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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K/A



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Amendment No. 1

(Mark One)

|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------



FOR THE FISCAL YEAR ENDED: SEPTEMBER 30, 2005



OR



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



FOR THE TRANSITION PERIOD FROM              TO



COMMISSION FILE NUMBER: 000-31081



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TRIPATH TECHNOLOGY INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Delaware                                                       |  | 77-0407364                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)



2560 Orchard
Parkway

San Jose, CA 95131

(408) 750-3000

(Address, including zip code, of registrants principal executive offices and telephone number,
including area code)



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Securities registered pursuant to Section 12(b) of the Act: None



Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value per share

(Title of Class)



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



Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. ̈



Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the
Act).    Yes  x    No ̈



Indicate by check mark whether the Registrant is a shell company (as defined
in Rule 12b-2 of the Act).    Yes ̈No  x



Indicate by check mark whether
the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes ̈No  x



Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes ̈No  x



State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common
equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the Registrants most recently completed second fiscal quarter: $46,235,000



There were 55,948,455 shares of Tripath Technology Inc. common stock
outstanding on December 13, 2005.



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##### Table of Contents

EXPLANATORY NOTE



This Annual Report on Form 10-K/A (Form 10-K/A) is being filed as Amendment No. 1 to our Annual Report on
Form 10-K for the year ended September 30, 2005, which was filed with the Securities and Exchange Commission (the SEC) on December 7, 2005 (the Original Filing).



This Form 10-K/A amends and restates Item 8. Financial Statements
and Supplementary Data of the Original Filing. Specifically, in the table labeled Consolidated Statements of Operations in Item 8, the two line items Cost of Revenue and Provision for slow moving, excess and
obsolete inventory are being added together for the year ended September 30, 2005. The resulting sum of $5,285 (in thousands) for the year ended September 30, 2005 appears in the table in Amendment No. 1 as Cost of
Revenue and the Provision for slow moving, excess and obsolete inventory for the year ended September 30, 2005 is zero in Amendment No. 1. Additionally, also in Item 8, Note 8Litigation has been updated
to reflect developments since the Original Filing, and Note 12Events (Unaudited) subsequent to the date of the report of the Independent Registered Accounting Firm has been added to reflect a development since the Original Filing.



Pursuant to the rules of the SEC, Item 15 of Part IV of
the Original Filing has been amended to include the consent of our independent registered public accounting firm and currently-dated certifications from our principal executive officer and principal financial officer, as required by Sections 302 and
906 of the Sarbanes-Oxley Act of 2002. The consent of our independent registered public accounting firm is attached to this Form 10-K/A as Exhibit 23.1. The certifications of our principal executive officer and our principal financial officer
are attached to this Form 10-K/A as Exhibits 31.1, 31.2 and 32.1.



The other items of the Original Filing have not been amended. This Form 10-K/A does not reflect events occurring after the December 7, 2005 Original Filing or modify or update the disclosures therein in any way other than as required
to reflect the amendment as set forth above.



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##### Table of Contents

TRIPATH TECHNOLOGY INC.



ANNUAL REPORT
ON FORM 10-K/A

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2005



TABLE OF CONTENTS



|              |  |                                             |  |     
|------------- |  | ------------------------------------------- |  | ----
|              |  |                                             |  | Page
|PART II      
|              |  |                                            
|ITEM 8.       |  | Financial Statements and Supplementary Data |  | 1   
|             
|PART IV      
|              |  |                                            
|ITEM 15.      |  | Exhibits and Financial Statement Schedules  |  | 36  
|              | 
|SIGNATURES    |  | 37                                         
|              | 
|EXHIBIT INDEX |  | 38                                         



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##### Table of Contents

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



INDEX TO FINANCIAL STATEMENTS



|                                                         |  |     
|-------------------------------------------------------- |  | ----
|                                                         |  | Page
|Reports of Independent Registered Public Accounting Firm |  | 2   
|                                                         | 
|Consolidated Balance Sheets                              |  | 6   
|                                                         | 
|Consolidated Statements of Operations                    |  | 7   
|                                                         | 
|Consolidated Statements of Stockholders Equity          |  | 8   
|                                                         | 
|Consolidated Statements of Cash Flows                    |  | 9   
|                                                         | 
|Notes to Consolidated Financial Statements               |  | 10  



1



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##### Table of Contents

Report of Independent Registered Public Accounting Firm



Board of Directors and Stockholders

Tripath Technology Inc.

San Jose, CA



To The Board of Directors and Stockholders of Tripath
Technology Inc.:



We have audited the accompanying consolidated
balance sheets of Tripath Technology Inc. (the Company) and its subsidiary as of September 30 2005 and 2004 and the related consolidated statements of operations, stockholders equity, and cash flows for the year ended
September 30, 2005, the nine month period ended September 30, 2004 and the year ended December 31, 2003. Our audit also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and
financial statement schedules are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits.



We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Tripath
Technology Inc. at September 30, 2005 and 2004, and the consolidated results of their operations and their cash flows for the year ended September 30, 2005, the nine month period ended September 30, 2004 and the year ended
December 31, 2003, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the financial statement schedule as of September 30, 2005 and 2004 and for each of the two years in the
period then ended, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.



The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going
concern. As discussed in Note 1 to the consolidated financial statements, the Companys significant recurring operating losses and accumulated deficit raise substantial doubt about its ability to continue as a going concern. Managements
plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.



We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
effectiveness of the Tripath Technology Inc.s internal control over financial reporting as of September 30, 2005, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) and our report dated November 23, 2005 expressed an unqualified opinion on managements assessment and an adverse opinion on the effectiveness of internal control over financial reporting.



/s/    STONEFIELD JOSEPHSON,
INC.



San Francisco, California

November 23, 2005, except as to the fourth, seventh and ninth paragraphs of Note 8, which are as of December 15, 2005.



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Report of Independent Registered Public Accounting Firm On Internal Controls Over Financial Reporting



Board of Directors and Stockholders

Tripath Technology Inc.

San Jose, CA



To The Board of Directors and Stockholders of Tripath Technology Inc.:



We have audited managements assessment, included in the accompanying
Managements Report on Internal Control over Financial Reporting, that Tripath Technology Inc. did not maintain effective internal control over financial reporting as of September 30, 2005, because of the effects of the material weaknesses
identified in managements assessment, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Tripath Technology Inc.s
management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on managements
assessment and an opinion on the effectiveness of the Companys internal control over financial reporting based on our audit.



We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, evaluating managements assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.



A companys
internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that
receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.



Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



A material weakness is a control deficiency, or combination of control
deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. The following material weaknesses have been identified and included in
managements assessment:



| |  |  | Lack of sufficient personnel and technical accounting and financial reporting expertise within the Companys accounting and finance function. As of September 30, 2005, the
Company did not have sufficient personnel and technical accounting and financial reporting expertise within its accounting function to sufficiently address relatively complex transactions and/or accounting and financial reporting issues that arise
from time to time in the course of its operations. This situation was exacerbated by the additional demands placed upon the Companys accounting and finance personnel as it worked to meet the internal control requirements under Section 404
of the Sarbanes-Oxley Act of 2002 and the turnover in the personnel in the accounting and finance functions.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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This material weakness resulted in adjustments, some of which are material to the Companys fiscal
year 2005 annual financial statements. Further, this material weakness could result in material misstatements to the Companys future annual or interim financial statements that would not be prevented or detected.



| |  |  | Inadequate controls over the period-end financial reporting process. As of September 30, 2005, the Companys Chief Financial Officer was responsible for preparing or
compiling certain critical portions of the quarterly and annual internal financial information and was also responsible for performing a review of this information to monitor the results of operations. This review represents an important detective
control in the Companys internal control over financial reporting. Because there was no separate independent detailed review of this critical financial information, there is a risk that inaccurate information may be reported and misstatements
may not be identified. Also, due to the turnover in the personnel in the accounting and finance functions many controls over period-end financial reporting were not properly followed. This material weakness resulted in adjustments, some of which are
material to the Companys fiscal year 2005 annual financial statements. Further, this material weakness could result in material misstatements to the Companys future annual or interim financial statements that would not be prevented or
detected.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Inadequate controls in the area of inventory. As of September 30, 2005, there were certain instances in which the Companys standard costing was not applied correctly. In
addition, in certain instances one individual had authority for certain activities which should be segregated, such as processing of point-of-sale reports, inventory reports and invoicing. The Company did not have adequate oversight and review of
these personnel to compensate for the inadequate segregation of duties. These weaknesses individually represent significant deficiencies and, in the aggregate, represent a material weakness. This material weakness resulted in adjustments, some of
which are material to the Companys fiscal year 2005 annual financial statements. Further, this material weakness could result in material misstatements to the Companys future annual or interim financial statements that would not be
prevented or detected.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Inadequate controls in the area of fixed assets. As of September 30, 2005, management did not ensure that the Companys Fixed Asset Policy was strictly enforced, including
instances where the detail listing of assets was not comprehensive, the capitation policy was not followed and depreciation expense was not calculated correctly. In addition, the Company did not maintain adequate segregation of duties among members
of its fixed asset department. In several instances, the Company had the same personnel performing duties that were not compatible. Furthermore, management did not have adequate oversight and review of these personnel to compensate for the
inadequate segregation of duties. These weaknesses individually represent significant deficiencies and, in the aggregate, represent a material weakness. This material weakness resulted in adjustments, some of which are material to the Companys
fiscal year 2005 annual financial statements. Further, this material weakness could result in material misstatements to the Companys future annual or interim financial statements that would not be prevented or detected.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Inadequate controls in the areas of reconciliation of accrued expenses. As of September 30, 2005, there were certain instances in which the company failed to reconcile the
supporting documentation for accrued expenses to the general ledger control account impacting the Companys ability to ensure all transactions flowing through the accounts are properly reflected in the recorded account balances. These
weaknesses individually represent significant deficiencies and, in the aggregate, represent a material weakness. This material weakness resulted in adjustments, some of which are material to the Companys fiscal year 2005 annual financial
statements. Further, this material weakness could result in material misstatements to the Companys future annual or interim financial statements that would not be prevented or detected.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Inadequate controls in the area of payroll/human resources. As of September 30, 2005, management did not ensure that the Companys review of payroll
reports was strictly enforced, including tracking of vacation and tracking of new and terminated employees. In addition, the Company did not maintain adequate segregation of duties among members of its payroll/human resource departments. In several
instances, the Company had the same personnel performing duties that were not compatible.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | Furthermore, management did not have adequate oversight and review of these personnel to compensate for the inadequate segregation of duties. These
weaknesses individually represent significant deficiencies and, in the aggregate, represent a material weakness. This material weakness resulted in adjustments, some of which are material to the Companys fiscal year 2005 annual financial
statements. Further, this material weakness could result in material misstatements to the Companys future annual or interim financial statements that would not be prevented or detected.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Inadequate controls in the area of information technology. As of September 30, 2005, the Company did not maintain effective controls over access to the accounting system and in
some cases did not maintain complete documentation regarding these access rights. Specifically, certain of the Companys accounting users with financial, accounting and reporting responsibilities also had inappropriate access to financial
application programs and data. Such access was not in compliance with segregation of duties requirements nor was this access independently monitored. In addition, the documentation regarding access privileges of certain individuals to the accounting
system was not reflective of actual access privileges. Further, the Company did not maintain adequate controls in the area of system development. These weaknesses individually represent significant deficiencies and, in the aggregate, represent a
material weakness. This material weakness did not result in adjustments to the Companys fiscal year 2005 annual financial statements. However, this material weakness could result in material misstatements to the Companys future annual or
interim financial statements that would not be prevented or detected.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Lack of internal control reports (under SAS 70) from critical external service providers whose processes are significant to the Companys internal control over financial
reporting. As of September 30, 2005, the Company was unable to obtain proper Report on Controls Placed in Operation and Test of Operating Effectiveness (in accordance with Statement of Auditing Standards No. 70) from two external
service providers, and the Company did not have alternative procedures to test user controls, test controls at service organizations or request the service organization auditor to perform agreed upon procedures. These include the providers of the
Companys payroll service, and the stock management provider. The services performed by these service providers were deemed material and significant to the Companys business and accurate financial reporting. This material weakness did not
result in adjustments to the Companys fiscal year 2005 annual financial statements. However, this material weakness could result in material misstatements to the Companys future annual or interim financial statements that would not be
prevented or detected by the Companys system of internal control over financial reporting.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of Tripath Technology
Inc.s consolidated financial statements as of and for the year ended September 30, 2005, and this report does not affect our report dated November 23, 2005 on those consolidated financial statements.



In our opinion, managements assessment that Tripath Technology Inc. did
not maintain effective internal control over financial reporting as of September 30, 2005, is fairly stated, in all material respects, based on criteria established inInternal ControlIntegrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, because of the effects of the material weaknesses described above on the achievement of the objectives of the control criteria, Tripath Technology Inc. has not
maintained effective internal control over financial reporting as of September 30, 2005, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).



We do not express an opinion or any other
form of assurance on managements statements regarding corrective actions taken by the Company after September 30, 2005.



/s/    STONEFIELD JOSEPHSON, INC.



San Francisco, California

November 23,
2005



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TRIPATH TECHNOLOGY INC.



CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)



