ~~growth~~result ~~until~~of ~~the~~managing ~~current~~GoVideo’s liquidity ~~operating~~issues, ~~levels~~and ~~return~~(c) to ~~profitability~~ our consolidated net loss.

AsIn July 2003, GoVideo entered into a ~~result~~financing ofagreement ~~GoVideo successfully~~last ~~extending~~amended ~~its~~and ~~forbearance~~restated ~~agreement~~in ~~through~~May ~~August 31,~~2004. ~~2005,~~The original maximum ~~the~~line ~~current~~of ~~forecast~~credit ~~shows~~available ~~the~~was ~~Company~~$40,000,000 ~~will~~limited ~~have~~by ~~enough~~a ~~working~~borrowing ~~capital~~base todetermined by ~~continue~~specific asinventory aand ~~going~~receivable ~~concern~~balances, ~~for~~and ~~the~~provides 12for ~~months~~cash ~~following~~loans, ~~the~~letters ~~date~~ of ~~this~~credit ~~filing~~and acceptances. ~~However,~~ ~~GoVideo~~The ~~may~~financing ~~need~~agreement, ~~to extend~~as ~~its~~amended, ~~forbearance~~states ~~agreement~~that ~~beyond~~ the ~~current~~line ~~expiration~~of ~~date~~credit ofwill mature ~~August~~July 3121, ~~2005~~ if2007. ~~the~~Interest ~~Company~~was ~~does~~originally ~~not~~charged ~~successfully~~at ~~execute~~prime ~~its~~plus ~~current~~1/2 ~~cost~~percent. ~~reduction~~The ~~efforts. If~~line ~~GoVideo~~of ~~requires~~credit ~~an additional~~is ~~extension~~collateralized onby ~~its~~all ~~forbearance~~of ~~agreement~~GoVideo’s assets and up to $5,000,000 ~~but~~of the credit facility is ~~unable~~guaranteed toby ~~obtain~~Opta. Under the ~~extension~~ current credit facility, GoVideo ~~will~~is required ~~have~~ to ~~take~~comply ~~steps~~with ~~towards~~certain ~~liquidating~~financial ~~significant assets~~covenants inand ~~order~~conditions toincluding ~~repay~~minimum levels ~~its~~of ~~lender~~net income. ~~This~~ ~~will~~GoVideo ~~likely~~was ~~lead~~unable to ~~significant~~comply ~~losses~~with on the ~~liquidation~~financial ofcovenants ~~these~~by not ~~assets~~earning the required minimum net income. ~~Additionally~~ As a result, ~~should~~on ~~our~~June 1, ~~capital~~2004, interest began ~~requirements~~accruing at the default rate of prime plus 3 1/2%.

17On 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:

~~exceed~~• ~~cash~~To ~~available~~pay ~~from operations~~all wethe ~~cannot~~lender's ~~assure~~costs ~~that~~and ~~additional~~expenses ~~sources~~associated ofwith ~~financing~~existing ~~would be available to us on commercially favorable terms, if at all.~~default;

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

~~The~~• ~~following~~To ~~table~~pay ~~summarizes~~no ~~our~~more ~~contractual~~than ~~obligations at September 30~~$100, ~~2004,~~000 ~~and~~toward ~~the~~any ~~effect~~subordinate ~~such~~indebtedness; ~~obligations~~and ~~are~~o ~~expected~~To tonot ~~have~~incur oncapital ~~our~~expenditures ~~liquidity and cash flows~~ in ~~future~~excess ~~periods~~of ~~(in thousands):~~$150,000.

	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 Agreement also called for the following modifications:

~~The~~• ~~above~~A ~~inventory~~reduction ~~purchase~~of ~~obligations~~the ~~relate~~maximum toline ~~our subsidiary GoVideo and are generally subject~~ to ~~renegotiation or cancellation at any time.~~$20,000,000;

~~All~~• ~~our~~A ~~operating~~change ~~lease~~to ~~obligations~~the ~~are~~minimum ~~building~~net ~~leases. On~~income ~~November 4,~~(loss) ~~2004~~per ~~Correlant~~month ~~entered~~requirement ~~a lease termination agreement~~ for ~~its~~the ~~San~~period ~~Diego facility. Correlant agreed to pay a termination payment~~ of ~~$370,000,~~February ~~a consideration fee of $4~~1,~~000~~ ~~and~~2005 ~~surrender~~through ~~all~~August ~~claims to the security deposit of $43~~31,~~000. Because~~ ~~the lease~~2005; ~~termination was entered subsequent to September 30, 2004, the amounts set forth above include Correlant’s original lease obligation.~~and

~~Off-Balance Sheet~~• ~~Arrangements~~A reduction in the borrowing base as determined by specific inventory and receivable balances.

~~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~~17 ~~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~~The ~~Trends~~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.

~~The~~As a result of GoVideo successfully ~~following~~extending isits forbearance agreement through August 31, 2005, the current forecast shows the Company will have enough working capital to continue as a ~~description~~going concern for the 12 months following the date of this filing. However, GoVideo may need to extend its forbearance agreement beyond the ~~most~~current ~~significant~~expiration ~~recent~~date ~~trends~~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 ~~consumer~~operations ~~electronic~~we ~~business~~cannot ~~segment:~~assure that additional sources of financing would be available to us on commercially favorable terms, if at all.

~~Traditional consumer~~Contractual ~~electronics~~Obligations 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,~~The asfollowing ~~well~~table assummarizes ~~the consumer electronics industry in general, has~~our ~~been~~contractual ~~subject~~obligations toat ~~substantial~~March ~~price competition. In addition~~31, ~~consumer electronics companies in Asia~~2005, ~~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~~effect ~~realigned management’s~~such ~~roles~~obligations ~~and~~are ~~responsibilities~~expected to have ~~better~~on ~~control~~our liquidity and ~~more~~cash ~~closely manage~~flows ~~GoVideo’s~~in ~~products~~future ~~which~~periods ~~should~~(in ~~allow~~thousands): ~~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.

	Total		Less Than One Year		Greater Than One Year
Operating lease obligations	$	385	$	385	$ --
Capital lease obligations		--		--	--
Inventory purchase obligations		10,833		10,833	--

Total contractual cash obligations	$	11,218	$	11,218	$ --

18All our operating lease obligations are building leases.

~~LCD displays.~~ The ~~large-screen~~above ~~display~~inventory ~~market for LCD~~purchase ~~displays~~obligations ~~has~~are ~~been~~entered ~~expanding~~as inpart ~~recent~~of ~~years. As~~ the ~~market has~~normal ~~increased~~course ~~so has the number~~ of ~~companies~~business ~~that~~by ~~compete with~~ our ~~products. Each~~subsidiary ~~company is increasing investment~~ GoVideo and ~~expanding~~are ~~production.~~generally Assubject ~~the number of companies entering this market increases, it is expected that the unit price will continue~~ to ~~decrease~~renegotiation ~~due to intensifying competition. As a result of this trend, we have taken a cautious approach to this market~~ and ~~have~~cancellation ~~limited~~at ~~our activity~~any ~~to only a few models until such~~ time ~~as we believe the volatility in this market can be safely managed.~~

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

WeAt March 31, 2005, we did not have ~~will~~any ~~continue~~relationship towith ~~invest~~unconsolidated inentities ~~product~~or ~~development~~financial ~~and~~partnerships, which other companies have established for the ~~manufacturing~~purpose ~~process~~of asfacilitating off-balance sheet arrangements weor ~~believe~~other ~~these~~contractually ~~are~~narrow ~~both~~or ~~critical~~limited topurposes ~~facilitate~~as ~~innovation~~defined ofin ~~new~~Item ~~and~~303(a)(4)(ii) ~~improved~~of SEC ~~products~~Regulation ~~and technologies~~S-K. We ~~will~~Therefore, ~~also~~we ~~continue~~are not materially exposed to ~~improve~~any ~~our~~financing, ~~distribution~~liquidity, ~~network~~market ~~reach~~or ~~our~~credit ~~targeted~~risk ~~customers~~that ~~more~~could ~~efficiently~~arise if we had engaged in such relationships.

~~Business Outlook~~Significant Trends

~~Since~~The wefollowing ~~filed~~is ~~our~~a ~~Annual Report~~description onof ~~Form 10-K for~~ the ~~year ended June 30, 2004 with the SEC on February 18,~~ ~~2005,~~most wesignificant ~~have~~recent ~~focused,~~trends ~~and will continue to focus on current operations, namely GoVideo,~~ in anour ~~attempt~~consumer toelectronic ~~become~~business asegment: ~~profitable company with the ability to generate a positive cash flow from operations.~~

~~Following~~Traditional ~~the~~consumer ~~takeover of the~~electronics ~~Board~~continues ofto ~~Directors~~be ofexposed ~~the Company on June 29, 2001,our primary strategy for business operations has been~~ to ~~restructure~~downward ~~our~~price ~~unprofitable businesses, acquire undervalued companies (such as GoVideo) and focus on growth~~pressure. We ~~aggressively~~have ~~sold~~responded, ~~restructured~~and orwill ~~shutdown~~continue ~~our~~to ~~businesses~~respond ~~which~~to ~~were~~this ~~either~~negative ~~not~~trend ~~consistently~~through ~~generating~~the ~~cash~~introduction ~~from operations~~of ornew ~~which~~value-added products ~~could~~and ~~have~~models ~~required~~in ~~future~~home ~~significant~~entertainment ~~cash~~including ~~investments~~MP3 ~~to become~~players, ~~consistently~~DVD-related ~~cashflow~~products ~~positive.~~ and AsLCD adisplays ~~result~~and ofby ~~this~~increasing ~~effort,~~the wenumber ~~currently~~of ~~have~~unit ~~one~~sales. The ~~subsidiary~~difficulty ~~with~~of ~~operations~~this ~~(GoVideo)~~trend ~~and~~is ~~one~~managing ~~subsidiary~~through ~~with~~price nodecreases ~~operations~~as ~~(Correlant)~~we ~~but~~outsource ~~with significant~~all ~~cash and short term investments~~manufacturing.

~~We purchased GoVideo out of~~ Generally, ~~bankruptcy~~we ~~and~~are ~~have~~able ~~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~~obtain ~~GoVideo’s~~competitive ~~current operations~~pricing in anall ~~attempt~~product ~~to generate a profit and positive cash flow~~categories. ~~Looking into the future with respect to GoVideo~~ However, managing ~~we expect to incur additional losses for~~ the ~~remainder~~timing of ~~fiscal~~future ~~2005. As~~price ~~previously~~decreases ~~discussed, GoVideo has taken steps to reorganize certain aspects of its business~~ and ~~has~~obtaining ~~undertaken cost~~forward ~~reduction~~pricing ~~efforts, including reducing staff, realigning the roles and responsibilities of management and reducing other operating expenses in an attempt~~ to ~~return~~protect ~~to profitability. We will continue to focus on~~ our ~~current reorganization efforts. If GoVideo is unable to return to~~ ~~profitability~~inventory as awell ~~result~~as ofour ~~the current realignment, additional steps including, but not limited to, further cost reductions and the elimination of some of GoVideo~~customer’s ~~current~~inventory ~~activities,~~has ~~may~~been ~~be necessary~~challenging.

WeGoVideo, ~~successfully~~as ~~shut~~well ~~down~~as ~~Correlant’s~~the consumer ~~historical~~electronics ~~operations~~industry in ~~the~~general, ~~unprofitable~~has ~~cable~~been ~~modem~~subject ~~business,~~to ~~which~~substantial ~~reduced the~~price ~~cash~~competition. ~~outflow~~In addition, ~~and~~consumer ~~preserved~~electronics ~~Correlant’s~~companies ~~significant~~in ~~assets. Looking~~Asia, ~~into~~particularly ~~the~~those ~~future~~from ~~with~~Korea ~~respect~~and ~~to Correlant~~China, pose wea ~~expect~~severe tothreat ~~maintain~~through ~~the~~price ~~current~~competition. ~~level~~We ofanticipate ~~assets~~this ~~during~~trend ~~the remainder~~to ofcontinue. ~~fiscal~~And as ~~2005~~a asresult, ~~Correlant~~the ~~has~~Company norealigned ~~current~~management’s ~~operations. We~~roles ~~will~~and ~~continue~~responsibilities to ~~seek~~have better ~~market~~control ~~opportunities~~and ~~that~~more ~~can~~closely ~~utilize~~manage ~~Correlant~~GoVideo’s ~~significant~~ ~~assets~~products towhich ~~complement~~should ~~and~~allow ~~improve~~for ~~the~~more efficient ~~returns~~responses onto ~~our~~market ~~current operations~~opportunities and threats.

~~Certain Factors~~- ~~That~~18 ~~May Affect~~- ~~Future Results~~

~~Forward~~DVD ~~Looking~~players ~~Statements~~and recorders. ~~This Quarterly~~ ~~Report on Form 10-Q contains certain statements that are forward~~As ~~looking~~a ~~within~~result ~~the meaning~~ of ~~Section 27A of~~ the ~~Securities~~dramatic ~~and~~expansion ~~Exchange Act~~ of ~~1933,~~the asDVD ~~amended~~market, ~~and~~DVD ~~Section 21E~~players ofhave ~~the~~become ~~Securities~~commodity products and ~~Exchange Act~~suffer offrom ~~1934,~~significant asprice ~~amended, that involve risks and uncertainties~~competition. ~~Any~~The ~~statements~~DVD ~~contained~~Recorder ~~herein~~+ ~~(including, without~~VCR ~~limitation, statements to the effect that the Company or management “estimates,”~~has ~~“expects,”~~been ~~“anticipates,”~~one ~~“plans,”~~of ~~“believes,”~~our ~~“projects,”~~fastest ~~“continues,”~~growing ~~“may,” or~~product ~~“will”~~areas orrecently ~~statements~~and ~~concerning~~we ~~“potential”~~believe orwe ~~“opportunity”~~are orpositioned ~~variations~~to ~~thereof~~face ~~or comparable terminology or~~ the ~~negative~~competition ~~thereof),~~because ~~that are not statements~~ of ~~historical~~our ~~fact~~strategic ~~should~~relationships bewith ~~construed as forward looking statements. All statements that address operating performance~~manufacturers, ~~events or developments that~~ our ~~management expects or~~ ~~anticipates~~expected toreduction ~~incur~~of inmanufacturing ~~the~~costs ~~future,~~and ~~including~~our ~~statements~~efforts ~~relating~~ to ~~sales~~introduce ~~and earnings~~new ~~growth or statements expressing general optimism about future operating results~~innovative, ~~are forward~~ high-~~looking~~end ~~statements. These~~and ~~forward~~value-~~looking~~added ~~statements are based on our management’s current views and assumptions regarding future events and operating performance~~products. ~~Many~~ ~~factors~~

19LCD 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.

~~could~~MP3 ~~cause~~Players. We ~~actual results~~ continue to ~~differ~~capitalize ~~materially from~~on ~~estimates contained in our management’s forward-looking statements including~~ the ~~factors~~increased ~~listed~~demand atfor ~~pages 20~~digital -consumer ~~22. The~~electronics ~~differences may be caused~~ by aintroducing 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~~Rave ~~results~~MP3 ~~and~~players ~~financial~~both ~~condition,~~domestically ~~inability to carry out marketing~~ and ~~sales~~ ~~plans and loss of key executives, among other things~~internationally. ~~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~~will ~~GoVideo’s~~continue ~~cash~~to ~~flow~~invest ~~from~~in ~~operations,~~product development ~~borrowings~~and ~~under~~the ~~its credit~~manufacturing ~~facility~~process ~~and~~as ~~related~~we ~~party~~believe ~~debt~~these are ~~sufficient~~both critical to facilitate ~~fund~~innovation ~~existing operations~~of ~~for~~new ~~the~~and ~~foreseeable~~improved ~~future~~products and technologies. We will also ~~See~~continue ~~“Liquidity~~to ~~and~~improve ~~Capital~~our ~~Resources.” However,~~distribution ~~GoVideo~~network ~~may~~reach ~~need additional~~our ~~capital~~targeted tocustomers ~~operate~~more efficiently. ~~if:~~

~~• Market~~Business ~~conditions~~Outlook ~~change;~~

~~• Business~~Since ~~plans~~we orfiled ~~assumptions~~our ~~change;~~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.