|                                                                                                                                                                                 |  |                   |          |   |                                    |   |          |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | -------- | - | ---------------------------------- | - | -------- | -
|                                                                                                                                                                                 |  | September 30,2005 |          |   | September 30,2004 Restated(Note 9) |  
|ASSETS                                                                                                                                                                           |  |                   |          |   |                                    |   |          |  
|Current assets:                                                                                                                                                                  |  |                   |          |   |                                    |   |          |  
|Cash and cash equivalents                                                                                                                                                        |  | $                 | 716      |   |                                    | $ | 6577     |  
|Restricted cash                                                                                                                                                                  |  |                   | 162      |   |                                    |   | 762      |  
|Accounts receivable, net of allowance for doubtful accounts of $0 and $50 at September 30, 2005 and 2004 respectively                                                            |  |                   | 1,010    |   |                                    |   | 1,019    |  
|Inventories, net                                                                                                                                                                 |  |                   | 5,457    |   |                                    |   | 3,939    |  
|Prepaid expenses and other current assets                                                                                                                                        |  |                   | 1,512    |   |                                    |   | 212      |  
|                                                                                                                                                                                 |  |                   |          |   |                                    |   |          |  
|Total current assets                                                                                                                                                             |  |                   | 8,857    |   |                                    |   | 12,509   |  
|Property and equipment, net                                                                                                                                                      |  |                   | 875      |   |                                    |   | 1,674    |  
|Other assets                                                                                                                                                                     |  |                   | 122      |   |                                    |   | 123      |  
|                                                                                                                                                                                 |  |                   |          |   |                                    |   |          |  
|Total assets                                                                                                                                                                     |  | $                 | 9,854    |   |                                    | $ | 14,306   |  
|                                                                                                                                                                                 |  |                   |          |   |                                    |   |          |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                             |  |                   |          |   |                                    |   |          |  
|Current liabilities:                                                                                                                                                             |  |                   |          |   |                                    |   |          |  
|Accounts payable                                                                                                                                                                 |  | $                 | 3,488    |   |                                    | $ | 2,908    |  
|Current portion of capital lease obligations                                                                                                                                     |  |                   | 215      |   |                                    |   | 664      |  
|Current portion of deferred rent                                                                                                                                                 |  |                   | 305      |   |                                    |   | 266      |  
|Accrued expenses                                                                                                                                                                 |  |                   | 2,899    |   |                                    |   | 764      |  
|Deferred distributor revenue                                                                                                                                                     |  |                   | 1,202    |   |                                    |   | 1,075    |  
|Warrant Liability                                                                                                                                                                |  |                   | 396      |   |                                    |   |         |  
|                                                                                                                                                                                 |  |                   |          |   |                                    |   |          |  
|Total current liabilities                                                                                                                                                        |  |                   | 8,505    |   |                                    |   | 5,677    |  
|                                                                                                                                                                                 |  |                   |          |   |                                    |   |          |  
|Deferred rent                                                                                                                                                                    |  |                   | 167      |   |                                    |   | 471      |  
|Capital lease obligations                                                                                                                                                        |  |                   | 21       |   |                                    |   | 100      |  
|                                                                                                                                                                                 |  |                   |          |   |                                    |   |          |  
|Total long term liabilities                                                                                                                                                      |  |                   | 188      |   |                                    |   | 571      |  
|                                                                                                                                                                                 |  |                   |          |   |                                    |   |          |  
|Commitments and contingencies (Note 7)                                                                                                                                           |  |                   |          |   |                                    |   |          |  
|Stockholders equity:                                                                                                                                                            |  |                   |          |   |                                    |   |          |  
|Preferred stock, $0.001 par value, 5,000,000 shares authorized; 0 shares issued and outstanding                                                                                  |  |                   |         |   |                                    |   |         |  
|Common stock, $0.001 par value, 100,000,000 shares authorized; 55,410,722 and 50,043,158 shares issued and outstanding at September 30,
2005 and September 30, 2004 respectively |  |                   | 55       |   |                                    |   | 49       |  
|Additional paid-in capital                                                                                                                                                       |  |                   | 202,310  |   |                                    |   | 199,333  |  
|Deferred stock-based compensation                                                                                                                                                |  |                   |         |   |                                    |   | (95      | )
|Other comprehensive expense                                                                                                                                                      |  |                   | (3       | ) |                                    |   |         |  
|Accumulated deficit                                                                                                                                                              |  |                   | (201,201 | ) |                                    |   | (191,229 | )
|                                                                                                                                                                                 |  |                   |          |   |                                    |   |          |  
|Total stockholders equity                                                                                                                                                       |  |                   | 1,161    |   |                                    |   | 8,058    |  
|                                                                                                                                                                                 |  |                   |          |   |                                    |   |          |  
|Total liabilities and stockholders equity                                                                                                                                       |  | $                 | 9,854    |   |                                    | $ | 14,306   |  
|                                                                                                                                                                                 |  |                   |          |   |                                    |   |          |  



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



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##### Table of Contents

TRIPATH TECHNOLOGY INC.



CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)



|                                                                      |  |                             |         |   |                                                 |   |         |                            |  |   |        |  
|--------------------------------------------------------------------- |  | --------------------------- | ------- | - | ----------------------------------------------- | - | ------- | -------------------------- |  | - | ------ | -
|                                                                      |  | Year EndedSeptember 30,2005 |         |   | Nine MonthsEndedSeptember 30,2004 Restated 2004 |   |         | Year EndedDecember 31,2003 | 
|Revenue                                                               |  | $                           | 10,761  |   |                                                 | $ | 9,169   |                            |  | $ | 13,891 |  
|Cost of revenue                                                       |  |                             | 5,285   |   |                                                 |   | 7,415   |                            |  |   | 9,467  |  
|Provision for slow moving, excess and obsolete inventory              |  |                             |        |   |                                                 |   | 4,316   |                            |  |   | 243    |  
|                                                                      |  |                             |         |   |                                                 |   |         |                            |  |   |        |  
|Gross profit (loss)                                                   |  |                             | 5,476   |   |                                                 |   | (2,562  | )                          |  |   | 4,181  |  
|                                                                      |  |                             |         |   |                                                 |   |         |                            |  |   |        |  
|Operating expenses:                                                   |  |                             |         |   |                                                 |   |         |                            |  |   |        |  
|Research and development                                              |  |                             | 7,413   |   |                                                 |   | 5,521   |                            |  |   | 6,874  |  
|Selling, general and administrative                                   |  |                             | 8,586   |   |                                                 |   | 3,556   |                            |  |   | 4,544  |  
|                                                                      |  |                             |         |   |                                                 |   |         |                            |  |   |        |  
|Total operating expenses                                              |  |                             | 15,999  |   |                                                 |   | 9,077   |                            |  |   | 11,418 |  
|                                                                      |  |                             |         |   |                                                 |   |         |                            |  |   |        |  
|Loss from operations                                                  |  |                             | (10,523 | ) |                                                 |   | (11,639 | )                          |  |   | (7,237 | )
|Net gain on revaluation of warrant liability                          |  |                             | 570     |   |                                                 |   |        |                            |  |   |       |  
|Interest and other income (expense), net                              |  |                             | (19     | ) |                                                 |   | (26     | )                          |  |   | 22     |  
|                                                                      |  |                             |         |   |                                                 |   |         |                            |  |   |        |  
|Net loss                                                              |  |                             | (9,972  | ) |                                                 |   | (11,665 | )                          |  |   | (7,215 | )
|                                                                      |  |                             |         |   |                                                 |   |         |                            |  |   |        |  
|Basic and diluted net loss per share                                  |  | $                           | (0.19   | ) |                                                 | $ | (0.25   | )                          |  | $ | (0.17  | )
|                                                                      |  |                             |         |   |                                                 |   |         |                            |  |   |        |  
|Number of shares used to compute basic and diluted net loss per share |  |                             | 53,206  |   |                                                 |   | 46,541  |                            |  |   | 41,993 |  
|                                                                      |  |                             |         |   |                                                 |   |         |                            |  |   |        |  





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



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##### Table of Contents

TRIPATH TECHNOLOGY INC.



CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

(in thousands)



|                                                                  |  |              |  |        |    |                          |   |         |                                   |  |   |                    |   |  |                           |          |   |                          |   |    |   |  |   |         |  
|----------------------------------------------------------------- |  | ------------ |  | ------ | -- | ------------------------ | - | ------- | --------------------------------- |  | - | ------------------ | - |  | ------------------------- | -------- | - | ------------------------ | - | -- | - |  | - | ------- | -
|                                                                  |  | CommonShares |  | Amount |    | AdditionalPaid inCapital |   |         | Deferred Stock-based Compensation |  |   | AccumulatedDeficit |   |  | OtherComprehensiveExpense |          |   | TotalStockholdersEquity |  
|Balance at December 31, 2002                                      |  | 41,327       |  | $      | 41 |                          | $ | 187,835 |                                   |  | $ | (91                | ) |  | $                         | (172,349 | ) |                          |   |    |   |  | $ | 15,436  |  
|Issuance of common stock upon exercise of stock options           |  | 660          |  |        |   |                          |   | 498     |                                   |  |   |                   |   |  |                           |         |   |                          |   |    |   |  |   | 498     |  
|Issuance of common stock upon exercise of warrants                |  | 1,896        |  |        | 2  |                          |   | 3,111   |                                   |  |   |                    |   |  |                           |          |   |                          |   |    |   |  |   | 3,113   |  
|Issuance of common stock through the ESPP                         |  | 27           |  |        |   |                          |   | 7       |                                   |  |   |                   |   |  |                           |         |   |                          |   |    |   |  |   | 7       |  
|Reversal of previously recognized compensation due to forfeitures |  |             |  |        |   |                          |   | (117    | )                                 |  |   | 10                 |   |  |                           |         |   |                          |   |    |   |  |   | (107    | )
|Deferred stock-based compensation                                 |  |             |  |        |   |                          |   |        |                                   |  |   | (324               | ) |  |                           |         |   |                          |   |    |   |  |   | (324    | )
|Amortization of deferred stock-based compensation                 |  |             |  |        |   |                          |   |        |                                   |  |   | 188                |   |  |                           |         |   |                          |   |    |   |  |   | 188     |  
|Issuance of restricted stock                                      |  | 1,800        |  |        | 2  |                          |   | 322     |                                   |  |   |                   |   |  |                           |         |   |                          |   |    |   |  |   | 324     |  
|Net Loss                                                          |  |             |  |        |   |                          |   |        |                                   |  |   |                   |   |  |                           | (7,215   | ) |                          |   |    |   |  |   | (7,215  | )
|                                                                  |  |              |  |        |    |                          |   |         |                                   |  |   |                    |   |  |                           |          |   |                          |   |    |   |  |   |         |  
|Balance at December 31, 2003                                      |  | 45,710       |  |        | 45 |                          |   | 191,656 |                                   |  |   | (217               | ) |  |                           | (179,564 | ) |                          |   |    |   |  |   | 11,920  |  
|Issuance of common stock upon exercise of stock options           |  | 535          |  |        | 1  |                          |   | 345     |                                   |  |   |                   |   |  |                           |         |   |                          |   |    |   |  |   | 346     |  
|Issuance of common stock upon exercise of warrants                |  | 1,211        |  |        | 1  |                          |   | 2,347   |                                   |  |   |                   |   |  |                           |         |   |                          |   |    |   |  |   | 2,348   |  
|Issuance of common stock through the ESPP                         |  | 87           |  |        |   |                          |   | 43      |                                   |  |   |                   |   |  |                           |         |   |                          |   |    |   |  |   | 43      |  
|Issuance of common stock                                          |  | 2,500        |  |        | 2  |                          |   | 4,998   |                                   |  |   |                   |   |  |                           |         |   |                          |   |    |   |  |   | 5,000   |  
|Stock issuance cost                                               |  |             |  |        |   |                          |   | (56     | )                                 |  |   |                   |   |  |                           |         |   |                          |   |    |   |  |   | (56     | )
|Amortization of deferred stock-based compensation                 |  |             |  |        |   |                          |   |        |                                   |  |   | 122                |   |  |                           |         |   |                          |   |    |   |  |   | 122     |  
|Net loss (restated)                                               |  |             |  |        |   |                          |   |        |                                   |  |   |                   |   |  |                           | (11,665  | ) |                          |   |    |   |  |   | (11,665 | )
|                                                                  |  |              |  |        |    |                          |   |         |                                   |  |   |                    |   |  |                           |          |   |                          |   |    |   |  |   |         |  
|Balance at September 30, 2004 (restated)                          |  | 50,043       |  |        | 49 |                          |   | 199,333 |                                   |  |   | (95                | ) |  |                           | (191,229 | ) |                          |   |    |   |  |   | 8,058   |  
|Issuance of common stock upon exercise of stock options           |  | 425          |  |        | 1  |                          |   | 135     |                                   |  |   |                   |   |  |                           |         |   |                          |   |    |   |  |   | 136     |  
|Deferred stock-based compensation                                 |  |             |  |        |   |                          |   | 19      |                                   |  |   |                   |   |  |                           |         |   |                          |   |    |   |  |   | 19      |  
|Issuance of common stock through the ESPP                         |  | 110          |  |        |   |                          |   | 51      |                                   |  |   |                   |   |  |                           |         |   |                          |   |    |   |  |   | 51      |  
|Issuance of common stock                                          |  | 4,833        |  |        | 5  |                          |   | 3,380   |                                   |  |   |                   |   |  |                           |         |   |                          |   |    |   |  |   | 3,385   |  
|Stock issuance costs                                              |  |             |  |        |   |                          |   | (608    | )                                 |  |   |                   |   |  |                           |         |   |                          |   |    |   |  |   | (608    | )
|Amortization of deferred stock-based compensation                 |  |             |  |        |   |                          |   |        |                                   |  |   | 95                 |   |  |                           |         |   |                          |   |    |   |  |   | 95      |  
|Foreign currency translation adjustment                           |  |              |  |        |    |                          |   |         |                                   |  |   |                    |   |  |                           |          |   |                          |   | (3 | ) |  |   | (3      | )
|Net loss                                                          |  |             |  |        |   |                          |   |        |                                   |  |   |                   |   |  |                           | (9,972   | ) |                          |   |    |   |  |   | (9,972  | )
|                                                                  |  |              |  |        |    |                          |   |         |                                   |  |   |                    |   |  |                           |          |   |                          |   |    |   |  |   |         |  
|Balance at September 30, 2005                                     |  | 55,411       |  | $      | 55 |                          | $ | 202,310 |                                   |  | $ |                   |   |  | $                         | (201,201 | ) |                          | $ | (3 | ) |  | $ | 1,161   |  
|                                                                  |  |              |  |        |    |                          |   |         |                                   |  |   |                    |   |  |                           |          |   |                          |   |    |   |  |   |         |  