~~• Material~~Our ~~increases~~primary instrategy ~~working~~for ~~capital~~business ~~become~~operations ~~necessary;~~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 grown GoVideo’s ~~lender~~revenues ~~calls~~since orthe ~~accelerates~~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 ~~repayment~~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 ~~line~~business and has undertaken cost reduction efforts, including reducing staff, realigning the roles and responsibilities of management and ~~credit~~reducing ~~due~~other operating expenses in an attempt to ~~noncompliance~~return ~~with~~to ~~debt~~profitability. ~~covenants~~We will continue to focus on our current reorganization efforts. If GoVideo is unable to return to profitability as ~~previously~~a ~~discussed~~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.

~~The~~We ~~Company~~successfully ~~has~~shut ~~experienced a history of recurring~~down ~~operating~~Correlant’s ~~losses~~historical ~~and~~operations ~~may~~in ~~not~~the ~~have~~unprofitable ~~liquidity~~cable ~~necessary~~modem tobusiness, ~~execute its strategy~~which ~~and~~reduced ~~return~~the tocash ~~profitability. GoVideo~~outflow isand ~~under~~preserved aCorrelant’s ~~forbearance~~significant ~~agreement~~assets. ~~with~~Looking ~~its lender on its line of~~into ~~credit~~the ~~due~~future ~~to financial covenant violations~~ with respect to ~~net~~Correlant, ~~losses~~we ~~incurred by~~expect ~~GoVideo. The~~to ~~Company~~maintain ~~recently successfully negotiated an extension of~~ the ~~forbearance period from the~~ current ~~expiration~~ ~~date~~level of ~~February 28, 2005 to August 31, 2005. We believe this six month extension will~~assets ~~allow~~during the ~~Company~~remainder toof ~~execute~~fiscal ~~its~~2005 ~~strategy~~as ofCorrelant ~~returning~~has ~~the~~no ~~Company~~current ~~to profitability~~operations. ~~Should~~ ~~the~~We ~~Company be~~will ~~unable~~continue to ~~execute~~seek ~~its~~market ~~strategies~~opportunities tothat ~~return~~can toutilize ~~profitability~~Correlant’s orsignificant ~~should the~~assets ~~Company need, but be unable~~ to ~~obtain,~~complement anand ~~extension~~improve ~~beyond August 31, 2005,~~ the ~~Company~~returns ~~may~~on ~~not~~our ~~have~~current ~~the liquidity to continue as a going concern~~operations.

~~The~~- ~~restatement~~19 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.~~

AsCertain aFactors ~~result~~That ~~of the restatement and reaudit of~~May ~~our~~Affect ~~financial~~Future ~~statements~~Results 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.

IfForward weLooking ~~become~~Statements. This ~~subject~~Quarterly toReport ~~such~~on ~~heightened scrutiny,~~Form ~~this~~10-Q ~~could~~contains ~~adversely~~certain ~~affect~~statements ~~investor~~that ~~confidence,~~are ~~our~~forward looking ~~ability~~within ~~to access~~the meaning of Section 27A of the ~~capital~~Securities ~~markets~~and Exchange Act of 1933, as amended, and ~~cause~~Section 21E of the ~~trading~~Securities ~~price~~and ~~for~~Exchange ~~our~~Act ~~securities~~of to1934, as amended, ~~decline~~that involve risks and uncertainties. InAny ~~addition~~statements contained herein (including, wewithout limitation, ~~cannot~~statements ~~assure~~to ~~you~~the effect that wethe 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 ~~have~~statements toof historical ~~further~~fact should be construed as forward looking statements. All statements that ~~restate~~address ~~earnings~~operating performance, events or ~~further~~developments ~~revise~~that our ~~reports~~management ~~for~~expects ~~prior~~or anticipates ~~periods~~to asincur ain ~~result~~the offuture, including statements relating to sales and earnings ~~any~~growth ~~SEC~~or ~~review~~statements expressing general optimism about future operating results, are forward-looking statements. ~~Any~~ ~~such~~These ~~restatement~~forward-looking statements are based on our management’s current views and assumptions regarding future events and operating performance. Many factors could ~~further~~cause ~~impact~~actual ~~investor~~results ~~confidence,~~to differ materially from estimates contained in our ~~ability~~management’s toforward-looking ~~access~~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, ~~markets~~unexpected costs, lower revenues, net income and forecasts, the ~~trading~~possibility ~~price~~of fluctuation and volatility of our ~~securities~~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.

20GoVideo 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:

We• ~~and~~Market ~~our independent~~conditions 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.change;

If• ~~the Company~~Business isplans 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~~ ofassumptions 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.change;

~~The~~• ~~Company faces~~Material ~~tough~~increases ~~competition. The Company’s only operating subsidiary GoVideo plays a unique niche~~ in a ~~highly~~working ~~competitive~~capital ~~industry:~~become ~~consumer~~necessary; 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.or

• GoVideo’s ~~customers~~ ~~have~~lender ~~the~~calls ~~ability~~or toaccelerates ~~go straight to~~ the ~~contract~~repayment ~~manufacturer. GoVideo~~of ~~has~~its noline ~~manufacturing capabilities. All products are purchased from contract manufacturers. Because~~ of ~~this,~~ ~~there~~credit isdue ~~nothing~~to ~~stopping~~noncompliance ~~GoVideo’s~~with ~~customers~~debt ~~from~~covenants ~~purchasing~~as ~~products direct~~previously ~~from these contract manufacturers~~discussed.

WeThe ~~may~~Company ~~not be~~has ~~able~~experienced toa history ~~produce sufficient quantities~~ of ~~our~~recurring ~~products~~operating aslosses weand ~~obtain components~~may ~~from,~~not ~~and~~have ~~depend~~liquidity ~~on,~~necessary ato ~~limited~~execute ~~number~~its strategy ofand ~~key~~return ~~suppliers~~to profitability. ~~All~~ ~~our~~GoVideo TVis ~~and~~under ~~DVD~~a ~~player~~forbearance ~~products~~agreement ~~contain~~with ~~one~~its orlender ~~more~~on ~~components~~its ~~that~~line ~~are~~of ~~available~~credit ~~from~~due ato ~~single~~financial ~~supply~~covenant ~~source~~violations ~~and~~with ~~other components~~respect ~~that~~to ~~are~~net losses ~~available~~incurred ~~from~~by ~~limited sources~~GoVideo. We ~~depend~~The onCompany ~~these~~recently ~~sources~~successfully tonegotiated ~~meet~~an ~~our~~extension of ~~production~~the ~~requirements. We~~forbearance doperiod ~~not~~from ~~have any~~the ~~long~~current ~~term~~expiration ~~supply~~date ~~contracts. Although we~~of doFebruary 28, ~~not~~2005 ~~presently~~to August 31, ~~anticipate~~2005. aWe ~~disruption~~believe in this ~~source~~six ofmonth ~~supply,~~extension ifwill itallow isthe Company to ~~necessary~~execute ~~for~~its usstrategy toof ~~obtain~~returning ~~these~~the ~~key~~Company ~~components~~to ~~from~~profitability. anShould ~~alternative~~the ~~supplier,~~Company be itunable ~~could~~to ~~take~~execute ~~several~~its ~~months~~strategies ~~before~~to ~~receiving~~return ~~adequate~~to ~~supplies,~~profitability ~~and~~or ~~during this~~should ~~time~~the weCompany ~~would~~need, but be unable to ~~satisfy~~obtain, ~~our~~an ~~customers’~~extension ~~demands. In~~beyond ~~such~~August ~~event~~31, ~~prolonged~~2005, ~~delays~~the ~~could~~Company ~~result in~~may ~~the~~not ~~cancellation~~have ofthe liquidity ~~orders~~to ~~and~~continue ~~the~~as ~~loss~~a ofgoing ~~customers~~concern.

If GoVideo revenues continue to ~~purchases~~decrease ~~products~~for ~~from~~an ~~countries~~extended inperiod ~~Asia~~of time, ~~including~~we ~~China,~~could ~~South~~experience ~~Korea~~further operating losses and ~~Taiwan,~~could ~~where~~have ~~there~~to ~~are~~make ~~risks~~additional ~~associated~~reductions ~~with~~in operating expenses to meet our obligations. GoVideo revenues were down 42% during the ~~potential~~three ~~change~~months inended ~~social~~March 31, 2005 as ~~political~~compared ~~and~~to ~~regulatory~~the ~~and~~three ~~economic~~months ~~conditions~~ended March 31, 2004. ~~Significant~~ ~~changes~~Additionally, inrevenues during the ~~social,~~three ~~political~~months ~~and~~ended ~~regulatory~~March 31, 2005 were down 63% and ~~economic~~51% ~~conditions~~from ~~could~~the ~~adversely~~three ~~affect~~months ~~GoVideo through~~ended ~~increased~~December ~~costs~~31, 2004 ~~unavailability~~and ofthe ~~goods~~three ormonths ~~increased~~ended ~~tariffs~~September 30, 2004, respectively. As aGiven ~~result~~the ofchallenging economic ~~trade~~environment ~~disputes,~~and the USbusiness ~~has occasionally~~challenges ~~imposed~~facing ~~tariffs~~GoVideo, ~~regulatory~~we ~~procedures~~are ~~and~~expecting ~~importation~~lower revenues ~~bans~~through ~~on certain~~the ~~products~~end of fiscal 2005. ~~Trade~~ ~~sanctions~~Should ~~or regulatory~~revenues ~~procedures~~continue ~~involving~~to adecrease ~~country~~for inan extended ~~which~~period of time, we ~~conduct~~could aexperience ~~substantial amount~~further ofoperating ~~business~~losses and could have ato take ~~material~~additional ~~adverse~~steps ~~effect~~including, onbut not limited to, further cost reductions and the elimination of current activities, to meet our ~~operations~~obligations.

~~GoVideo~~The isrestatement and reaudit of our ~~responsible~~financial statements, the additional delays in subsequent filings and the potential for review ~~product~~of ~~warranties~~our financial disclosure could materially impact our business and ~~defects~~results of operations. Following the replacement of prior management, the new management began ~~Although~~reviewing ~~GoVideo~~various ~~outsources~~transactions ~~all~~undertaken ~~product~~by ~~manufacturing~~old management prior to June 29, it2001. During ~~provides~~its ~~limited~~preliminary ~~labor~~investigation, new management identified certain material transactions undertaken by prior management that impact reported financial and ~~parts~~operating ~~warranties~~results onwith ~~certain~~respect ofto its ~~products~~consolidated financial statements for athe ~~maximum~~fiscal ofyears ~~one~~ended June 30, ~~year~~2001, 2000 and 1999. ~~Therefore~~ Due to the preliminary results, ~~GoVideo~~the isCompany ~~highly~~dismissed the ~~dependent~~then ~~upon~~existing independent accountants, hired new independent accountants and reaudited all periods under investigation. The Company completed the ~~quality~~restatement of previously reported financial statements in its ~~suppliers~~Annual Report on Form 10-K for fiscal 2002 filed with the SEC on April 16, 2004. Until this filing, we were unable to become current with respect to all SEC required filings.

~~Our~~- ~~new products~~20 ~~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

21We 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 a letter dated March 29, 2005, the SEC stated it will make no further comments. In the future we may be required to take additional actions with respect to other filings.

~~characterized~~ If we byare ~~continual product~~required ~~introductions,~~to ~~rapid~~take ~~development~~other actions in ~~technology~~response to, arising out of, or relating to the restatement and ~~subjective~~reaudit of our financial statements or other late filings, such actions may require significant attention and resources of management and, regardless of the ~~changing~~outcome, ~~consumer~~could ~~preferences~~materially impact our business and results of operations.

~~The~~If we become subject to such ~~introduction~~heightened orscrutiny, ~~expected~~this ~~introduction~~could ofadversely ~~new~~affect ~~products~~investor orconfidence, ~~technologies~~our ~~may~~ability to ~~depress~~access ~~sales~~the ofcapital ~~existing~~markets ~~products~~ and ~~technologies. As GoVideo maintains~~cause athe ~~substantial~~trading ~~investment~~price infor ~~product~~our securities to decline. In ~~inventory~~addition, ~~the~~we ~~introduction~~cannot ofassure ~~new~~you ~~products~~that ~~may~~we ~~force~~will usnot have to ~~charge~~further ~~less~~restate ~~for~~earnings ~~our~~or ~~existing~~further ~~inventory~~revise ~~and~~our ~~cause~~reports ~~such~~for ~~existing~~prior ~~inventory~~periods toas ~~become~~a ~~obsolete. Such~~result ~~declining~~of ~~prices~~any ~~and~~SEC ~~inventory~~review. Any such ~~obsolescence~~restatement could ~~have~~further aimpact ~~material~~investor ~~adverse~~confidence, ~~effect~~our onability ~~our~~to ~~business~~access ~~and~~the ~~financial~~capital ~~results~~markets and the trading price of our securities.

We ~~are~~and our independent auditors ~~exposed~~have identified a number of material weaknesses related to ~~the~~our ~~risks~~internal ~~associated~~control ~~with~~over financial ~~the~~reporting, ~~recent~~which ~~decision~~could continue to ~~cease~~impact ~~cable modem-related~~our ~~business~~ability byto ~~Correlant,~~report our ~~subsidiary.~~results ~~The~~of operations ~~Company~~and isfinancial ~~actively~~condition ~~seeking~~accurately and in a ~~viable~~timely manner. The Company has ~~business~~had ~~model~~significant ~~for~~financial ~~Correlant~~reporting issues to ~~maximize~~address ~~our~~since ~~stockholders’~~the ~~interest. Even~~restatement ifof aits June 30, ~~viable~~2001, ~~business~~2000 ~~model~~and is1999 ~~found~~financial ~~that will~~statements. ~~correspond~~As ~~with~~a ~~Correlant~~result, on January 19, 2005, the Company’s ~~available~~external ~~cash~~auditors ~~size,~~informed ~~there~~the isboard ~~still~~of noa “reportable ~~guarantee~~condition” ~~the~~that ~~model~~constituted ~~will~~a ~~succeed. We~~“material ~~successfully~~weakness” ~~reduced~~in ~~Correlant’s~~our internal control ~~cash~~over ~~burn~~financial ~~rate~~reporting. byWhile ~~winding~~we ~~down~~are ~~Correlant’s~~implementing ~~historical~~steps ~~operations~~to inensure the ~~cable~~effectiveness of ~~modem~~our ~~industry. However,~~internal ~~since~~control ~~shutting down~~over ~~the~~financial ~~operations~~reporting, ~~which~~failure ~~was~~to ~~substantially~~restore ~~completed~~the ~~March 2004,~~effectiveness weof ~~have~~our ~~been~~internal ~~unable~~control over financial reporting could continue to ~~identify~~negatively impact our ability to report our financial condition and ~~secure~~results of operations accurately and could have a material ~~viable~~adverse effect on our business, ~~plan~~results ~~that~~of ~~will~~operations, ~~utilize Correlant’s~~financial ~~assets~~condition and liquidity.