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



8



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##### Table of Contents

TRIPATH TECHNOLOGY INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



|                                                                                          |  |                             |        |   |                                            |   |         |                            |  |   |        |  
|----------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ------------------------------------------ | - | ------- | -------------------------- |  | - | ------ | -
|                                                                                          |  | Year EndedSeptember 30,2005 |        |   | Nine MonthsEndedSeptember 30,Restated 2004 |   |         | Year EndedDecember 31,2003 | 
|Cash flows from operating activities:                                                     |  |                             |        |   |                                            |   |         |                            |  |   |        |  
|Net loss                                                                                  |  | $                           | (9,972 | ) |                                            | $ | (11,665 | )                          |  | $ | (7,215 | )
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |                             |        |   |                                            |   |         |                            |  |   |        |  
|Change due to revaluation of warrant liability                                            |  |                             | (570   | ) |                                            |   |        |                            |  |   |       |  
|Depreciation and amortization                                                             |  |                             | 895    |   |                                            |   | 829     |                            |  |   | 1,206  |  
|                                                                                          |  |                             |       
|Allowance for doubtful accounts                                                           |  |                             | (111   | ) |                                            |   |        |                            |  |   |       |  
|Provision for slow moving excess and obsolete inventory                                   |  |                             | (4,026 | ) |                                            |   | 4,316   |                            |  |   | 243    |  
|Stock-based compensation                                                                  |  |                             | 95     |   |                                            |   | 122     |                            |  |   | 81     |  
|Changes in assets and liabilities:                                                        |  |                             |        |   |                                            |   |         |                            |  |   |        |  
|Accounts receivable                                                                       |  |                             | 120    |   |                                            |   | 1,012   |                            |  |   | (570   | )
|Inventories                                                                               |  |                             | 2,508  |   |                                            |   | (2,681  | )                          |  |   | (565   | )
|                                                                                          |  |                             |       
|Prepaid expenses and other assets                                                         |  |                             | (1,299 | ) |                                            |   | 9       |                            |  |   | 546    |  
|Accounts payable                                                                          |  |                             | 580    |   |                                            |   | (1,151  | )                          |  |   | 1,674  |  
|Accrued expenses                                                                          |  |                             | 2,135  |   |                                            |   | 162     |                            |  |   | (468   | )
|Deferred distributor revenue                                                              |  |                             | 127    |   |                                            |   | (50     | )                          |  |   | 499    |  
|Deferred rent                                                                             |  |                             | (265   | ) |                                            |   | 40      |                            |  |   | 502    |  
|                                                                                          |  |                             |        |   |                                            |   |         |                            |  |   |        |  
|Net cash used in operating activities                                                     |  |                             | (9,783 | ) |                                            |   | (9,057  | )                          |  |   | (4,067 | )
|                                                                                          |  |                             |        |   |                                            |   |         |                            |  |   |        |  
|Cash flows from investing activities:                                                     |  |                             |        |   |                                            |   |         |                            |  |   |        |  
|                                                                                          |  |                             |       
|Restricted cash                                                                           |  |                             | 600    |   |                                            |   | (101    | )                          |  |   | (175   | )
|Purchase of property and equipment                                                        |  |                             | (96    | ) |                                            |   | (606    | )                          |  |   | (312   | )
|                                                                                          |  |                             |        |   |                                            |   |         |                            |  |   |        |  
|Net cash provided by (used in) investing activities                                       |  |                             | 504    |   |                                            |   | (707    | )                          |  |   | (487   | )
|                                                                                          |  |                             |        |   |                                            |   |         |                            |  |   |        |  
|Cash flows from financing activities:                                                     |  |                             |        |   |                                            |   |         |                            |  |   |        |  
|                                                                                          |  |                             |       
|Proceeds from issuance of common stock under ESPP and upon exercise of options            |  |                             |       |   |                                            |   | 389     |                            |  |   | 505    |  
|Issuance of common stock upon exercise of warrants                                        |  |                             |       |   |                                            |   | 2,348   |                            |  |   | 3113   |  
|Issuance of common stock upon sale of sale of common stock, net of issuance costs         |  |                             | 3,949  |   |                                            |   | 4,944   |                            |  |   |       |  
|Principal payments on capital lease obligations                                           |  |                             | (528   | ) |                                            |   | (291    | )                          |  |   | (225   | )
|                                                                                          |  |                             |        |   |                                            |   |         |                            |  |   |        |  
|Net cash provided by financing activities                                                 |  |                             | 3,421  |   |                                            |   | 7,390   |                            |  |   | 3,393  |  
|                                                                                          |  |                             |        |   |                                            |   |         |                            |  |   |        |  
|Effect of exchange rate changes on cash and cash equivalents                              |  |                             | (3     | ) |                                            |   |        |                            |  |   |       |  
|Net decrease in cash and cash equivalents                                                 |  |                             | (5,861 | ) |                                            |   | (2,374  | )                          |  |   | (1,161 | )
|Cash and cash equivalents at beginning of year                                            |  |                             | 6,577  |   |                                            |   | 8,951   |                            |  |   | 10,112 |  
|                                                                                          |  |                             |        |   |                                            |   |         |                            |  |   |        |  
|Cash and cash equivalents at end of year                                                  |  | $                           | 716    |   |                                            | $ | 6,577   |                            |  | $ | 8,951  |  
|                                                                                          |  |                             |        |   |                                            |   |         |                            |  |   |        |  
|Supplemental disclosure of cash flow information:                                         |  |                             |        |   |                                            |   |         |                            |  |   |        |  
|Interest Income (Expense)                                                                 |  | $                           | (25    | ) |                                            | $ | (26     | )                          |  | $ | 23     |  
|                                                                                          |  |                             |       
|Non-cash investing and financing activities:                                              |  |                             |        |   |                                            |   |         |                            |  |   |        |  
|Property and equipment acquired by capital lease                                          |  | $                           |       |   |                                            | $ |        |                            |  | $ | 317    |  
|Conversion of preferred stock into common stock                                           |  | $                           |       |   |                                            | $ |        |                            |  | $ |       |  
|Issuance of common stock warrants                                                         |  | $                           |       |   |                                            | $ |        |                            |  | $ |       |  



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



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##### Table of Contents

TRIPATH TECHNOLOGY INC.



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1THE COMPANY AND BASIS
OF PRESENTATION:



The Company



Tripath Technology Inc. (the Company or Tripath) was
incorporated in California in July 1995. The Company was reincorporated in Delaware in July 2000. The Company designs, develops and markets integrated circuit devices for the Consumer and PC Convergence, DSL and Wireless markets. On August 1,
2000, the Company completed its initial public offering of 5 million shares of common stock at $10.00 per share.



Basis of Presentation



The consolidated financial statements include the accounts of Tripath and its wholly owned subsidiary, Tripath Technology Japan Ltd. All significant
intercompany accounts and transactions have been eliminated. Accounts denominated in foreign currency have been remeasured using the U.S. dollar as the functional currency.



On November 14, 2004, Tripaths Board of Directors approved a change in the Companys fiscal year end from
December 31 to September 30, effective as of September 30, 2004.



The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates, and such differences could affect the results of operations reported in future periods and such differences could be material.



Going Concern



The Companys consolidated financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business. The Company has incurred substantial losses and has experienced negative cash flow since inception and has an accumulated deficit of $201.2 million at September 30, 2005. These
factors raise substantial doubt about the Companys ability to continue as a going concern.



Beginning in August 2001, the Company instituted programs to reduce expenses including reducing headcount from 144 employees at the end of July 2001 to 56
employees at the end of December 2003 and reducing employee salaries by 10 percent. In September 2002 the Company relocated its headquarters which reduced rent expense and canceled its D&O policy which reduced insurance expense. These actions
resulted in significant cost savings in 2003. The Company reduced its cash used in operating activities from approximately $13 million in 2002 to approximately $4 million in 2003. However, for the nine months ended September 30, 2004, cash used
in operating activities increased to $9.1 million and for the year ended September 30, 2005 the Company used $9.8 million in cash.



During 2003 warrants were exercised which resulted in the Company receiving proceeds totaling approximately $3.1 million. During 2004, the Company
received proceeds of approximately $2.3 million from the exercise of outstanding warrants and $5 million from the sale of common stock. During 2005, the Company received proceeds of approximately $4.4 million from the sale of common stock. At
September 30, 2005, the Company had working capital of $0.4 million, including cash of $0.9 million.



The Company will require more cash during 2006 to fund its operations and management believes that such additional cash requirements could be met by first
obtaining additional financing or by taking measures to reduce



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##### Table of Contents

TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



operating expenses such as reducing headcount or canceling research and development projects. However, the Company may not be able to obtain additional funds
on terms that would be favorable to its stockholders and the Company, or at all. The Companys long term prospects are dependent upon obtaining sufficient financing as needed to fund current working capital needs and future growth, and
ultimately on achieving profitability.



Foreign Currency Translation



The U.S. dollar is the functional currency for the
Companys Japanese wholly-owned subsidiary. Assets and liabilities that are not denominated in the functional currency are remeasured into U.S. dollars and the resulting gains or losses are included in Interest and other income,
net. Such gains or losses have not been material for any period presented.



NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:



Revenue Recognition



The Company
recognizes revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104 (SAB 104), Revenue Recognition in Financial Statements. The Company recognizes revenue when all of the following
criteria are met: 1) there is persuasive evidence that an arrangement exists, 2) delivery of goods has occurred, 3) the sales price is fixed or determinable, and 4) collectibility is reasonably assured. The following policies apply to the
Companys major categories of revenue transactions.



Sales to OEM Customers: Under the Companys standard terms and conditions of sale, title and risk of loss transfer to the customer at the time product is delivered to the customer, FOB shipping point, and revenue is recognized
accordingly. The Company accrues the estimated cost of post-sale obligations, including basic product warranties or returns, based on historical experience. The Company has experienced minimal warranty or other returns to date.



Sales to Distributors: Sales to distributors are made under
arrangements allowing limited rights of return, generally under product warranty provisions, stock rotation rights and price protection on products unsold by the distributor. In addition, the distributor may request special pricing and allowances
which may be granted subject to the companys approval. As a result of these return rights and potential pricing adjustments, the Company generally defers recognition of revenue until such time that the distributor sells product to its customer
based upon receipt of point-of-sale reports from the distributor.



Costs related to shipping and handling are included in cost of revenue for all periods presented.



Allowance for Doubtful Accounts



The Company provides an allowance for doubtful accounts to ensure trade receivables are not overstated due to un-collectibility. The collectibility of the Companys receivables is evaluated based on a variety of
factors, including the length of time receivables are past due, indication of the customers willingness to pay, significant one-time events and historical experience. An additional reserve for individual accounts is recorded when the Company
becomes aware of a customers inability to meet its financial obligations, such as in the case of bankruptcy filings or substantial deterioration in the customers operating results or financial position. If circumstances related to the
Companys customers change, estimates of the recoverability of receivables would be further adjusted.



Cash and cash equivalents and restricted cash



The Company considers all highly liquid investments with a maturity of three months or less from the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash and money market funds, the fair
value of which approximates cost.



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##### Table of Contents

TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table summarizes the Companys cash and cash equivalents (in thousands):



|                           |  |                   |     |                   |   |      
|-------------------------- |  | ----------------- | --- | ----------------- | - | -----
|                           |  | September 30,2005 |     | September 30,2004
|Cash and cash equivalents: |  |                   |     |                   |   |      
|Cash                       |  | $                 | 530 |                   | $ | 942  
|Money market funds         |  |                   | 186 |                   |   | 5,635
|                           |  |                   |     |                   |   |      
|                           |  | $                 | 716 |                   | $ | 6,577
|                           |  |                   |     |                   |   |      



At September 30,
2005 and September 30, 2004, the Company had $0.2 million and $0.8 million in restricted cash, respectively. The restricted cash represents monies held in a separate money market account that collateralize standby letters of credit that have
been issued (see Note 7).



Fair value of financial instruments



Carrying amounts of certain of the Companys
financial instruments, including cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values due to their relative short maturities and based upon comparable market information available at the respective
balance sheet dates. The Company does not hold or issue financial instruments for trading purposes.



Concentration of credit risk and significant customers



Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and short-term
investments. Substantially all of the Companys cash and cash equivalents are invested in highly-liquid money market funds. The Company sells its products through distributors and directly to original equipment manufacturers. The Company
performs ongoing credit evaluations of its customers and maintains an allowance for potential credit losses, as considered necessary by management. Credit losses to date have been consistent with managements estimates. During the year ended
September 30, 2005, the nine months ended September 30, 2004 and year ended December 31, 2003 the Company wrote-off bad debts which had previously been reserved totaling approximately $0, $0, and $295,000, respectively.



The following table summarizes sales to end customers comprising 10 percent
or more of the Companys total revenue for the periods indicated:



|           |  |                                                  |   |  |                                                                       |   |  |                                                 |  
|---------- |  | ------------------------------------------------ | - |  | --------------------------------------------------------------------- | - |  | ----------------------------------------------- | -
|           |  | % of Revenue for theYear EndedSeptember 30, 2005 |   |  | % of Revenue for theNine Months
EndedSeptember 30, 2004 Restated 2004 |   |  | % of Revenue for theYear EndedDecember 31, 2003 |  
|Customer A |  | 40                                               | % |  | 28                                                                    | % |  | 24                                              | %
|Customer B |  | 16                                               | % |  | 19                                                                    | % |  |                                                | %
|Customer C |  | 12                                               | % |  | 9                                                                     | % |  | 18                                              | %
|Customer D |  |                                                 | % |  |                                                                      | % |  | 15                                              | %



The Companys
accounts receivable were concentrated with 3 customers at September 30, 2005 representing 40 percent, 16 percent and 12 percent of aggregate gross receivables, three customers at September 30, 2004 representing 28 percent, 19 percent and 9
percent of aggregate gross receivables and three customers at December 31, 2003 representing 24 percent, 18 percent and 15 percent of aggregate gross receivables.



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##### Table of Contents

TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Inventories



Inventories are stated at the lower of cost or market. This policy requires the Company to make estimates regarding the market value of the
Companys inventory, including an assessment of excess or obsolete inventory. The Company determines excess and obsolete inventory based on an estimate of the future demand and estimated selling prices for the Companys products within a
specified time horizon, generally 12 months. The estimates the Company uses for expected demand are also used for near-term capacity planning and inventory purchasing and are consistent with the Companys revenue forecasts. Actual demand and
market conditions may be different from those projected by the Companys management. If the Companys unit demand forecast is less than the Companys current inventory levels and purchase commitments, during the specified time
horizon, or if the estimated selling price is less than the Companys inventory value, the Company will be required to take additional excess inventory charges or write-downs to net realizable value which will decrease the Companys gross
margin and net operating results in the future. During the quarter ended March 31, 2002, the Company recorded a provision for excess inventory of approximately $5 million primarily related to excess inventory for the Companys TA2022
product as a result of a decrease in forecasted sales for this product. In 2004, the Company increased the inventory reserves by an additional $4.3 million from $4.9 million to $9.2 million to account for slow moving, excess, and obsolete inventory.
The additional inventory charge related to slow-moving and excess inventory for our TA1101B, TA3020, TA2041, TA2022 and leaded TA2024 products, the TK2350, TK2051, TK2150, TK2050 and TK2052 chipsets, and Kauai 2BB and U461 die based on a decline in
forecasted sales for these parts. These components and finished goods did not have a market or sales forecast based on customer demand that could support the number of units in inventory at that time. During the year ended September 30, 2005, the
Company released a net amount of approximately $4.0 million of inventory reserves for products sold that were previously reserved for. These releases were due to the Companys end-customers experiencing significant growth which resulted in
sales of previously written down inventory. In addition during 2005, certain of the Companys customers products had experienced growth beyond previously estimated levels.



Inventory purchase commitment losses



The Company accrues for estimated losses on non-cancelable purchase orders. The estimated losses result from anticipated future sale of products for
sales prices less than the estimated cost to manufacture. Inventory purchase commitment losses accrued at September 30, 2005, September 30, 2004 and December 31, 2003 were $0.



Research and development expenses



Research and development costs are charged to expense as incurred.



Property and equipment



Property and equipment, including leasehold improvements, are stated at
historical cost, less accumulated depreciation and amortization. Amortization of leasehold improvements is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the term of the lease. Depreciation is
computed using the straight-line method over the estimated useful lives of the assets as follows:



|                       |  |                                        
|---------------------- |  | ---------------------------------------
|Furniture and fixtures |  | 5 years                                
|Software               |  | Shorter of 3-5 years or term of license
|Equipment              |  | 2-5 years                              



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##### Table of Contents

TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes
in circumstances indicate that their net book value may not be recoverable. An impairment loss is recognized if the sum of the expected future cash flows (undiscounted and before interest) from the use of the assets is less than the net book value
of the asset. The amount of the impairment loss, if any, will generally be measured as the difference between net book value of the assets and their estimated fair values.



Comprehensive income



Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income, establishes standards for reporting and displaying
comprehensive income and its components in a full set of general-purposes financial statements. There was no difference between the Companys net loss and its total comprehensive loss for the year ended September 30, 2005, the nine months
ended September 30, 2004, and for the year ended December 31, 2003.



Accounting for stock-based compensation



At September 30, 2005, the Company has two stock-based employee compensation plans, which are described more fully in Note 5. The Company accounts for those plans under the recognition and measurement principles of APB Opinion
No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based employee compensation cost related to stock options is reflected in net income for the year ended September 30, 2005, the nine months
ended September 30, 2004 and year ended December 31, 2003, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the
effect on net income and earnings per share if the Company had applied the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.



|                                                                                                                                                            |  |                             |         |   |                                            |   |         |                            |  |   |        |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ------------------------------------------ | - | ------- | -------------------------- |  | - | ------ | -
|                                                                                                                                                            |  | Year EndedSeptember 30,2005 |         |   | Nine MonthsEndedSeptember 30,2004 Restated |   |         | Year EndedDecember 31,2003 | 
|Net loss applicable to common stockholders, as reported                                                                                                     |  | $                           | (9,972  | ) |                                            | $ | (11,665 | )                          |  | $ | (7,215 | )
|Total stock-based employee compensation expense included in the net loss, determined under the recognition and measurement principles of APB
Opinion No. 25 |  |                             | 95      |   |                                            |   | 122     |                            |  |   | 81     |  
|Total stock-based employee compensation expense determined under fair value based method for all awards                                                     |  |                             | (3,657  | ) |                                            |   | (2,378  | )                          |  |   | (1,211 | )
|                                                                                                                                                            |  |                             |         |   |                                            |   |         |                            |  |   |        |  
|Pro forma net loss applicable to common stockholders                                                                                                        |  | $                           | (13,534 | ) |                                            | $ | (13,921 | )                          |  | $ | (8,345 | )
|                                                                                                                                                            |  |                             |         |   |                                            |   |         |                            |  |   |        |  
|As reported                                                                                                                                                 |  | $                           | (0.19   | ) |                                            | $ | (0.25   | )                          |  | $ | (0.17  | )
|                                                                                                                                                            |  |                             |         |   |                                            |   |         |                            |  |   |        |  
|Pro forma                                                                                                                                                   |  | $                           | (0.25   | ) |                                            | $ | (0.30   | )                          |  | $ | (0.20  | )
|                                                                                                                                                            |  |                             |         |   |                                            |   |         |                            |  |   |        |  



The fair value for
these options was estimated using the Black-Scholes option pricing model.