~~Our~~If ~~stock price~~the ~~may not come back. The~~ Company’s ~~stock~~is ~~was~~unable ~~removed~~to ~~from OTC~~take ~~Bulletin~~the ~~Board~~necessary ascorrective aaction ~~result~~to ofstrengthen ~~the~~its ~~Company’s~~disclosure ~~failure~~controls, toits ~~timely~~ability ~~submit~~to report its ~~Annual Report~~financial results on ~~Form 10-K~~a ~~for~~timely ~~fiscal 2002, 2003~~ and ~~2004. Although~~accurate webasis ~~filed~~may ~~our~~be ~~Annual~~adversely ~~Reports on Form 10-K~~affected. ~~for~~Based ~~fiscal~~upon ~~2002,~~the ~~2003~~evaluation ~~and~~of ~~2004~~our oncontrol ~~April 16,~~weaknesses ~~2004,~~as ~~August 24,~~discussed ~~2004 and February 18~~above, ~~2005, respectively,~~ we ~~are~~concluded ~~not eligible to trade on the OTC~~that ~~Bulletin~~our ~~Board~~disclosure ~~until~~controls weand ~~become~~procedures ~~current~~need into ~~all~~be ~~our~~strengthened ~~required~~and ~~filings~~are ornot ~~until we~~sufficiently ~~file~~effective. aWe ~~Form 10~~have ~~and~~taken ~~clear~~various ~~all~~steps ~~comments~~to ~~with~~maintain the ~~SEC. The~~accuracy ~~current trading~~ of ~~the~~our ~~Company’s stock is~~financial ~~sporadic~~disclosures, and ~~minimal~~based ~~and~~on ~~there~~these ismeasures noand ~~established~~other ~~public~~significant ~~trading~~work, ~~market~~management ~~for our~~believes ~~common~~there ~~stock.~~are Inno ~~addition,~~material ~~the~~inaccuracies ~~stock~~or ~~market~~omissions ~~has~~of ~~experienced~~material ~~extreme~~fact ~~price~~in ~~and~~our financial ~~volume~~statements ~~fluctuations~~and ~~that~~other ~~have~~reports ~~affected~~filed with the ~~market~~SEC. ~~price~~However, ofmaterial ~~many~~weaknesses ~~technology companies,~~ in ~~particular, and that have often been unrelated to the operating~~our ~~performance~~internal ofcontrols ~~these~~over ~~companies.~~financial ~~These~~reporting ~~factors,~~could asfurther ~~well~~adversely asimpact ~~general~~our ~~economic and~~current ~~political~~inability ~~conditions,~~to ~~may~~report ~~materially~~timely ~~adversely~~financial ~~affect~~information. If the ~~market~~current ~~price~~inability ofto ~~our~~report ~~common~~timely ~~stock~~is inexacerbated ~~the~~by ~~future.~~weak ~~Additionally~~disclosure controls, ~~volatility~~this orcould aresult ~~lack~~in offurther ~~positive~~accounting ~~performance~~restatements inor ~~our~~other ~~stock~~accounting ~~price~~related ~~may~~problems ~~adversely~~and ~~affect~~we ~~our~~could ~~ability~~face togreater ~~retain~~scrutiny ~~key~~from ~~employees~~the SEC.

~~Our executive~~The ~~officers~~Company ~~and~~faces ~~key~~tough competition. ~~personnel~~The ~~are~~Company’s ~~critical~~only tooperating ~~our~~subsidiary ~~business~~GoVideo ~~and~~plays ~~the~~a ~~loss~~unique niche ofin ~~their~~a ~~services~~highly ~~could~~competitive ~~disrupt~~industry: ~~our~~consumer ~~operations~~electronics. ~~and~~GoVideo ~~our~~competes ~~customer~~against many well ~~relationships. Our~~established ~~success~~companies ~~depends~~including tomany aoriginal ~~significant~~equipment manufacturers (“OEM”) ~~degree~~who ~~upon~~have ~~the~~substantially ~~continuing~~greater ~~contributions~~financial ofand ~~our~~other ~~key~~resources ~~management,~~than ~~technical,~~the Company. ~~marketing~~Additionally, ~~and~~the ~~sales~~consumer ~~employees. There~~electronics ~~can~~industry is empirically facing a trend of declining begross nomargin ~~assurance~~resulted ~~that~~from weemerging ~~will~~global bemarket ~~successful~~and competition. Although GoVideo was profitable in ~~retaining~~fiscal ~~our~~2003, ~~key~~it ~~employees~~was ~~or that~~not weprofitable ~~can~~during ~~attract~~fiscal ~~and~~2004 ~~retain~~nor ~~additional~~during ~~skilled~~the ~~personnel~~nine months asended ~~required~~March 31, 2005. The ~~loss~~ competitive nature of the ~~services~~industry ofmay ~~key~~further ~~personnel~~negatively affect ~~could~~the ~~significantly~~Company’s ~~harm~~earnings ~~our~~if ~~results~~GoVideo ofis unable to quickly adapt to the ~~operations~~technological and ~~business~~market changes of the industry.

~~Because~~GoVideo’s ofcustomers ~~these~~have ~~and other~~the ~~factors~~ability ~~affecting~~to ~~our~~go ~~operating~~straight ~~results,~~to ~~past~~the ~~financial~~contract ~~performance~~manufacturer. ~~should~~GoVideo ~~not be~~has ~~considered~~no anmanufacturing capabilities. ~~indicator~~All ofproducts ~~future~~are ~~performance,~~purchased ~~and~~from ~~investors~~contract ~~should~~manufacturers. ~~not~~Because ~~use~~of this, ~~historical~~there ~~trends~~is tonothing ~~anticipate~~stopping ~~results~~GoVideo’s orcustomers ~~trends~~from inpurchasing ~~future~~products ~~periods~~direct from these contract manufacturers.

~~Critical~~We may not be able to produce ~~Accounting~~sufficient ~~Policies~~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.

~~The~~- ~~discussion~~21 ~~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.

WeGoVideo purchases products from ~~believe~~countries ~~the~~in ~~following~~Asia, ~~among~~including ~~others~~China, toSouth beKorea ~~critical~~and ~~accounting~~Taiwan, ~~policies. That~~where isthere are risks associated with the potential change in social, ~~they~~political ~~are~~and ~~both~~regulatory ~~important~~and toeconomic conditions. Significant changes in the ~~portrayal~~social, political and regulatory and economic conditions could adversely affect GoVideo through increased costs, unavailability of ~~our~~goods or ~~financial~~increased ~~condition~~tariffs. ~~and~~As ~~results~~a result of ~~operations~~trade disputes, ~~and~~the ~~they~~US ~~require~~has ~~critical~~occasionally imposed ~~management~~tariffs, ~~judgments~~regulatory procedures and ~~estimates~~importation ~~about~~bans ~~matters~~on ~~that~~certain ~~are~~products. ~~inherently~~Trade sanctions ~~uncertain. Although~~or weregulatory ~~believe~~procedures ~~our judgments~~involving ~~and~~a ~~estimates~~country ~~are~~in ~~appropriate~~which ~~and~~we ~~correct,~~conduct ~~actual~~a ~~future~~substantial ~~results~~amount ~~may~~of ~~differ~~business ~~from~~could have a material adverse effect on our ~~estimates~~operations.

~~• Revenue~~GoVideo ~~recognition. We~~is ~~recognize~~responsible ~~revenue~~for ~~upon~~product warranties ~~passage~~and ofdefects. ~~title~~Although ofGoVideo ~~our~~outsources all product inmanufacturing, ~~accordance~~it ~~with~~provides ~~the~~limited ~~Securities~~labor and ~~Exchange~~parts ~~Commission~~warranties ~~(“SEC”)~~on ~~Staff~~certain ~~Accounting~~of ~~Bulletin 101,~~its ~~Revenue~~products ~~Recognition~~for ina ~~Financial~~maximum ~~Statements~~of ~~(“SAB~~one ~~101”), as amended by SAB 101A and 101B~~year. At ~~the time revenue is recognized~~Therefore, GoVideo ~~records~~is anhighly ~~allowance~~dependent ~~for estimated~~upon ~~sales~~the ~~returns~~quality ~~based~~of onits ~~estimates derived from historical trends~~suppliers. ~~Sales~~ ~~returns are recorded with net revenues. GoVideo also establishes an allowance for~~

22Our 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.

~~estimated payment~~The ~~term~~introduction ~~discounts~~or expected introduction toof benew ~~taken~~products byor ~~customers~~technologies ~~based~~may ondepress ~~analysis~~sales of existing products and ~~historical~~technologies. ~~trends~~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. ~~Payment~~ ~~term~~Such declining prices and ~~discounts~~inventory ~~granted~~obsolescence ~~are~~could ~~recorded~~have ina ~~net~~material ~~revenues~~adverse effect on our business and financial results.