The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Option pricing models require the input of
highly subjective assumptions, including the expected stock price volatility. Accordingly, option pricing models may not necessarily provide a reliable single measure of the fair value of options.



14



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##### Table of Contents

TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The fair value of options at the date of grant was estimated on the date of grant based on the method
prescribed by SFAS No. 123. The following table summarizes the estimated fair value of options and assumptions used in the SFAS No. 123 calculations for stock option plans:



|                          |  |                             |      |   |                                   |   |      |                            |  |   |      |  
|------------------------- |  | --------------------------- | ---- | - | --------------------------------- | - | ---- | -------------------------- |  | - | ---- | -
|                          |  | Year EndedSeptember 30,2005 |      |   | Nine MonthsEndedSeptember 30,2004 |   |      | Year EndedDecember 31,2003 | 
|Estimated fair value      |  | $                           | .62  |   |                                   | $ | 1.12 |                            |  | $ | 0.73 |  
|Expected lives (in years) |  |                             | 5    |   |                                   |   | 5    |                            |  |   | 5    |  
|Volatility                |  |                             | 150  | % |                                   |   | 155  | %                          |  |   | 157  | %
|Risk-free interest rate   |  |                             | 3.94 | % |                                   |   | 3.29 | %                          |  |   | 2.96 | %
|Dividend yield            |  |                             |     |   |                                   |   |     |                            |  |   |     |  



The following table
summarizes the estimated fair value of employees purchase rights and assumptions used in the SFAS No. 123 calculations:



|                          |  |                              |      |   |                                   |   |      |                            |  |   |      |  
|------------------------- |  | ---------------------------- | ---- | - | --------------------------------- | - | ---- | -------------------------- |  | - | ---- | -
|                          |  | Year EndedSeptember 30, 2005 |      |   | Nine MonthsEndedSeptember 30,2004 |   |      | Year EndedDecember 31,2003 | 
|Estimated fair value      |  | $                            | .31  |   |                                   | $ | 2.91 |                            |  | $ | 0.15 |  
|Expected lives (in years) |  |                              | 0.5  |   |                                   |   | 0.5  |                            |  |   | 0.5  |  
|Volatility                |  |                              | 150  | % |                                   |   | 155  | %                          |  |   | 157  | %
|Risk-free interest rate   |  |                              | 3.94 | % |                                   |   | 3.29 | %                          |  |   | 2.96 | %
|Dividend yield            |  |                              |     |   |                                   |   |     |                            |  |   |     |  



The following tables
sets forth, for each of the periods presented, deferred stock-based compensation recorded and the amortization of deferred stock-based compensation (in thousands):



|                                                                  |  |                             |    |                                   |   |                            |  |   |      |  
|----------------------------------------------------------------- |  | --------------------------- | -- | --------------------------------- | - | -------------------------- |  | - | ---- | -
|                                                                  |  | Year EndedSeptember 30,2005 |    | Nine MonthsEndedSeptember 30,2004 |   | Year EndedDecember 31,2003 | 
|Deferred stock-based compensation                                 |  | $                           |   |                                   | $ |                           |  | $ | (324 | )
|Amortization of deferred stock-based compensation                 |  |                             | 95 |                                   |   | 122                        |  |   | 188  |  
|Reversal of previously recognized compensation due to forfeitures |  |                             |   |                                   |   |                           |  |   | (107 | )



Unamortized deferred
stock-based compensation at September 30, 2005, September 30, 2004 and December 31, 2003 was $0, $95,000 and $217,000, respectively.



Stock-based compensation attributable to individuals that worked in the following functions is as follows (in thousands):



|                                            |  |                             |    |                                   |   |                            |  |   |   
|------------------------------------------- |  | --------------------------- | -- | --------------------------------- | - | -------------------------- |  | - | --
|                                            |  | Year EndedSeptember 30,2005 |    | Nine MonthsEndedSeptember 30,2004 |   | Year EndedDecember 30,2003
|Manufacturing/operations (cost of revenues) |  | $                           |   |                                   | $ |                           |  | $ | 4 
|Research and development                    |  |                             |   |                                   |   | 1                          |  |   | 20
|Selling, general and administrative         |  |                             | 95 |                                   |   | 121                        |  |   | 57
|                                            |  |                             |    |                                   |   |                            |  |   |   
|Total stock-based compensation              |  | $                           | 95 |                                   | $ | 122                        |  | $ | 81
|                                            |  |                             |    |                                   |   |                            |  |   |   



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##### Table of Contents

TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Segment and geographic information



The Company has determined that it has one reportable business segment: the design, license and marketing of integrated
circuits.



The following is a geographic breakdown of the
Companys sales by shipping destination for the following periods:



|              |  |                             |        |                                                 |   |                            |  |   |       
|------------- |  | --------------------------- | ------ | ----------------------------------------------- | - | -------------------------- |  | - | ------
|              |  | Year EndedSeptember 30,2005 |        | Nine MonthsEndedSeptember 30,2004 Restated 2004 |   | Year EndedDecember 31,2003
|United States |  | $                           | 628    |                                                 | $ | 1,034                      |  | $ | 909   
|Japan         |  |                             | 4,888  |                                                 |   | 4,927                      |  |   | 6,117 
|Singapore     |  |                             | 21     |                                                 |   | 142                        |  |   | 522   
|Taiwan        |  |                             | 1,167  |                                                 |   | 222                        |  |   | 1,325 
|China         |  |                             | 1,393  |                                                 |   | 1,424                      |  |   | 797   
|Korea         |  |                             | 718    |                                                 |   |                           |  |   | 3,146 
|Rest of world |  |                             | 1,946  |                                                 |   | 1,420                      |  |   | 1,075 
|              |  |                             |        |                                                 |   |                            |  |   |       
|              |  | $                           | 10,761 |                                                 | $ | 9,169                      |  | $ | 13,891
|              |  |                             |        |                                                 |   |                            |  |   |       



Net property and
equipment by country was as follows:



|              |  |                   |     |                    |   |                  |  |   |      
|------------- |  | ----------------- | --- | ------------------ | - | ---------------- |  | - | -----
|              |  | September 30,2005 |     | September 30, 2004 |   | December 31,2003
|United States |  | $                 | 324 |                    | $ | 891              |  | $ | 1,532
|Korea         |  |                   | 264 |                    |   | 389              |  |   | 317  
|Malaysia      |  |                   | 282 |                    |   | 362              |  |   |     
|Japan         |  |                   | 5   |                    |   | 32               |  |   | 48   
|              |  |                   |     |                    |   |                  |  |   |      
|              |  | $                 | 875 |                    | $ | 1,674            |  | $ | 1,897
|              |  |                   |     |                    |   |                  |  |   |      



Recent Accounting
Pronouncements



In November 2004, the FASB issued SFAS
No. 151, Inventory Costsan amendment of ARB No. 43, Chapter 4, or SFAS 151. SFAS 151 amends ARB 43, Chapter 4 to clarify that abnormal amounts of idle freight, handling costs and spoilage
should be recognized as current period charges. SFAS 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. We do not anticipate that the adoption of this standard will have a material impact on
our consolidated financial statements.



In December 2004, the
FASB issued SFAS No. 153 Exchanges of Non-monetary Assetsan amendment of APB opinion No. 29, or SFAS 153. SFAS 153 clarifies that exchanges of non-monetary assets should be measured based on the fair value of
the assets exchanged, with a general exception for exchanges that have no commercial substance. SFAS 153 is effective for non-monetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. We do not anticipate that the
adoption of this standard will have a material impact on our consolidated financial statements.



In December 2004, the FASB revised SFAS No. 123 (SFAS 123(R)). SFAS 123(R), Share-Based Payment, requires all share-based
payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. Pro forma disclosure is no longer an alternative to financial statement recognition. SFAS 123(R) is
effective for periods beginning after June 15, 2005. On



16



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##### Table of Contents

TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



April 14, 2005, the SEC announced the adoption of a new rule that amended the compliance dates for SFAS 123(R). Under the new rule, companies are
allowed to implement SFAS 123(R) at the beginning of the next fiscal year, instead of the next reporting period, that begins after June 15, 2005. We are required to comply with SFAS 123(R) beginning with our fiscal quarter ending
December 31, 2005. SFAS 123(R) provides transition alternatives for public companies to restate prior interim periods or prior years. We are still evaluating the transition provisions allowed by SFAS 123(R).



In March 2005, the SEC released SEC Staff Accounting Bulletin No. 107,
Share-Based Payment (SAB 107). SAB 107 provides the SEC staffs position regarding the application of SFAS 123(R) and certain SEC rules and regulations, and also provides the staffs views regarding
the valuation of share-based payment arrangements for public companies. We are currently reviewing the effect, if any, that the application of SAB 107 will have on our financial position and results of operations.



In March 2005, the FASB issued FSP No. 46(R)-5, Implicit Variable
Interests under FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities (FSP 46(R)-5), which provides guidance for a reporting enterprise on whether it holds an implicit variable interest in a
variable interest entity (VIE) or potential VIE when specific conditions exist. FSP 46(R)-5 became applicable to the Company in the quarter ended June 30, 2005. FSP 46(R) had no impact on the Companys consolidated results of
operations and financial condition as of September 30, 2005.



In March 2005, the FASB issued FIN 47, Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143 (FIN 47), which requires an entity to recognize a liability for the fair value of a
conditional asset retirement obligation when incurred if the liabilitys fair value can be reasonably estimated. FIN 47 is effective for fiscal years ending after December 15, 2005. The Company is currently evaluating the effect that
the adoption of FIN 47 will have on the Companys consolidated results of operations and financial condition, but does not expect it to have a material impact.



In May 2005, the FASB issued SFAS No. 154 Accounting Changes and Error Correctionsa replacement of APB
Opinion No. 20, and FASB Statement No. 3. (SFAS 154). SFAS 154 replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements, and changes
the requirements for the accounting for and reporting of a change in accounting principle. This statement applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual
instance that the pronouncement does not include specific transition provisions. When a pronouncement includes specific transition provisions, those provisions should be followed. SFAS 154 is effective for accounting changes and corrections of
errors made in fiscal years beginning after December 31, 2005. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements.



In December 2004, the FASB issued and made effective two Staff Positions
(FSP) that provide accounting guidance on how companies should account for the effect of the American Jobs Creation Act of 2004 that was signed into law on October 22, 2004. In FSP FAS 109-1, Application of FASB Statement No. 109, Accounting
for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004, the FASB concluded that the special tax deduction for domestic manufacturing, created by the new legislation, should
be accounted for as a special deduction instead of a tax rate reduction. As such, the special tax deduction for domestic manufacturing is recognized no earlier than the year in which the deduction is taken on the tax return. FSP FAS
109-2, Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004, allows additional time to evaluate the effects of the new legislation on any plan for reinvestment
or repatriation of foreign earnings for purposes of applying FASB Statement No. 109. The Company does not anticipate that this legislation will impact its results of operations or financial condition.



17



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##### Table of Contents

TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Net loss per share



Basic net loss per share is computed by dividing the net loss available to common stockholders for the period by the
weighted average number of common stock outstanding during the period. Diluted net loss per share is computed based on the weighted average number of common stock and dilutive potential common stock outstanding. The calculation of diluted net loss
per share excludes potential common stock if the effect is anti-dilutive. Potential common stock consists of incremental common stock issuable upon the exercise of stock options, shares issuable upon conversion of convertible preferred stock and
common stock issuable upon the exercise of common stock warrants.



The following table sets forth the computation of basic and diluted net loss per share for the periods presented (in thousands, except per share amounts):



|                                           |  |                             |        |   |                                              |   |         |                            |  |   |        |  
|------------------------------------------ |  | --------------------------- | ------ | - | -------------------------------------------- | - | ------- | -------------------------- |  | - | ------ | -
|                                           |  | Year EndedSeptember 30,2005 |        |   | Nine Months EndedSeptember 30, 2004 Restated |   |         | Year EndedDecember 31,2003 | 
|Numerator:                                 |  |                             |        |   |                                              |   |         |                            |  |   |        |  
|Net loss applicable to common stockholders |  | $                           | (9,972 | ) |                                              | $ | (11,665 | )                          |  | $ | (7,215 | )
|                                           |  |                             |        |   |                                              |   |         |                            |  |   |        |  
|Denominator:                               |  |                             |        |   |                                              |   |         |                            |  |   |        |  
|Weighted average common stock              |  |                             | 53,206 |   |                                              |   | 46,541  |                            |  |   | 41,993 |  
|                                           |  |                             |        |   |                                              |   |         |                            |  |   |        |  
|Net loss per share:                        |  |                             |        |   |                                              |   |         |                            |  |   |        |  
|Basic and diluted                          |  | $                           | (0.19  | ) |                                              | $ | (0.25   | )                          |  | $ | (0.17  | )
|                                           |  |                             |        |   |                                              |   |         |                            |  |   |        |  



The following table
sets forth potential shares of common stock that are not included in the diluted net loss per share calculation above because to do so would be anti-dilutive for the periods presented (in thousands):



|                                                |  |                             |  |                                   |  |                            
|----------------------------------------------- |  | --------------------------- |  | --------------------------------- |  | ---------------------------
|                                                |  | Year EndedSeptember 30,2005 |  | Nine MonthsEndedSeptember 30,2004 |  | Year Ended December 31,2003
|Common stock options                            |  | 10,403                      |  | 11,418                            |  | 8,501                      
|Common stock under Employee Stock Purchase Plan |  | 125                         |  | 234                               |  | 322                        
|Common stock warrants                           |  | 968                         |  | 16                                |  | 1,229                      
|Restricted Stock                                |  | 1,800                       |  | 1,800                             |  | 1,800                      



18



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##### Table of Contents

TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 3BALANCE SHEET COMPONENTS (in thousands):



|                                                             |  |                   |        |   |                            |   |        |                  |  |   |        |  
|------------------------------------------------------------ |  | ----------------- | ------ | - | -------------------------- | - | ------ | ---------------- |  | - | ------ | -
|                                                             |  | September 30,2005 |        |   | September 30,2004 Restated |   |        | December 31,2003 | 
|Accounts receivable, net:                                    |  |                   |        |   |                            |   |        |                  |  |   |        |  
|Accounts receivable                                          |  | $                 | 1,142  |   |                            | $ | 1,089  |                  |  | $ | 2,101  |  
|Less: allowance for sales returns                            |  |                   | (132   | ) |                            |   | (20    | )                |  |   | (10    | )
|Less: allowance for doubtful accounts                        |  |                   |       |   |                            |   | (50    | )                |  |   | (50    | )
|                                                             |  |                   |        |   |                            |   |        |                  |  |   |        |  
|                                                             |  | $                 | 1,010  |   |                            | $ | 1,019  |                  |  | $ | 2,041  |  
|                                                             |  |                   |        |   |                            |   |        |                  |  |   |        |  
|Inventories, net:                                            |  |                   |        |   |                            |   |        |                  |  |   |        |  
|Raw materials                                                |  | $                 | 4,805  |   |                            | $ | 6,668  |                  |  | $ | 5,148  |  
|Work-in-process                                              |  |                   | 986    |   |                            |   | 847    |                  |  |   | 1,007  |  
|Finished goods                                               |  |                   | 3,913  |   |                            |   | 4,938  |                  |  |   | 3,551  |  
|Inventory held by distributors                               |  |                   | 925    |   |                            |   | 685    |                  |  |   | 731    |  
|                                                             |  |                   |        |   |                            |   |        |                  |  |   |        |  
|                                                             |  |                   | 10,629 |   |                            |   | 13,138 |                  |  |   | 10,437 |  
|Less: reserve for slow-moving, excess and obsolete inventory |  |                   | (5,172 | ) |                            |   | (9,199 | )                |  |   | (4,863 | )
|                                                             |  |                   |        |   |                            |   |        |                  |  |   |        |  
|                                                             |  | $                 | 5,457  |   |                            | $ | 3,939  |                  |  | $ | 5,574  |  
|                                                             |  |                   |        |   |                            |   |        |                  |  |   |        |  
|Property and equipment, net:                                 |  |                   |        |   |                            |   |        |                  |  |   |        |  
|Furniture and fixtures                                       |  | $                 | 100    |   |                            | $ | 221    |                  |  | $ | 221    |  
|Software                                                     |  |                   | 4,273  |   |                            |   | 4,265  |                  |  |   | 4,175  |  
|Equipment                                                    |  |                   | 3,908  |   |                            |   | 4,749  |                  |  |   | 4,233  |  
|Leasehold improvements                                       |  |                   | 152    |   |                            |   | 152    |                  |  |   | 152    |  
|                                                             |  |                   |        |   |                            |   |        |                  |  |   |        |  
|                                                             |  |                   | 8,433  |   |                            |   | 9,387  |                  |  |   | 8,781  |  
|Less: accumulated depreciation and amortization              |  |                   | (7,558 | ) |                            |   | (7,713 | )                |  |   | (6,884 | )
|                                                             |  |                   |        |   |                            |   |        |                  |  |   |        |  
|                                                             |  | $                 | 875    |   |                            | $ | 1,674  |                  |  | $ | 1,897  |  
|                                                             |  |                   |        |   |                            |   |        |                  |  |   |        |  



Property and equipment
includes assets under capital leases and accumulated amortization of assets under capital leases of $1,853,000, $1,217,000 and $925,000, at September 30, 2005, September 30, 2004 and at December 31, 2003, respectively.



|                                          |  |                   |       |                            |   |                  |  |   |    
|----------------------------------------- |  | ----------------- | ----- | -------------------------- | - | ---------------- |  | - | ---
|                                          |  | September 30,2005 |       | September 30,2004 Restated |   | December 31,2003
|Accrued expenses:                         |  |                   |       |                            |   |                  |  |   |    
|Accrued compensation and related benefits |  | $                 | 394   |                            | $ | 260              |  | $ | 218
|Accrued audit fees                        |  |                   | 214   |                            |   | 123              |  |   | 95 
|Other accrued expenses                    |  |                   | 2,291 |                            |   | 381              |  |   | 289
|                                          |  |                   |       |                            |   |                  |  |   |    
|                                          |  | $                 | 2,899 |                            | $ | 764              |  | $ | 602
|                                          |  |                   |       |                            |   |                  |  |   |    



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##### Table of Contents

TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 4COMMON STOCK:



The Companys Amended and Restated Articles of Incorporation authorize the Company to issue 100,000,000 shares of
common stock. At September 30, 2005, September 30, 2004 and December 31, 2003, there were 55,410,722, 50,043,158 shares and 45,709,740 shares, respectively, of common stock issued and outstanding.



The Company has reserved the following number of shares of common stock for
future issuance (in thousands):



|                                                        |  |                   |  |                   
|------------------------------------------------------- |  | ----------------- |  | ------------------
|                                                        |  | September 30,2005 |  | September 30, 2004
|Common stock warrants                                   |  | 968               |  | 16                
|Common stock under Employee Stock Purchase Plan         |  | 125               |  | 234               
|Common stock upon exercise of outstanding stock options |  | 10,403            |  | 11,418            
|                                                        |  |                   |  |                   
|                                                        |  | 11,496            |  | 11,668            
|                                                        |  |                   |  |                   



On January 24,
2002, the Company completed a financing in which it raised $21 million in gross proceeds through a private placement of non-voting Series A Preferred Stock and warrants, at $30 per unit to a group of investors, which was convertible into 13,999,000
shares of common stock and warrants to purchase 3,303,760 shares of common stock. Each share of Series A Preferred Stock was convertible into 20 shares of Common Stock (or an effective Common Stock price of $1.50 per share). Investors also received
warrants to purchase up to an additional 20 percent of shares of Series A Preferred Stock. The warrants have a term of three years and an exercise price equal to $39.00 per share (or an effective Common Stock exercise price of $1.95 per share).



At a Special Meeting of Stockholders held on March 7,
2002, the stockholders approved the issuance and sale of 699,950 shares of Series A Preferred Stock and warrants. The Series A Preferred Stock and warrants were not convertible until receipt of such stockholder approval. As a result, the Preferred
Stock and warrants automatically converted into 13,999,000 shares of common stock and warrants to purchase 3,303,760 shares of common stock.



As a result of the favorable conversion price of the preferred shares at the date of issuance, the Company recorded accretion of approximately $15 million
(thus increasing the net loss applicable to common stockholders for the year ended December 31, 2002) relating to the beneficial conversion feature representing the difference between the accounting conversion price and the fair
value of the common stock on the date of the transaction, after valuing the warrants issued in connection with the financing transaction. The Company valued the warrants using the Black-Scholes option pricing model, applying an expected life of
three years, a weighted average risk-free rate of 3.61 percent, an expected dividend yield of zero percent, a volatility of 130 percent and a deemed fair value of common stock of $2.35, which was the value of the Companys common stock on the
date of grant.



In August 2004 the Company completed a
financing through the sale of 2,500,000 shares of common stock at a price of $2.00 per share.



In March 2005 the Company completed a financing through the sale of 4,833,336 shares of common stock at a price of $0.91 per share in a private placement. In connection with this private placement, the Company also
issued warrants to purchase up to 966,667 shares of common stock with an exercise price of $1.25 per share.



20



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##### Table of Contents

TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Stock Repurchase Program



In August 2002, the Companys Board of Directors approved a Stock Repurchase Program and authorized the repurchase of
up to one million shares of the Companys common stock in the open market over the next year. No shares have been repurchased under the Stock Repurchase Program.



Common stock warrants



In connection with the financing that was completed on January 24, 2002, the Company issued warrants to purchase 3,303,760 shares of the
Companys common stock. This included unregistered warrants that were issued to the placement agent for the financing transaction to purchase 503,960 shares of the Companys common stock. The 2,799,800 registered warrants had a term of
three years and an effective Common Stock exercise price of $1.95 per share, whereas 419,968 of the 503,960 warrants issued to the placement agent had an effective Common Stock exercise price of $1.50 per share. The remainder of the warrants issued
to the placement agent had an effective Common Stock exercise price of $1.95 per share. As discussed below, all of these warrants have been exercised.



During the year ended December 31, 2003, warrants were exercised which resulted in the issuance of 1,896,226 shares of the Companys common
stock with proceeds to the Company totaling approximately $3.1 million. These amounts included the exercise of warrants issued to the placement agent on a cashless net issuance basis resulting in 300,438 shares of the Companys common stock
being issued to the placement agent.



The warrant agreement
contained a provision for the mandatory exercise of the warrants if the Companys common stock traded at $5.85 or higher for 20 out of 30 trading days. At the close of business on January 2, 2004 the Companys common stock had traded
at $5.85 or higher for 20 consecutive days and the Company was able to invoke the provision for the mandatory exercise of all outstanding warrants issued in connection with the January 2002 financing. All outstanding warrants were exercised in
January 2004 resulting in the issuance of an additional 1.2 million shares of common stock. The Company received proceeds of approximately $2.3 million from the exercise of these warrants.



During the nine months ended September 30, 2004 all the remaining
warrants issued in connection with the 2002 private placement were exercised which resulted in the issuance of 1,211,000 shares of the Company common stock with proceeds to the Company totaling approximately $2.3 million in January 2004.



On March 3, 2005, the Company completed a private placement which resulted
in gross proceeds of $4.4 million. In connection with this private placement the Company sold 4,833,335 shares of common stock at a price of $0.90 per share and issued warrants to purchase up to 966,667 shares of common stock. The warrants have
a term of 3.5 years and an exercise price equal to $1.25. Since the warrants are subject to certain registration rights, the Company recorded a warrant liability, totaling $967,000, in accordance with EITF 00-19 Accounting for Derivative
Financial Instruments Indexed to, and Potentially Settled in, a Companys Own Stock. The warrant liability has subsequently been recalculated using the closing price of the Companys common stock as of September 30, 2005 of $0.68.
The registration rights provide for the Company to file with the Securities and Exchange Commission a Registration Statement covering the resale of all of the securities issued in connection with the private placement. The registration statement was
filed with the Securities and Exchange Commission on March 24, 2005. We were required to have received an effective registration no later than 30 days after the Closing date. If the registration was not effective by that time we incurred penalties.
The registration became effective on September 12, 2005, and we do not anticipate any future penalties associated with the registration. The Company valued the warrants using the Black-Scholes option pricing model, applying a life of 3.5 years, a
risk free interest rate of 4.02%, an expected dividend yield of 0%, a volatility of 154% and a deemed fair value of



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TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



common stock of $1.17 which was the closing price of the Companys common stock on March 3, 2005. In accordance with SFAS 133 Accounting for
Derivative Instruments and Hedging Activities, the Company revalued the warrants as of September 30, 2005 using the Black-Scholes option pricing model. Assumptions regarding the life, the expected dividend yield and volatility were left
unchanged but the Company did apply a risk free interest rate of 4.13% and a deemed fair value of common stock of $0.68, which was the closing price of the Companys common stock on September 30, 2005. The difference between the fair value of
the warrants as of September 30, 2005 and the previous valuation as of June 30, 2005 has been recorded as a change in fair value on revaluation of warrant liability.



Restricted stock



In April 2003, the Company issued 1.8 million shares of restricted stock, pursuant to the 2000 Stock Plan. The Company determined the value of the
restricted stock grant to be $324,000 by reference to the quoted market price at the time of issuance and is amortizing this amount over two years. Compensation expense related to the issuance of restricted stock was $94,000, $122,000 and $108,000
for the year ended September 30, 2005, the nine months ended September 30, 2004 and year ended December 31, 2003, respectively.



NOTE 5EMPLOYEE BENEFIT PLANS:



Stock Option Plans



In April 2000, the Company adopted the 2000 Stock Option Plan (the 2000 Plan). Upon adoption of the 2000 Plan, shares reserved for issuance
under the 1995 Stock Option Plan relating to un-granted options were cancelled, and outstanding options under the 1995 Plan became subject to the 2000 Plan. The 2000 Plan authorizes the Board of Directors to grant incentive stock options
(ISOs) and non-statutory stock options (NSOs) to employees, directors and consultants for up to 19,300,000 shares of common stock. ISOs may be granted only to employees of the Company (including officers and directors who are
also employees). NSOs may be granted to employees, non-employee directors and consultants of the Company. No person will be eligible to receive more than 500,000 shares in any fiscal year pursuant to awards under the 2000 Plan other than a new
employee of the Company who will be eligible to receive no more than 1,000,000 shares in the fiscal year in which such employee commences employment.



Under the 2000 Plan, ISOs and NSOs are granted at a price that is not to be less than 100 percent of the fair market value of the common stock on the date
of grant, as determined by the Board of Directors. Initial hire-on stock options generally vest at 25 percent on the first anniversary date from the date of grant and then monthly thereafter over the remaining 36 months. Subsequent discretionary
stock options, generally vest equally each month over 48 months. Options granted to shareholders who own more than 10 percent of the outstanding stock of the Company at the time of grant must be issued at prices not less than 110 percent of the
estimated fair value of the stock on the date of grant. Options under the 2000 Plan may be granted for periods up to 10 years.



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TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table summarizes stock option activity under the Companys Stock Option Plans (in
thousands, except per share data):



|                              |  |                           |   |  |                     |   |  |                                          |     
|----------------------------- |  | ------------------------- | - |  | ------------------- | - |  | ---------------------------------------- | ----
|                              |  |                           |   |  | Options Outstanding
|                              |  | OptionsAvailablefor Grant |   |  | Shares              |   |  | Weighted AverageExercise Price Per Share
|Balance at December 31, 2002  |  | 6,219                     |   |  | 7,535               |   |  | $                                        | 2.88
|Granted                       |  | (2,955                    | ) |  | 2,955               |   |  | $                                        | 0.83
|Grant of restricted stock     |  | (1,800                    | ) |  |                    |   |  |                                          |    
|Additional shares reserved    |  | 2,000                     |   |  |                    |   |  |                                          |    
|Canceled                      |  | 1,329                     |   |  | (1,329              | ) |  | $                                        | 2.53
|Exercised                     |  |                          |   |  | (660                | ) |  | $                                        | 0.72
|                              |  |                           |   |  |                     |   |  |                                          |     
|Balance at December 31, 2003  |  | 4,793                     |   |  | 8,501               |   |  | $                                        | 2.40
|Granted                       |  | (3,975                    | ) |  | 3,975               |   |  | $                                        | 1.61
|Additional shares reserved    |  | 2,000                     |   |  |                    |   |  |                                          |    
|Canceled                      |  | 523                       |   |  | (523                | ) |  | $                                        | 1.16
|Exercised                     |  |                          |   |  | (535                | ) |  | $                                        | 0.65
|                              |  |                           |   |  |                     |   |  |                                          |     
|Balance at September 30, 2004 |  | 3,341                     |   |  | 11,418              |   |  | $                                        | 2.25
|Granted                       |  | (1,055                    | ) |  | 1,055               |   |  | $                                        | 1.10
|Additional shares reserved    |  |                          |   |  |                    |   |  |                                          |    
|Canceled                      |  | 1,645                     |   |  | (1,645              | ) |  | $                                        | 1.70
|Exercised                     |  |                          |   |  | (425                | ) |  | $                                        | 0.33
|                              |  |                           |   |  |                     |   |  |                                          |     
|Balance at September 30, 2005 |  | 3,341                     |   |  | 10,403              |   |  | $                                        | 2.20
|                              |  |                           |   |  |                     |   |  |                                          |     



Significant options
groups outstanding at September 30, 2005 and related weighted average exercise prices and contractual life information are as follows:



|                         |  |                     |  |                                        |  |                                       |       |                             |           |                                       |   |      
|------------------------ |  | ------------------- |  | -------------------------------------- |  | ------------------------------------- | ----- | --------------------------- | --------- | ------------------------------------- | - | -----
|                         |  | Options Outstanding |  | Options Vested andExercisable         
|Range of Exercise Prices |  | Number Outstanding  |  | WeightedAverageContractualLife (Years) |  | WeightedAverageExercisePrice PerShare |       | NumberVested andExercisable |           | WeightedAverageExercisePrice PerShare
|$  0.14$  0.21          |  | 1,677,126           |  | 6.4                                    |  | $                                     | 0.15  |                             | 1,339,541 |                                       | $ | 0.15 
|$  0.22$  2.50          |  | 6,808,574           |  | 7.8                                    |  | $                                     | 1.01  |                             | 3,369,020 |                                       | $ | 0.93 
|$  2.51$  4.50          |  | 832,357             |  | 7.2                                    |  | $                                     | 4.30  |                             | 527,557   |                                       | $ | 4.37 
|$  4.51$  8.00          |  | 169,665             |  | 3.3                                    |  | $                                     | 6.05  |                             | 169,665   |                                       | $ | 6.05 
|$  8.01$12.00           |  | 855,000             |  | 4.7                                    |  | $                                     | 11.97 |                             | 855,000   |                                       | $ | 11.97
|$12.01$19.88            |  | 55,000              |  | 5.2                                    |  | $                                     | 14.31 |                             | 55,000    |                                       | $ | 14.31
|$20.89$22.35            |  | 5,000               |  | 5.0                                    |  | $                                     | 21.75 |                             | 5,000     |                                       | $ | 21.75
|                         |  |                     |  |                                        |  |                                       |       |                             |           |                                       |   |      
|                         |  | 10,402,722          |  | 7.2                                    |  | $                                     | 2.20  |                             | 6,320,783 |                                       | $ | 2.82 
|                         |  |                     |  |                                        |  |                                       |       |                             |           |                                       |   |      



The weighted-average
grant date fair value of options granted during the year ended September 30, 2005 was $1.10. The weighted-average grant date fair value of options granted during the nine months ended September 30, 2004 was $1.48. The total number of
options exercisable as of December 31, 2003 was 3,732,080 and the weighted-average grant date fair value of options granted during the year ended December 31, 2003 was $0.71.