~~• Warranty~~We ~~Reserves.~~ are exposed to the risks Goassociated ~~Video~~with ~~provides~~the ~~limited~~decision ~~labor~~to ~~and~~cease ~~parts~~cable ~~warranties~~modem-related onbusiness ~~certain~~by ofCorrelant, ~~its~~our ~~products~~subsidiary. ~~for~~The Company is actively seeking a ~~maximum~~viable ofbusiness ~~one~~model ~~year. Go~~for Correlant to ~~Video~~maximize ~~records~~our stockholders’ interest. Even if a ~~warranty~~viable ~~reserve~~business ~~based~~model ~~upon~~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 ~~experience~~operations ~~and~~in anthe cable modem industry. However, ~~estimate~~since ofshutting ~~total~~down ~~exposure~~the ~~associated~~operations, ~~with~~which ~~products~~was ~~sold~~substantially completed March 2004, we have been unable to ~~consumers~~identify ~~through~~and ~~retail~~secure a viable business plan that will utilize ~~outlets~~Correlant’s assets.

~~• Bad~~Our ~~debt~~stock ~~reserves~~price may not come back. WeThe ~~conduct~~Company’s ~~business~~stock ~~and~~was ~~extend~~removed ~~credit~~from ~~based~~OTC onBulletin anBoard ~~evaluation~~as a result of ~~our~~the ~~customers~~Company’s ~~financial~~failure ~~condition~~to ~~generally~~timely ~~without~~submit ~~requiring~~its ~~collateral.~~Annual ~~Exposure to~~Report ~~losses~~ on ~~trade~~Form ~~receivables~~10-K isfor ~~expected~~fiscal to2002, 2003 ~~vary~~and by2004. ~~customer~~Although ~~due~~we tofiled ~~the financial~~our ~~condition~~Annual ofReports ~~each~~on ~~customer.~~Form We10-K ~~monitor~~for ~~exposure~~fiscal to2002, ~~credit~~2003 ~~losses~~ and ~~maintain~~2004 ~~allowances~~and our Quarterly Report on Form 10-Q for ~~anticipated~~September ~~losses~~30, ~~considered~~2004 ~~necessary~~on ~~under~~April 16, ~~the~~2004, ~~circumstances.~~August ~~Delinquent~~24, ~~notes~~2004, February 18, 2005 and ~~trade~~April ~~accounts~~8, ~~receivable~~2005, respectively, we are ~~charged~~not eligible to ~~against~~trade on the ~~allowance~~OTC ~~for~~Bulletin ~~doubtful~~Board ~~accounts~~until ~~once~~we ~~uncollectibility~~become ~~has~~current ~~been~~in all our required filings or ~~determined.~~until ~~The~~we ~~allowance~~file isa ~~determined~~Form ~~through~~10 anand ~~analysis~~clear ofall comments with the ~~aging~~SEC. The current trading of the ~~accounts~~Company’s ~~receivable~~stock ~~and~~is ~~assessments~~sporadic ofand ~~risk~~minimal ~~based~~and onthere ~~historical~~is ~~trends~~no ~~and~~established anpublic trading ~~evaluation~~market offor our common stock. In addition, the ~~impact~~stock ofmarket ~~current~~has experienced extreme price and ~~projected~~volume ~~economic~~fluctuations ~~conditions. We~~that ~~evaluate~~have affected the ~~past-due~~market ~~status~~price of ~~our~~many ~~notes~~technology companies, in particular, and ~~related~~that ~~parties~~have ~~and~~often ~~trade~~been ~~receivables~~unrelated ~~based~~to onthe ~~contractual~~operating ~~terms~~performance of ~~sale~~these companies. These factors, as well as general economic and political conditions, may Ifmaterially adversely affect the ~~financial~~market ~~condition~~price of our ~~customers~~common ~~were~~stock toin ~~deteriorate,~~the ~~this could~~future. ~~result~~Additionally, involatility anor ~~impairment~~a lack of ~~ability~~positive toperformance ~~make~~in ~~payments,~~our ~~and~~stock ~~additional~~price ~~allowances~~ may adversely beaffect ~~required~~our ability to retain key employees.

~~• Related~~Our ~~party~~executive ~~transactions.~~ officers and key Wepersonnel ~~have~~are ~~significant~~critical ~~related~~to ~~party~~our ~~transactions~~business and ~~agreements;~~the ~~many~~loss of their services could disrupt our ~~which~~operations ~~are~~and ~~complex~~our customer relationships. We ~~believe~~Our ~~such~~success depends to a significant degree ~~transactions~~upon ~~have~~the ~~been~~continuing ~~accounted~~contributions ~~for~~of atour ~~fair~~key ~~value~~management, technical, marketing and sales employees. We ~~utilized~~There ~~our~~can ~~best~~be ~~estimate~~no ofassurance ~~the~~that ~~value~~we ofwill be successful in retaining our key ~~these~~employees ~~transactions~~or that we can attract and ~~agreements~~retain additional skilled personnel as required. ~~Had~~ The ~~alternative~~loss ~~assumptions~~of ~~been~~the ~~used,~~services ~~the~~of ~~values~~key ~~obtained~~personnel ~~may~~could ~~have~~significantly ~~been~~harm ~~different~~our results of operations and business.

~~• Inventories.~~Because ~~GoVideo’s~~of ~~inventory~~these ~~consists~~and ofother ~~mostly~~factors ~~finished~~affecting ~~goods,~~our ~~some~~operating ofresults, ~~which~~past ~~are~~financial inperformance ~~transit~~should ~~from~~not ~~its~~be ~~contract manufacturer. Inventories~~considered ~~are stated at~~an ~~the~~indicator ~~lower~~ of ~~cost~~future ~~or market with cost being determined on a first-in~~performance, ~~first-out basis. We~~and ~~write~~investors ~~down~~should ~~our~~not ~~inventory~~use ~~for estimated~~historical ~~obsolescence~~trends ~~or unmarketable inventory equal~~ to ~~the difference~~ ~~between~~anticipate ~~the~~results ~~cost~~or oftrends ~~the~~in ~~inventory and the estimated market value based upon assumptions about~~ future ~~demand and market conditions~~periods.

~~• Investments. Our~~- ~~investments~~22 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~~Critical ~~of other long-lived~~Accounting ~~assets. Other~~Policies 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~~The discussion and analysis of our ~~Issued~~financial ~~Accounting~~condition ~~Standards~~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.

InWe ~~November 2004,~~believe the ~~Financial~~following, ~~Accounting Standards Board (“FASB”)~~among ~~issued Statement of Financial Accounting Standards (“SFAS”) 151~~others, ~~Inventory~~to ~~Costs~~be ~~(“SFAS~~critical ~~151”),~~accounting ~~which~~policies. ~~revised~~That ~~Accounting Research Bulletin (“ARB”) 43~~is, ~~relating~~they toare ~~inventory~~both ~~costs.~~important ~~This revision is~~ to ~~clarify~~ the portrayal ~~accounting for abnormal amounts~~ of ~~idle~~our ~~facility~~financial ~~expense,~~condition ~~freight, handling costs~~ and ~~wasted~~results ~~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~~operations, ~~this~~and ~~Statement~~they ~~requires~~require ~~the allocation of fixed production overheads~~critical tomanagement ~~the~~judgments ~~costs~~and ofestimates ~~conversion~~about bematters ~~based~~that onare ~~normal~~inherently ~~capacity~~uncertain. ~~of the production~~Although ~~facilities.~~we ~~SFAS~~believe ~~151~~our isjudgments ~~effective~~and ~~for~~estimates ~~inventory~~are ~~costs~~appropriate ~~incurred~~and ~~during~~correct, ~~fiscal years~~actual ~~beginning~~future ~~after June 15, 2005.~~ results Wemay dodiffer ~~not~~from ~~believe the adoption of SFAS 151 will have a material impact on~~ our ~~financial statements~~estimates.

23• 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.