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TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



2000 Employee Stock Purchase Plan



In April 2000 the Company adopted the 2000 Employee Stock Purchase Plan (the Purchase Plan) under which 500,000
shares of common stock have been reserved for issuance. Eligible employees may elect to withhold up to 15 percent of their salary to purchase shares of the Companys common stock at a price equal to 85 percent of the market value of the stock
at the beginning or ending of a six month offering period, whichever is lower. No more than 5,000 shares may be purchased by an eligible employee during any calendar year. The Purchase Plan will terminate in 2010. Under the Purchase Plan, 109,705,
87,263, and 27,184 shares were issued during the year ended September 30, 2005, the nine months ended September 30, 2004, and year ended December 31, 2003, respectively.



The Company did not recognize compensation expense related to employee purchase rights in 2003.



401(k) Plan



The Company sponsors a 401(k) Plan (the 401(k) Plan) which provides tax-deferred salary deductions for eligible
employees. Employees may contribute up to 15 percent of their annual compensation to the 401(k) Plan, limited to a maximum annual amount as set periodically by the Internal Revenue Service. The 401(k) Plan permits, but does not require, the Company
to make matching contributions. To date, no such matching contributions have been made.



NOTE 6INCOME TAXES:



At
September 30, 2005, the Company had net operating loss carry-forwards for federal and state income tax purposes of approximately $126,800,000 and $46,200,000 respectively, which expire in varying amounts beginning in 2008 through 2026. In
addition, the Company has credit carry-forwards of approximately $4,800,000 for federal and state purposes. The federal and state carry-forwards expire in varying amounts through 2026. Under the Tax Reform Act of 1986, the amounts of and benefits
from net operating loss and tax credit carry-forwards may be impaired or limited in certain circumstances. Events which could cause limitations in the use of net operating loss and tax credit carry-forwards that the Company may utilize in any one
year include, but are not limited to, a cumulative ownership change of more than 50 percent, as defined, over a three-year period.



|                                                      |  |                   |         |   |                   |   |         |  
|----------------------------------------------------- |  | ----------------- | ------- | - | ----------------- | - | ------- | -
|                                                      |  | September 30,2005 |         |   | September 30,2004 |  
|Deferred taxes comprise the following (in thousands): |  |                   |         |   |                   |   |         |  
|Net operating loss carry-forwards                     |  | $                 | 45,807  |   |                   | $ | 41,086  |  
|Non-deductible reserves and accruals                  |  |                   | 3,235   |   |                   |   | 5,113   |  
|Credit carry-forwards                                 |  |                   | 4,294   |   |                   |   | 4,321   |  
|Capitalized research and development                  |  |                   | 2,497   |   |                   |   | 2,934   |  
|Depreciation                                          |  |                   | 182     |   |                   |   | 427     |  
|                                                      |  |                   |         |   |                   |   |         |  
|Net deferred tax assets                               |  |                   | 56,015  |   |                   |   | 53,881  |  
|Less: Valuation allowance                             |  |                   | (56,015 | ) |                   |   | (53,881 | )
|                                                      |  |                   |         |   |                   |   |         |  
|Net deferred tax assets                               |  | $                 |        |   |                   | $ |        |  
|                                                      |  |                   |         |   |                   |   |         |  



The Company believes
that, based on number of factors, the available objective evidence creates sufficient uncertainty regarding the realizability of the deferred tax assets such that a full valuation allowance has been recorded. These factors include the Companys
history of losses, and relatively high expense levels, the fact that the market in which the Company competes is intensely competitive and characterized by rapidly changing



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TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



technology, the lack of carry-back capacity to realize deferred tax assets and the uncertainty regarding market acceptance of the Companys products.
The Company will continue to assess the realizability of the deferred tax assets based on actual and forecasted operating results. Deferred tax assets related to items effecting equity will be charged to equity when realized.



Income tax expense differed from the amounts computed by applying the
statutory federal income tax rate of 34 percent to pretax income as a result of the following (in thousands):



|                                 |  |                   |        |   |                   |   |        |  
|-------------------------------- |  | ----------------- | ------ | - | ----------------- | - | ------ | -
|                                 |  | September 30,2005 |        |   | September 30,2004 |  
|Federal tax at statutory rate    |  | $                 | (3,690 | ) |                   | $ | (4,282 | )
|Amortization of intangibles      |  |                   | 73     |   |                   |   | 83     |  
|Net operating loss not benefited |  |                   | 3,572  |   |                   |   | 4,147  |  
|Nondeductible expenses           |  |                   | 11     |   |                   |   | 8      |  
|Nondeductible stock compensation |  |                   | 34     |   |                   |   | 44     |  
|                                 |  |                   |        |   |                   |   |        |  
|Total income tax expense         |  | $                 |       |   |                   | $ |       |  
|                                 |  |                   |        |   |                   |   |        |  



NOTE 7COMMITMENTS AND
CONTINGENCIES:



Lease commitments



The Company leases office space and equipment under non-cancelable operating
leases with various expiration dates through 2007. Rent expense for operating leases was as follows (in thousands):



|             |  |                             |     |                                   |   |                            |  |   |    
|------------ |  | --------------------------- | --- | --------------------------------- | - | -------------------------- |  | - | ---
|             |  | Year EndedSeptember 30,2005 |     | Nine MonthsEndedSeptember 30,2004 |   | Year EndedDecember 31,2003
|Rent expense |  | $                           | 829 |                                   | $ | 619                        |  | $ | 837



On July 18, 2002,
the Company entered into a sublease agreement for the lease of new office space. Under the terms of the sublease agreement, commencing September 1, 2002 the Company became entitled to free rent until June 30, 2003. Subsequently, the
Company will make monthly payments ranging from $0.65 per square foot to $1.35 per square foot until the sublease expires on March 31, 2007. As a result, the Company recorded its rent expense on a straight line basis and had $737,000 and
$697,000 of deferred rent at September 30, 2004 and December 31, 2003, respectively.



On November 30, 2003, the Company entered into a capital lease for test equipment. The lease has a term of 38 months and at the end of the lease the Company may purchase the test equipment for $1.00. The Company
may also purchase the test equipment after 14 months for $166,000 or after 20 months for $133,000.



Future minimum lease payments under non-cancelable operating leases and capital leases are as follows (in thousands):



|                                                   |  |                  |       |                |   |      |  
|-------------------------------------------------- |  | ---------------- | ----- | -------------- | - | ---- | -
|Year Ending September 30,                          |  | Operating Leases |       | Capital Leases |  
|2006                                               |  | $                | 1,189 |                | $ | 222  |  
|2007                                               |  |                  | 568   |                |   | 21   |  
|2008                                               |  |                  | 5     |                |   |     |  
|2009                                               |  |                  |      |                |   |     |  
|2010 and beyond                                    |  |                  |      |                |   |     |  
|                                                   |  |                  |       |                |   |      |  
|Total minimum lease payments                       |  | $                | 1,762 |                |   | 243  |  
|                                                   |  |                  |       |                |   |      |  
|Less: amount representing interest                 |  |                  |       |                |   | (8   | )
|                                                   |  |                  |       |                |   |      |  
|Present value of minimum lease payments            |  |                  |       |                |   | 235  |  
|Less: current portion of capital lease obligations |  |                  |       |                |   | (490 | )
|                                                   |  |                  |       |                |   |      |  
|Long-term capital lease obligations                |  |                  |       |                | $ | (255 | )
|                                                   |  |                  |       |                |   |      |  



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TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Inventory purchase commitments



At September 30, 2005 the Company had open purchase orders for the purchase of inventory totaling approximately $3.3
million. These purchase orders may only be cancelled if the foundry has not yet started production of the wafers to which the open purchase orders relate.



Contingencies



From time to time, in the normal course of business, various claims are made against the Company, its directors or officers. The Company has agreed to
indemnify its officers and directors with respect to such claims, except in limited circumstances. For more information regarding the Companys indemnification obligations and pending litigation please see Guarantees below in this
Note 7 and see Note 8 below.



Guarantees



In November 2002, the FASB issued FIN No. 45 Guarantors
Accounting and Disclosure Requirements for Guarantees, including Indirect Guarantees of Indebtedness of Othersan interpretation of FASB Statements No. 5, 57 and 107 and rescission of FIN 34. The following is a summary of the
Companys agreements that the Company has determined are within the scope of FIN 45.



The Company provides a limited warranty for up to one year for any defective products. During the year ended September 30, 2005, the nine months ended September 30, 2004 and year ended December 31,
2003, warranty expense was insignificant. The Company has a reserve for warranty costs of $20,000, which has not changed in the past year.



In March 2004, the Company entered into a Security Agreement to provide collateral for outstanding standby letters of credit which totaled $0.7 million at
September 30, 2004. During 2005 one of these letters of credit expired and was not renewed. The second letter of credit for $0.2 million remains in place at September 30, 2005.



Pursuant to its bylaws, the Company has agreed to indemnify its officers and directors for certain events or occurrences
arising as a result of the officer or director serving in such capacity. The term of the indemnification period is for the officers or directors lifetime. To date, the Company has not incurred any costs in connection with these
indemnification agreements. Accordingly, the Company has no liabilities recorded for these agreements as of September 30, 2005. The Company is self-insured for these and similar claims. The lawsuits described below in Note 8 involve claims that
may be covered by these indemnification agreements.



The
Company enters into indemnification provisions under (i) its agreements with other companies in its ordinary course of business, typically with business partners, contractors and customers, its sub-landlord and (ii) its agreements with
investors. Under these provisions the Company has agreed to generally indemnify and hold harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Companys activities or, in some cases, as a
result of the indemnified partys activities under the agreement. These indemnification provisions often include indemnifications relating to representations made by the Company with regard to intellectual property rights. These indemnification
provisions generally survive termination of the underlying agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited. To date, the Company has not incurred
any costs in connection with these indemnification agreements. Accordingly, the Company has no liabilities recorded for these agreements as of September 30, 2005.



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TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 8LITIGATION:



We are a party to lawsuits in the normal course of our business. Litigation in general, and securities litigation in
particular, can be expensive and disruptive to normal business operations. Moreover, the results of legal proceedings are difficult to predict. An unfavorable resolution of one or more of these lawsuits would materially adversely affect our
business, results of operations, or financial condition. In addition, given our financial condition and that we do not have insurance to offset the cost of litigation, the costs of defending one or more of these lawsuits will likely adversely affect
our financial condition. We cannot estimate the loss or range of loss that may be reasonably possible for any of the contingencies described and accordingly have not recorded any associated liabilities in our consolidated balance sheets. We accrue
legal costs when incurred.



Federal Securities Class Actions



Beginning on November 4, 2004, plaintiffs filed four separate
complaints purporting to be class actions in the United States District Court for the Northern District of California alleging that we and certain of our present or former officers and/or directors, Dr. Adya S. Tripathi, David Eichler and
Graham Wright, violated Sections 10(b) and 20(a) of the Exchange Act. Plaintiffs purported to represent a putative class of shareholders who purchased or otherwise acquired Tripath securities between January 29, 2004 and October 22,
2004. The complaints contain varying allegations, including that we and the individual defendants made materially false and misleading statements with respect to our financial results and with respect to our business, prospects and operations in the
our filings with the SEC, press releases and other disclosures. The complaints seek unspecified compensatory damages, attorneys fees, expert witness fees, costs and such other relief as may be awarded by the Court.



On December 22, 2004, the Court entered a stipulation and order
consolidating all of these complaints and ordering that the defendants need not respond to any of these complaints until after plaintiffs file a consolidated complaint. On January 4, 2005, plaintiffs filed motions for the appointment of lead
plaintiff. The Court, by Order dated January 28, 2005, appointed Robert Poteet as the sole lead plaintiff and approved Milberg Weiss Bershad & Schulman LLP as lead counsel.



On July 11, 2005, the Company entered into a Stipulation and Settlement Agreement (the Stipulation) which
was filed with the Court on July 12, 2005. The settlement class consists of all persons who purchased the securities of Tripath between January 29, 2004 and June 13, 2005, inclusive. Under the terms of the Stipulation, the parties
agreed that the class action will be dismissed in exchange for a payment of $200,000 in cash by Tripath and the issuance of 2.45 million shares of Tripath common stock which shall be exempt from registration pursuant to Section 3(a)(10) of
the Securities Act. The Stipulation remains subject to the satisfaction of various conditions, including without limitation final approval of the Stipulation by the Court, including a finding that the 2.45 million shares of Tripath common stock
to be issued are exempt from registration pursuant to Section 3(a)(1) of the Securities Act. On October 20, 2005, the Court entered a Preliminary Order for Notice and Hearing in Connection with Settlement Proceedings. The hearing for final
approval of the settlement currently is scheduled for January 24, 2006. However, on December 14, 2005, the parties submitted a stipulation and proposed order revising dates for class notice and final approval of settlement to the Court which
contemplates that the hearing for final approval of the settlement would be held on April 11, 2006. The stipulation and proposed order is pending before the Court. Approximately $1.8 million has been accrued for this matter.



Derivative Shareholder Litigation



On December 7, 2004, plaintiff Mildred Lyon filed a purported
derivative action in Santa Clara Superior Court against us and the following present or former officers and/or directors of the Company, Dr. Adya S. Tripathi, David P. Eichler, Graham K. Wright, A.K. Acharya, Andy Jasuja and Y.S. Fu. This
complaint appears to be based upon the same facts and circumstances as the federal class actions and makes the following



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TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



claims: violation of Section 25402 of the California Corporations Code, breach of fiduciary duty and misappropriation of information, abuse of control,
gross mismanagement, waste of corporate assets and unjust enrichment. On this basis, the complaint seeks unspecified compensatory damages, treble damages under Section 25502.5(a) of the California Corporations Code, extraordinary equitable
and/or injunctive relief, restitution and disgorgement, attorneys fees, expert witness fees, costs, and such other relief as may be ordered by the Court.



On December 27, 2004, the Court entered a stipulation and order extending the time for us to respond to the complaint to February 23, 2005.
On February 16, 2005, the Court entered an order further extending the time for us to respond to the complaint to March 25, 2005. On March 10, 2005, the court ordered that the individual defendants shall have through and including
April 25, 2005 to file any motions to quash and/or dismiss for lack of personal jurisdiction, and that all defendants shall have thirty (30) days from the date the court issues a ruling on any motions to quash and/or dismiss for lack of
personal jurisdiction to respond to the complaint, or in the event that no such motions are brought, extended the time for all defendants to respond to the complaint to April 25, 2005.



On April 4, 2005, the Court ordered that all deadlines shall be stayed
for Defendants filing any motions to quash and/or dismiss for lack of personal jurisdictions, or otherwise respond to the Complaint, until such date as the parties mutually designate to the Court for the Courts approval. A Case Management
Conference is scheduled for February 7, 2006 before the Court. The parties currently are engaged in settlement discussions.



Langley Securities Fraud Litigation



On or about June 2, 2005, plaintiff Langley Partners, L.P. (Langley) filed a complaint in the United States District Court for the
Southern District of New York alleging claims against the Company, Dr. Adya Tripathi, the Companys President and Chief Executive Officer, and David Eichler, the Companys former Chief Financial Officer. Langley alleges that it
entered into a stock purchase agreement with Tripath on or about August 2, 2004 in which Langley purchased 1 million shares of Tripath common stock at a purchase price of $2.00 per share. Langley also alleges that it consented to the
receipt of the Companys Prospectus dated August 2, 2004 and the accompanying Prospectus dated June 1, 2004 which specifically incorporated certain of the Companys filings with the SEC from March through July 2004. The
complaint generally alleges that the Company and the individual defendants made materially false and misleading statements with respect to the Companys financial results and with respect to its business, prospects, internal accounting controls
and design wins on Godzilla products in the Companys filings with the SEC, press releases and other documents. The complaint alleges claims against the Company and the individual defendants for violations of Sections 10(b) and 20(a) of
the Exchange Act, fraud, breach of contract, unjust enrichment and money had and received, rescission and violations of Sections 11 and 15 of the Securities Act. On this basis, the complaint seeks unspecified compensatory damages and
restitution in an amount in excess of $2 million, rescission of the purchase agreement and a return of $2 million, unspecified punitive damages, costs and such other relief as may be awarded by the Court.



On October 6, 2005, the Court entered an Order granting the Companys
motion to transfer this action from the Southern District of New York to the United States District Court for the Northern District of California. On October 18, 2005, the action was transferred to the Northern District of California. On December 9,
2005, the Company and the individual defendants filed a motion to dismiss the complaint in its entirety which has been scheduled for hearing before the Court on February 10, 2006.



Changes in and Disagreements with Accountants



As previously disclosed in our current report on Form 8-K dated October 18, 2004 and filed on October 22,
2004, in October 2004, our former independent registered public accountants, BDO Seidman LLP, or BDO,



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TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



provided our Audit Committee with a letter citing what BDO asserted are two material weaknesses over our internal financial controls: one
regarding the lack of effectiveness of our Audit Committee and the other regarding the lack of controls in place to estimate distributor returns in accordance with SFAS No. 48. Following discussions with our employees, representatives of BDO
further orally advised us that BDO had concerns regarding the appropriate accounting for approximately $1.3 million of product that, upon our inquiries, one of our distributors, Macnica, or the Distributor, reported had been returned to the
Distributor by the Distributors customers, or the Product Return. In response to both the letter and the verbal comments, the Audit Committee instructed our then-Chief Financial Officer to investigate this matter and report the findings to the
Audit Committee. As a result of the litigation matters referenced above, we retained outside litigation counsel to represent us in responding to the aforementioned complaints. In addition, the Audit Committee and the then-Chief Financial Officer
directed litigation counsel to further conduct an internal investigation into the verbal concerns raised by BDO regarding the Product Return. Separately, the Audit Committee, with the assistance of our then-Chief Financial Officer investigated
BDOs assertion regarding the lack of controls in place to estimate distributor returns.



The Audit Committee received an initial report from our litigation counsel on findings of the internal investigation on January 21, 2005 and requested additional investigation by litigation counsel. On
January 25, 2005, litigation counsel made a supplemental report on the findings of the internal investigation to date. Following the presentation of such report, including discussion of the findings of the forensic accountant hired by the
litigation counsel with the approval of the Audit Committee, the Audit Committee concluded that our Country Manager for the Japan Sales Office (who is no longer employed with us) agreed in an arrangement outside the formal paperwork of the
transactions underlying the Product Return that the Distributor could return the products back to us at the Distributors discretion.



The Audit Committee investigation and discussion included a review of our compliance with Securities and Exchange Commission Staff Accounting Bulletin
No. 104 Revenue Recognition in Financial Statements, or SAB 104, as applied to the circumstances surrounding the Product Return. Under SAB 104, a requirement for revenue recognition is that all of the following criteria must be
met: (1) there is persuasive evidence that an arrangement exists, (2) delivery of goods has occurred, (3) the sales price is fixed or determinable, and (4) collectibility is reasonably assured. In addition, pursuant to our
revenue recognition policy, for sales to distributors, we defer recognition of revenue until such time that the distributor sells products to its customers based upon receipt of point-of-sales reports from the distributor. The internal investigation
revealed that approximately $1.4 million of a sale of our product to the Distributor did not meet the foregoing criteria because our former employee had agreed that the Distributor could return the product at the Distributors discretion,
which forms the basis of the Restatement. This former employee had on this occasion agreed to a term of sale that was outside of our standard practices and was not referenced in the documentation related to the sale submitted to our finance
department. Given the discovery of this arrangement for the Distributor to return the product, the Audit Committee concluded on January 25, 2005 that we should restate certain financial information that was previously reported in our
Form 10-Q for the quarter ended June 30, 2004 filed with the Securities and Exchange Commission on August 6, 2004. For more information regarding the Restatement, please see Note 9 of Notes to Consolidated Financial Statements
included elsewhere in this Annual Report on Form 10-K. In addition, the Audit Committee approved certain changes to our internal controls over financial reporting as an additional remedial action in response to the report of our litigation counsel
and our forensic accountant and to the report by our Chief Financial Officer.



As a result, the Audit Committee concluded on May 5, 2005 that we should restate certain financial information (the Additional Restatement) that was previously reported in our Quarterly Reports on
Form 10-Q for the fiscal quarters ended March 31, 2004, June 30, 2004 and December 31, 2004 as well as certain financial information for the quarter and transition period ended September 30, 2004 and that was previously
reported in



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TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



our Transition Report. The Additional Restatement was based on the Audit Committees conclusion on such date that the Consolidated Balance Sheets as of
March 31, 2004, June 30, 2004, September 30, 2004 and December 31, 2004 and the related Consolidated Statements of Operations for the three months ended March 31, 2004, the three and six months ended June 30, 2004, the
nine month transition period ended September 30, 2004 and the three months ended December 31, 2004 should no longer be relied upon because of errors in such financial statements.



Following receipt of a final report on the internal investigation, the Audit
Committee determined that the internal investigation had been completed on June 15, 2005. The internal investigation revealed errors in the Companys financial statements for 2002 and 2003. Such errors included certain shipments between
distributors rather than to end-customers which were not noted on applicable point-of-sales reports, inaccurate shipment dates on certain point-of-sales reports, and inaccurate quantities noted on certain point-of-sales reports. The Company reviewed
these errors with reference to the guidelines set forth in SAB99. Based upon such review, the Company concluded that such errors were immaterial and thus would not result in a restatement of the 2002 or 2003 financial statements.



SEC Investigation



On or about November 9, 2004, the SEC requested that we voluntarily produce documents responsive to certain document
requests in the investigation entitled In the Matter of Tripath Technology, Inc. On or about January 25, 2004, February 14, 2005, and February 16, 2005, the SEC made additional documents requests. On or about March 30,
2005, the SEC issued a subpoena to the Company seeking additional documents. We have produced documents in response to the SECs voluntary requests for documents as well as the subpoena. We have cooperated with the SEC in its review of these
matters.



On February 24, 2005, the SEC, pursuant to
Section 20(a) of the Securities Act and Section 21(a) of the Exchange Act, issued a formal order of private investigation to determine whether there have been any violations of Section 17(a) of the Securities Act and
Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B) and 13(b)(5) of the Exchange Act and Rules 10b-5, 12b-20, 13a-13, 13a-14, 13b2-1 and 13b2-2 thereunder.



NOTE 9RESTATEMENT OF PREVIOUSLY REPORTED TRANSITION PERIOD FINANCIAL INFORMATION:



As originally described in the Companys Current Report on Form 8-K dated October 18, 2004 and filed with the
Securities and Exchange Commission on October 22, 2004 (the Prior 8-K), the Companys Audit Committee initiated an internal investigation regarding certain purported product returns (the Product Returns) to one of
the Companys distributors, Macnica Japan (Macnica), by its customers. The Audit Committee investigation and discussion included a review of the Companys compliance with Securities and Exchange Commission Staff Accounting
Bulletin No. 104 Revenue Recognition in Financial Statements (SAB 104) as applied to the circumstances surrounding the Product Returns. Under SAB 104, a requirement for revenue recognition is that all of the
following criteria must be met: (1) there is persuasive evidence that an arrangement exists, (2) delivery of goods has occurred, (3) the sales price is fixed or determinable, and (4) collectibility is reasonably assured. In
accordance with SAB 104, the Companys revenue recognition policy, for sales to distributors, requires that the Company defer recognition of revenue until such time that the distributor sells products to its customers based upon receipt of
point-of-sales reports from the distributor. As of the Audit Committees determination on January 25, 2005, the internal investigation revealed that approximately $1.4 million of a sale of the Companys product to Macnica did not
meet the foregoing criteria because the Companys Country Manager for the Japan Sales Office (who is no longer employed by the Company) had agreed that Macnica could return the product to the Company at Macnicas



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TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



discretion. The Audit Committee determined that this former employee had agreed to a term of sale that was outside of the Companys standard practices
and was not referenced in the documentation related to the sale submitted to the Companys finance department. Given the discovery of this arrangement for Macnica to return the product, the Companys Audit Committee concluded that the
Company should restate certain financial information that was previously reported in the Companys Form 10-Q for the quarter ended June 30, 2004, filed with the Securities and Exchange Commission on August 6, 2004 (the June
2004 Form 10-Q) to properly reflect its revenue and related financial information for the referenced periods (the Initial Restatement). Accordingly, the Company advised in the Prior 8-K that the Consolidated Statement of
Operations for the three months and six months ended June 30, 2004 and the Consolidated Balance Sheet as of June 30, 2004 included in the June 2004 Form 10-Q should no longer be relied upon. The financial impact of the Initial
Restatement was reflected in the Companys Transition Report on Form 10-K/T for the transition period ended September 30, 2004 filed with the Securities and Exchange Commission on February 3, 2005 (the Transition
Report).



The Audit Committee directed that the internal
investigation continue following reporting of the Initial Restatement. As a result of this further investigation, on May 5, 2005 the Audit Committee determined that additional sale transactions with Macnica, as well as with an additional
distributor of the Company, Uniquest, did not meet the Companys revenue recognition criteria and the requirements of SAB 104. In certain circumstances, the same former employee of the Company had agreed that Macnica could return the
referenced product at Macnicas discretion. This former employee had on these occasions agreed to a term of sale that was outside of the Companys standard practices and was not referenced in the documentation related to the sale submitted
to the Companys finance department. In addition, the Audit Committee determined that, in certain other circumstances, Macnica had shipped product not to end customers but to other distributors and the Company had relied on point-of-sales
reports submitted to the Company by Macnica that indicated the referenced product had been shipped to an end customer of Macnica when such product had only been shipped to other distributors. Recognition of revenue on sales between distributors
instead of to the end customers is not permitted under the Companys revenue recognition policies. Further, the Audit Committee determined that certain sales transactions with Uniquest did not meet the Companys revenue recognition
criteria and the requirements of SAB 104 because in certain circumstances, employees of Uniquest had incorrectly reported to the Company the date of shipments to end customers.



As a result, the Audit Committee concluded on May 5, 2005 that the Company should restate certain financial information
(the Additional Restatement) that was previously reported in the Companys Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2004, June 30, 2004 and December 31, 2004 as well as certain
financial information for the quarter and transition period ended September 30, 2004 that was previously reported in the Companys Transition Report. The Additional Restatement was based on the Audit Committees conclusion on such
date that the Consolidated Balance Sheets as of March 31, 2004, June 30, 2004, September 30, 2004 and December 31, 2004 and the related Consolidated Statements of Operations for the three months ended March 31, 2004, the
three and six months ended June 30, 2004, the nine month transition period ended September 30, 2004 and the three months ended December 31, 2004 should no longer be relied upon because of errors in such financial statements. The
Additional Restatement was originally described in our Current Report on Form 8-K dated May 5, 2005 and filed with the Securities and Exchange Commission on May 11, 2005 and is reflected in the financial statements in this report.



Following receipt of a final report on the internal
investigation, the Audit Committee determined that the internal investigation had been completed on June 15, 2005. The internal investigation revealed errors in the Companys financial statements for 2002 and 2003. Such errors included
certain shipments between distributors rather than to end-customers which were not noted on applicable point-of-sales reports, inaccurate shipment dates on certain point-of-sales reports, and inaccurate quantities noted on certain point-of-sales
reports. The Company reviewed these errors with reference to the guidelines set forth in SAB99. Based upon such review, the



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TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Company concluded that such errors were immaterial and thus would not result in a restatement of the 2002 or 2003 financial statements.



The following table provides a reconciliation of amounts previously reported
in the Companys Transition Report on Form 10-K/T for the three and nine months ended September 30, 2004 with amounts adjusted for the Initial Restatement and the Additional Restatement.