In• ~~December 2004,~~Warranty 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”)Reserves. ~~Among~~Go ~~other~~Video ~~items,~~provides ~~SFAS~~limited ~~123R eliminates~~labor ~~the use of APB 25~~ and ~~the~~parts ~~intrinsic~~warranties ~~value~~on ~~method~~certain of ~~accounting,~~its ~~and requires~~products ~~companies to recognize the cost of employee services received in exchange~~ for ~~awards~~a ofmaximum ~~equity instruments, based on the grant date fair value~~ of ~~those~~one ~~awards, in the financial statements~~year. ~~The~~Go ~~effective~~Video ~~date~~records ~~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~~warranty ~~prospective”~~reserve ~~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 onupon ~~the~~historical ~~requirements~~experience ~~of SFAS 123R for all share-based payments granted after that date,~~ and ~~based~~an onestimate ~~the requirements~~ of ~~SFAS~~total ~~123~~exposure ~~for~~associated ~~all~~with ~~unvested awards~~products ~~granted~~sold ~~prior~~ to ~~the~~consumers ~~effective~~through ~~date~~retail ~~of SFAS 123R~~outlets. 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~~Bad ~~currently~~debt ~~utilizes~~reserves. aWe ~~standard~~conduct ~~option~~business ~~pricing~~and ~~model~~extend (icredit based on an evaluation of our customers’ financial condition generally without requiring collateral.~~e., Black-Scholes)~~ Exposure to ~~measure~~losses on trade receivables is expected to vary by customer due to the ~~fair~~financial ~~value~~condition of ~~stock~~each ~~options~~customer. ~~granted~~We monitor exposure to ~~Employees~~credit losses and maintain allowances for anticipated losses considered necessary under the circumstances. ~~While~~ ~~SFAS~~Delinquent ~~123R~~notes ~~permits~~and ~~entities~~trade toaccounts ~~continue~~receivable toare ~~use~~charged ~~such~~against athe ~~model,~~allowance for doubtful accounts once uncollectibility has been determined. The allowance is determined through an analysis of the ~~standard also~~aging ~~permits~~of accounts receivable and assessments of risk based on historical trends and an evaluation of the ~~use~~impact of acurrent ~~“lattice”~~and ~~model~~projected economic conditions. ~~The~~We ~~Company~~evaluate ~~has~~the ~~not~~past-due ~~yet~~status ~~determined which~~of ~~model~~our itnotes ~~will~~and ~~use~~related toparties ~~measure~~and trade receivables based on contractual terms of sale. If the ~~fair~~financial ~~value~~condition of ~~employee~~our ~~stock~~customers ~~options upon~~were ~~the~~to ~~adoption~~deteriorate, this could result in an impairment of ~~SFAS~~ability ~~123R~~to make payments, and additional allowances may be required.

~~The~~• ~~Company~~Related ~~currently~~party ~~expects~~transactions. toWe ~~adopt~~have ~~SFAS~~significant ~~123R~~related ~~effective~~party ~~July~~transactions ~~1, 2005~~and agreements; many of which are complex. ~~However,~~ ~~because~~We ~~the~~believe ~~Company~~such ~~has not~~transactions ~~yet~~have ~~determined~~been ~~which~~accounted for at fair value. We utilized our best estimate of the ~~aforementioned~~value ~~adoption~~of ~~methods~~these ittransactions ~~will~~and ~~use, the~~agreements. ~~Company~~Had ~~has~~alternative ~~not~~assumptions ~~yet~~been ~~determined~~used, the ~~impact~~values ofobtained ~~adopting~~may ~~SFAS~~have ~~123R~~been different.

~~Item~~• 3Inventories. –GoVideo’s ~~Quantitative~~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 ~~Qualitative~~the ~~Disclosures~~estimated ~~About~~market ~~Market~~value ~~Risk:~~based upon assumptions about future demand and market conditions.

~~Interest~~• ~~Risk~~Investments. Our ~~exposure~~investments toconsist ~~market risk for changes in interest rates relates~~ primarily toof ~~our~~corporate ~~investment~~debt ~~portfolio.~~and Wegovernment ~~do not use derivative financial instruments in our investment portfolio~~securities. We ~~place~~Investments ~~our~~are ~~investments~~stated ~~with~~at ~~high~~fair ~~credit~~value ~~quality~~based ~~issuers~~on ~~and,~~quoted ~~by policy,~~market ~~limit~~prices ~~the~~obtained ~~amount~~from ofan ~~credit~~independent ~~exposure to any one issuer~~banker. We Investments are ~~averse~~classified toas ~~principal~~available-for-sale ~~loss~~based ~~and~~on ~~ensure the~~management’s ~~safety~~intended ~~and~~use. ~~preservation~~As of ~~invested~~March ~~funds by limiting default risk~~31, ~~market risk,~~2005 ~~and reinvestment risk. We minimize our risk by investing in only~~ the ~~safest~~cost ~~and~~of ~~highest credit quality securities and by constantly positioning~~ our ~~portfolio~~investments toapproximated ~~respond~~fair ~~appropriately to a significant reduction in a credit rating of any investment issuer or guarantor~~value. ~~Our portfolio includes only corporate debt and government securities.~~

~~Foreign Currency~~• ~~Risk~~Impairment of other long-lived assets. ~~The~~ ~~majority~~Other oflong-lived ~~our transactions~~assets, such as property and equipment, are ~~denominated~~amortized inor ~~the~~depreciated ~~U.S.~~over ~~dollar~~their estimated useful lives. ~~Therefore,~~ weThese doassets ~~not~~are ~~have~~reviewed ~~any~~for ~~hedging~~impairment whenever events or ~~similar~~ ~~foreign~~circumstances ~~currency~~provide ~~contracts. To date,~~evidence wethat ~~have~~suggest ~~not~~that ~~experienced~~the ~~any~~carrying ~~material~~amount ~~foreign~~of ~~currency~~the ~~exchange~~asset ~~rate~~may ~~gains or~~not ~~losses~~be ~~associated~~recoverable, with ~~foreign~~impairment ~~currency~~being ~~transactions~~based ~~and~~upon doan ~~not~~evaluation ~~expect~~of ~~any significant~~the ~~changes~~identifiable inundiscounted ~~foreign~~cash ~~currency~~flows. ~~exposure~~If inthe asset has been impaired, the ~~near~~resulting ~~future~~charge reflects the excess of the asset’s carrying cost over its fair value.

~~Item~~- 423 ~~– Controls~~- ~~and Procedures:~~

InRecently ~~connection with the audit of~~Issued ~~our~~Accounting ~~financial~~Standards 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~~In ~~communication~~November 2004, ~~from~~the ~~our~~Financial Accounting ~~independent~~Standards ~~auditors~~Board ~~did~~(“FASB”) ~~not~~issued ~~specifically~~Statement ~~mention~~of aFinancial Accounting ~~weakness~~Standards ~~with respect to~~ (“~~disclosure controls and procedures,~~SFAS”) ~~management~~151, ~~including~~ ~~the~~Inventory ~~Chief~~Costs ~~Executive~~(“SFAS ~~Officer~~151”), ~~Chief~~which revised ~~Financial~~Accounting ~~Officer~~Research ~~and~~Bulletin ~~Chief Operating~~(“ARB”) ~~Officer concluded~~43, ~~that~~relating ~~the~~to ~~material~~inventory ~~weakness~~costs. This ~~conditions~~revision ~~described~~is ~~in our~~to ~~Annual~~clarify ~~Report~~the onaccounting ~~Form 10-K~~ for ~~the~~abnormal ~~year~~amounts ~~ended~~of ~~June 30,~~idle ~~2004~~facility ~~also~~expense, ~~relate~~freight, tohandling ~~our~~costs ~~disclosure controls~~ and ~~procedures~~wasted asmaterial ~~of September 30, 2004~~(spoilage). ~~The~~ ~~interim~~SFAS ~~and~~151 ~~longer~~requires ~~term~~that ~~steps~~these ~~described~~items be inrecognized ~~our~~as ~~Annual~~a ~~Report~~current onperiod ~~Form 10-K for~~charge ~~the~~regardless ~~year~~of ~~ended~~whether ~~June 30,~~they ~~2004~~meet ~~are applicable to improving~~ the criterion ~~effectiveness~~specified ofin ~~our~~ARB ~~disclosure controls and procedures~~43. We ~~created~~In aaddition, ~~Disclosure~~this ~~Committee~~Statement torequires ~~ensure compliance with~~ the ~~disclosure~~allocation ~~controls~~of ~~and~~fixed production ~~procedures~~overheads ~~and~~ to ~~evaluate~~ the ~~effectiveness~~ costs of ~~those~~conversion ~~controls~~be ~~and~~based ~~procedures~~ on anormal ~~regular~~capacity ~~basis. Subsequent~~of to the production ~~formation~~facilities. ofSFAS ~~the~~151 ~~Disclosure Committee,~~is ~~Opta~~effective ~~adopted~~for ainventory ~~Disclosure~~costs ~~Committee~~incurred ~~Charter~~during ~~(“Charter”). The~~fiscal years ~~Company~~beginning ~~will~~after ~~provide~~June 15, a2005. ~~copy~~We ofdo ~~our Charter,~~not ~~free~~believe the adoption of ~~charge,~~SFAS ~~upon~~151 ~~written~~will have ~~request~~a ~~sent~~material toimpact on our ~~principal~~financial ~~executive office~~statements.

24In 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.

~~(b) Changes~~The inCompany ~~internal~~currently ~~control~~utilizes ~~over~~a ~~financial~~standard ~~reporting.~~option ~~There~~pricing ~~were~~model no(i.e., ~~changes~~Black-Scholes) into ~~our~~measure ~~internal controls over financial reporting identified in connection with~~ the ~~evaluation~~fair ~~required~~value ~~by paragraph (d)~~ of ~~Exchange Act rules 13a-15 or 15d-15 that occurred~~stock ~~during~~options ~~the~~granted ~~three~~to ~~months~~Employees. ~~ended~~While ~~September 30,~~SFAS ~~2004~~123R ~~that~~permits ~~have~~entities ~~materially affected,~~to orcontinue ~~are reasonably likely~~ to ~~materially~~use ~~affect,~~such ~~our internal controls~~a ~~over financial reporting. However~~model, asthe ~~a result~~standard ofalso ~~receiving~~permits ~~notification~~the use of a “~~material weakness~~lattice” ~~from~~model. ~~Hein,~~The weCompany ~~are~~has ~~currently~~not inyet ~~the~~determined ~~process~~which ofmodel ~~taking~~it awill ~~number~~use ~~of steps~~ to ~~improve~~measure the ~~effectiveness~~ offair ~~our~~value ~~internal~~of ~~control,~~employee ~~as previously reported in our annual~~stock ~~Report~~options onupon ~~Form 10-K for~~ the ~~year~~adoption ~~ended~~of ~~June 30,~~SFAS ~~2004~~123R.

~~PART~~The Company currently expects to adopt SFAS 123R effective July II1, 2005. ~~OTHER~~ ~~INFORMATION~~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~~- 124 - ~~Legal~~ ~~Proceedings:~~

FromItem time3 to– timeQuantitative we may be involved in various disputes and litigationQualitative mattersDisclosures arisingAbout inMarket 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.Risk:

~~Item~~Interest 2Risk. –Our ~~Unregistered~~exposure ~~Sales~~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 ~~Equity~~credit exposure ~~Securities~~to any one issuer. We are averse to principal loss and ~~Use~~ensure the safety and preservation of ~~Proceeds~~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.

~~Recent~~Foreign Currency Risk. The ~~Sales~~majority of ~~Unregistered~~our ~~Securities~~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.

ThereItem were4 no– salesControls of unregisteredand securities by the Company during the quarter ended September 30, 2004.Procedures:

~~Issuer~~In ~~Purchases~~connection with the audit of ~~Equity~~our financial ~~Securities~~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.

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

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 March 31, 2005. 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 ~~Pursuant~~in tointernal control over financial reporting. There were no changes in our internal controls over financial reporting identified in connection with the ~~terms~~evaluation required by paragraph (d) of aExchange ~~settlement~~Act ~~agreement~~rules 13a-15 ~~reached~~or ~~with~~15d-15 ~~TurboComm~~that occurred during the three months ended March 31, 2005 that ~~TurboComm~~ have ~~delivered~~materially ~~686~~affected,~~066~~ ~~shares~~or are reasonably likely to materially affect, our internal controls over financial reporting. However, as a result of ~~Opta~~receiving notification of a “material weakness” from Hein, ~~constituting~~we ~~all~~are ~~shares~~currently in the process of ~~Opta~~taking a number of steps to improve the effectiveness of our ~~owned~~ internal bycontrol, ~~TurboComm~~as previously reported in our Annual Report on Form 10-K for the year ended June 30, 2004.

ThePART Company has not publicly announced any plans to purchase Opta stockII. In theOTHER 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.INFORMATION

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

Item 1 — Legal Proceedings:

25From time to time we may be involved in various disputes and litigation matters arising in the normal course of business. As of May 16, 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.

On- ~~April 5,~~25 ~~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.

SeanItem Wang,2 41,– servedUnregistered asSales the Chief Financial Officer, from 2002 to 2004, of PacificNet, Inc.,Equity aSecurities company in Minneapolis, Minnesota whose shares are traded on NASDAQ (Symbol: PACT). PacificNet, Inc., through its subsidiaries, invests, operates and providesUse 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.Proceeds

ItemRecent 6Sales -of ExhibitsUnregistered Securities

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

There were no sales of unregistered securities by the Company during the quarter ended March 31, 2005.

26Issuer Purchases of Equity Securities

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

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
January 1 through	None	-	None	None
January 31, 2005
February 1 through	None	-	None	None
February 28, 2005
March 1 through	None	-	None	None
March 31, 2005

27The 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.

SIGNATUREItem 3 — Defaults Upon Senior

Securities Not

~~Pursuant~~Applicable ~~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

Item 4 — Submission of Matters to a Vote of Security Holders

28Not Applicable

Item 5 — Other

Information

Not Applicable

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	Sale agreement of TCL Digital dated December	Incorporated by reference to Exhibit
	20, 2003	10.9 to Form 10-K, filed April 16, 2004
10.4	Current Lease - GoVideo Office Lease	Incorporated by reference to Exhibit
		10.10 to Form 10-K, filed April 16, 2004
10.5	Current Lease - Go Video Lease for Commercial	Incorporated by reference to Exhibit
	Space	10.11 to Form 10-K, filed April 16, 2004
10.6	Current Lease - Opta Corporation Executive	Incorporated by reference to Exhibit
	Office Lease	10.9 to Form 10-K, filed February 18,
		2005

- 26 -

Exhibit Number	Description of Exhibit	Method of Filing
10.7	Debt agreement between GoVideo and T.C.L.	Incorporated by reference to Exhibit
	Industries Holdings (H.K.) Limited, dated June	10.10 to Form 10-K, filed February 18,
	28, 2003, as amended	2005
10.8	Debt agreement between GoVideo and Asia Focus	Incorporated by reference to Exhibit
	Industrial Ltd., dated June 12, 2003, as	10.11 to Form 10-K, filed February 18,
	amended	2005
10.9	Debt agreement between Opta and T.C.L.	Incorporated by reference to Exhibit
	Industries Holdings (H.K.) Limited, dated	10.12 to Form 10-K, filed February 18,
	October 21, 2003, as amended	2005
31.1	Certification of Principal Executive Officer	Filed herewith
	Pursuant to Section 302 of the Sarbanes-Oxley
	Act of 2002
31.2	Certification of Principal Financial Officer	Filed herewith
	Pursuant to Section 302 of the Sarbanes-Oxley
	Act of 2002
32.1	Certification Pursuant to Section 1350	Filed herewith
	Pursuant to Section 906 of the Sarbanes-Oxley
	Act of 2002

- 27 -

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.

Date: May 20, 2005

OPTA CORPORATION
(Registrant)

BY: /S/ YAN, Vincent Yong
——————————————
YAN, Vincent Yong
President, Chief Executive Officer, Director

- 28 -

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