Consolidated Statement of Operations



|                                                         |  |                                       |         |   |                       |   |       |               |  |   |         |  
|-------------------------------------------------------- |  | ------------------------------------- | ------- | - | --------------------- | - | ----- | ------------- |  | - | ------- | -
|                                                         |  | Three Months Ended September 30, 2004 |        
|                                                         |  | PreviouslyReported (1)                |         |   | RestatementAdjustment |   |       | RestatedTotal | 
|Net revenues                                             |  | $                                     | 2,218   |   |                       | $ | 1,077 |               |  | $ | 3,295   |  
|Gross profit                                             |  |                                       | (4,085  | ) |                       |   | 356   |               |  |   | (3,729  | )
|Operating loss                                           |  |                                       | (7,145  | ) |                       |   | 356   |               |  |   | (6,789  | )
|Net loss                                                 |  |                                       | (7,139  | ) |                       |   | 356   |               |  |   | (6,783  | )
|Basic and diluted net loss per share                     |  | $                                     | (0.15   | ) |                       |   |       |               |  | $ | (0.14   | )
|                                                         | 
|                                                         |  | Nine Months Ended September 30, 2004  |        
|                                                         |  | PreviouslyReported (1)                |         |   | RestatementAdjustment |   |       | RestatedTotal | 
|Revenue                                                  |  | $                                     | 9,421   |   |                       | $ | (252  | )(2)          |  | $ | 9,169   |  
|Cost of revenue                                          |  |                                       | 7,574   |   |                       |   | (159  | )(3)          |  |   | 7,415   |  
|Provision for slow-moving, excess and obsolete inventory |  |                                       | 4,316   |   |                       |   |      |               |  |   | 4,316   |  
|                                                         |  |                                       |         |   |                       |   |       |               |  |   |         |  
|Gross loss                                               |  |                                       | (2,469  | ) |                       |   | (93   | )             |  |   | (2,562  | )
|                                                         |  |                                       |         |   |                       |   |       |               |  |   |         |  
|Operating expenses:                                      |  |                                       |         |   |                       |   |       |               |  |   |         |  
|Research and development                                 |  |                                       | 5,521   |   |                       |   |      |               |  |   | 5,521   |  
|Selling, general and administrative                      |  |                                       | 3,556   |   |                       |   |      |               |  |   | 3,556   |  
|                                                         |  |                                       |         |   |                       |   |       |               |  |   |         |  
|Total operating expenses                                 |  |                                       | 9,077   |   |                       |   |      |               |  |   | 9,077   |  
|Loss from operations                                     |  |                                       | (11,546 | ) |                       |   | (93   | )             |  |   | (11,639 | )
|Interest and other income (expense) net                  |  |                                       | (26     | ) |                       |   |      |               |  |   | 26      |  
|                                                         |  |                                       |         |   |                       |   |       |               |  |   |         |  
|Net loss                                                 |  | $                                     | (11,572 | ) |                       | $ | (93   | )             |  | $ | (11,665 | )
|                                                         |  |                                       |         |   |                       |   |       |               |  |   |         |  



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TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|                                             |  |                        |          |   |                       |   |     |               |  |   |          |  
|-------------------------------------------- |  | ---------------------- | -------- | - | --------------------- | - | --- | ------------- |  | - | -------- | -
|                                             |  | September 30, 2004     |         
|                                             |  | PreviouslyReported (1) |          |   | RestatementAdjustment |   |     | RestatedTotal | 
|ASSETS                                       |  |                        |          |   |                       |   |     |               |  |   |          |  
|Current assets:                              |  |                        |          |   |                       |   |     |               |  |   |          |  
|Cash, cash equivalents and restricted cash   |  | $                      | 7,339    |   |                       | $ |    |               |  | $ | 7,339    |  
|Accounts receivable, net                     |  |                        | 1,019    |   |                       |   |    |               |  |   | 1,019    |  
|Inventories, net                             |  |                        | 3,780    |   |                       |   | 159 | (3)           |  |   | 3,939    |  
|Prepaid expenses and other current assets    |  |                        | 212      |   |                       |   |    |               |  |   | 212      |  
|                                             |  |                        |          |   |                       |   |     |               |  |   |          |  
|Total current assets                         |  |                        | 12,350   |   |                       |   | 159 |               |  |   | 12,509   |  
|Property and equipment, net                  |  |                        | 1,674    |   |                       |   |    |               |  |   | 1,674    |  
|Other assets                                 |  |                        | 123      |   |                       |   |    |               |  |   | 123      |  
|                                             |  |                        |          |   |                       |   |     |               |  |   |          |  
|Total assets                                 |  | $                      | 14,147   |   |                       | $ | 159 |               |  | $ | 14,306   |  
|                                             |  |                        |          |   |                       |   |     |               |  |   |          |  
|LIABILITIES AND STOCKHOLDERS EQUITY         |  |                        |          |   |                       |   |     |               |  |   |          |  
|Current liabilities:                         |  |                        |          |   |                       |   |     |               |  |   |          |  
|Accounts payable                             |  | $                      | 2,908    |   |                       | $ |    |               |  | $ | 2,908    |  
|Current portion of capital lease obligations |  |                        | 664      |   |                       |   |    |               |  |   | 664      |  
|Current portion of deferred rent             |  |                        | 266      |   |                       |   |    |               |  |   | 266      |  
|Accrued expenses                             |  |                        | 764      |   |                       |   |    |               |  |   | 764      |  
|Deferred distributor revenue                 |  |                        | 823      |   |                       |   | 252 | (2)           |  |   | 1,075    |  
|                                             |  |                        |          |   |                       |   |     |               |  |   |          |  
|Total current liabilities                    |  |                        | 5,425    |   |                       |   | 252 |               |  |   | 5,677    |  
|                                             |  |                        |          |   |                       |   |     |               |  |   |          |  
|Long term liabilities:                       |  |                        | 471      |   |                       |   |    |               |  |   | 571      |  
|                                             |  |                        |          |   |                       |   |     |               |  |   |          |  
|Stockholders equity:                        |  |                        |          |   |                       |   |     |               |  |   |          |  
|Common stock                                 |  |                        | 49       |   |                       |   |    |               |  |   | 49       |  
|Additional paid-in capital                   |  |                        | 199,333  |   |                       |   |    |               |  |   | 199,333  |  
|Deferred stock-based compensation            |  |                        | (95      | ) |                       |   |    |               |  |   | (95      | )
|Accumulated deficit                          |  |                        | (191,136 | ) |                       |   | (93 | )             |  |   | (191,229 | )
|                                             |  |                        |          |   |                       |   |     |               |  |   |          |  
|Total stockholders equity                   |  |                        | 8,151    |   |                       |   | (93 | )             |  |   | 8,058    |  
|                                             |  |                        |          |   |                       |   |     |               |  |   |          |  
|Total liabilities and stockholders equity   |  | $                      | 14,147   |   |                       | $ | 159 |               |  | $ | 14,306   |  
|                                             |  |                        |          |   |                       |   |     |               |  |   |          |  

---

|(1) | As previously reported in the Companys Transition Report on Form 10-K/T for the nine months ended September 30, 2004.
|--- | ----------------------------------------------------------------------------------------------------------------------

|(2) | Reflects the net cumulative deferral of revenue of approximately $252,000 relating to products subject to a right of return and product shipped not to end customers but to other
distributors.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Reflects a net cumulative increase in inventory of approximately $159,000 relating to the deferred cost associated with the deferred revenue.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------



Summarized quarterly financial information for the nine months ended
September 30, 2004 and years ended December 31, 2003 and 2002 is as follows (in thousands, except per share data):



|                                                                  |  |                      |        |   |                       |   |        |                      |  |   |        |  
|----------------------------------------------------------------- |  | -------------------- | ------ | - | --------------------- | - | ------ | -------------------- |  | - | ------ | -
|2004                                                              |  | FirstQuarterRestated |        |   | SecondQuarterRestated |   |        | ThirdQuarterRestated | 
|Net revenues                                                      |  | $                    | 3,273  |   |                       | $ | 2,601  |                      |  | $ | 3,295  |  
|Provision for slow-moving, excess and obsolete inventory (Note 1) |  | $                    |       |   |                       | $ | 254    |                      |  | $ | 4,082  |  
|Gross profit                                                      |  | $                    | 900    |   |                       | $ | 267    |                      |  | $ | (3,729 | )
|Operating loss                                                    |  | $                    | (2,087 | ) |                       | $ | (2,763 | )                    |  | $ | (6,789 | )
|Net loss                                                          |  | $                    | (2,079 | ) |                       | $ | (2,803 | )                    |  | $ | (6,783 | )
|Basic and diluted net loss per share                              |  | $                    | (0.05  | ) |                       | $ | (0.06  | )                    |  | $ | (0.14  | )



Note
1. Provision for slow-moving, excess and obsolete inventory



During the quarter ended September 30, 2004 the Company recorded a provision for slow-moving, excess and obsolete inventory of approximately $4.3 million. The inventory charge related to slow-moving and excess inventory for the
Companys TA1101B, TA3020, TA2041, TA2022 and leaded TA2024 products, the TK2350, TK2051, TK2150, TK2050 and TK2052 chipsets, and Kauai 2BB and U461 die based on a decline in forecasted sales for these parts.



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TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 2. Accretion on preferred stock



On January 24, 2002, the Company completed a financing in which it
raised $21 million in gross proceeds through a private placement of non-voting Series A Preferred Stock and warrants, at $30 per unit to a group of investors, which was convertible into 13,999,000 shares of common stock and warrants to purchase
3,303,760 shares of common stock. Each share of Series A Preferred Stock was convertible into 20 shares of Common Stock (or an effective Common Stock price of $1.50 per share). As a result of the favorable conversion price of the shares and related
warrants at the date of issuance, the Company recorded accretion of approximately $15 million relating to the beneficial conversion feature representing the difference between the accounting conversion price and the fair value of the common
stock on the date of the transaction, after valuing the warrants issued in connection with the financing transaction.



Nine months ended September 30, 2003 (unaudited)



The following information is being presented for comparative purposes since the Company changed its fiscal year end from December 31 to
September 30, effective as of September 30, 2004.



|                                     |  |                                     |        |  
|------------------------------------ |  | ----------------------------------- | ------ | -
|                                     |  | Nine Months EndedSeptember 30, 2003 |       
|Net revenues                         |  | $                                   | 9,765  |  
|Gross profit                         |  | $                                   | 2,824  |  
|Operating loss                       |  | $                                   | (5,843 | )
|Net loss                             |  | $                                   | (5,829 | )
|Basic and diluted net loss per share |  | $                                   | (0.14  | )



NOTE 10SUBSEQUENT EVENTS



In October 2005, the Company proposed amending the
warrants issued as part of the March 2005 private placement to lower the exercise price to $0.50 per share, eliminate the cashless net exercise provision of the warrant, and advance the warrant termination date to October 14, 2005. On October 14,
2005, the holders of warrants to exercise 533,333 shares of the Companys common stock agreed to the amendment and, as a result, the Company issued 533,333 shares of common stock upon the exercise of such amended warrants on October 14, 2005
for aggregate proceeds of $0.3 million. The remaining warrants to purchase 433,334 shares of common stock at and exercise price of $1.25 per share issued pursuant to the March 3, 2005 private placement are exercisable through September 4, 2008.



On November 8, 2005, the Company completed a private placement
which resulted in gross proceeds of $5.0 million. In connection with this private placement the Company sold $5,000,000 in principal amount of 6% Senior Secured Convertible Debentures, convertible into common stock at a price of $0.37 per share
(subject to certain adjustments), and issued Series A Warrants to purchase up to 6,756,755 shares of common stock at an exercise price of $0.37 per share and Series B Warrants to purchase up to 10,368,854 shares of common stock at an exercise price
of $0.43 per share. The Series A Warrants are exercisable immediately and terminate upon the earlier of July 1, 2005 or 30 days after the effectiveness date of the registration statement contemplated in the November 2005 private placement
transaction. The Series B Warrants are exercisable from May 8, 2006 until May 8, 2011.



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TRIPATH TECHNOLOGY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 11SUPPLEMENTARY FINANCIAL INFORMATION (unaudited):



Summarized quarterly financial information for the year ended
September 30, 2005, the nine months ended September 30, 2004 and year ended December 31, 2003 is as follows (in thousands, except per share data):



|                                     |  |                      |        |   |                       |   |        |                      |  |   |               |   |  |   |        |  
|------------------------------------ |  | -------------------- | ------ | - | --------------------- | - | ------ | -------------------- |  | - | ------------- | - |  | - | ------ | -
|2005                                 |  | FirstQuarter         |        |   | SecondQuarter         |   |        | ThirdQuarter         |  |   | FourthQuarter |  
|Net revenues                         |  | $                    | 1,673  |   |                       | $ | 2,728  |                      |  | $ | 2,886         |   |  | $ | 3,474  |  
|Gross profit                         |  | $                    | 446    |   |                       | $ | 1,738  |                      |  | $ | 1,572         |   |  | $ | 1,720  |  
|Operating loss                       |  | $                    | (2,883 | ) |                       | $ | (2,014 | )                    |  | $ | (4,036        | ) |  | $ | (1,590 | )
|Net loss                             |  | $                    | (2,878 | ) |                       | $ | (1,778 | )                    |  | $ | (3,829        | ) |  | $ | (1,487 | )
|Basic and diluted net loss per share |  | $                    | (0.06  | ) |                       | $ | (0.03  | )                    |  | $ | (0.07         | ) |  | $ | (0.03  | )
|                                     |  |                      |        |  
|2004                                 |  | FirstQuarterRestated |        |   | SecondQuarterRestated |   |        | ThirdQuarterRestated |  |   |               |  
|Net revenues                         |  | $                    | 3,273  |   |                       | $ | 2,601  |                      |  | $ | 3,295         |   |  |   |        |  
|Gross profit                         |  | $                    | 900    |   |                       | $ | 267    |                      |  | $ | (3,729        | ) |  |   |        |  
|Operating loss                       |  | $                    | (2,087 | ) |                       | $ | (2,763 | )                    |  | $ | (6,789        | ) |  |   |        |  
|Net loss                             |  | $                    | (2,079 | ) |                       | $ | (2,803 | )                    |  | $ | (6,783        | ) |  |   |        |  
|Basic and diluted net loss per share |  | $                    | (0.05  | ) |                       | $ | (0.06  | )                    |  | $ | (0.14         | ) |  |   |        |  
|                                     |  |                      |        |  
|2003                                 |  | FirstQuarter         |        |   | SecondQuarter         |   |        | ThirdQuarter         |  |   | FourthQuarter |  
|Net revenues                         |  | $                    | 2,952  |   |                       | $ | 3,139  |                      |  | $ | 3,674         |   |  | $ | 4,126  |  
|Gross profit                         |  | $                    | 745    |   |                       | $ | 919    |                      |  | $ | 1,160         |   |  | $ | 1,357  |  
|Operating loss                       |  | $                    | (2,479 | ) |                       | $ | (1,819 | )                    |  | $ | (1,545        | ) |  | $ | (1,394 | )
|Net loss                             |  | $                    | (2,477 | ) |                       | $ | (1,816 | )                    |  | $ | (1,536        | ) |  | $ | (1,386 | )
|Basic and diluted net loss per share |  | $                    | (0.06  | ) |                       | $ | (0.04  | )                    |  | $ | (0.04         | ) |  | $ | (0.03  | )



NOTE 12EVENTS (UNAUDITED)
SUBSEQUENT TO THE DATE OF THE REPORT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



On December 13, 2005, Tripath Technology Inc. terminated its Business Financing Agreement (the Agreement) with Bridge Bank, National Association (the Bank).



Pursuant to the terms of the Agreement, the Company is paying a $60,000
termination fee to the Bank to terminate the Agreement.



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PART IV



ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES



(a) The following documents are filed as part of this Form 10-K:



(1) Financial Statements:



Report of Independent Registered Public Accounting Firm



Consolidated Balance Sheets as of September 30, 2005, September 30, 2004 and December 31, 2003



Consolidated Statements of Operations for the year ended September 30,
2005, the nine months ended September 30, 2004, and year ended December 31, 2003



Consolidated Statements of Stockholders Equity for the year ended September 30, 2005, the nine months ended September 30, 2004, and year ended December 31, 2003



Consolidated Statements of Cash Flows for the year ended September 30,
2005, the nine months ended September 30, 2004, and year ended December 31, 2003



Notes to Consolidated Financial Statements



(2) Financial Statement Schedules:



Financial statement schedules have been omitted since the required information is not present in amounts sufficient to require submission of the schedules or because the information required is included in the
financial statements or notes thereto.



(3) Exhibits: The items listed on the Index to Exhibits on page 38 are incorporated herein by reference.



36



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SIGNATURES



Pursuant to the
requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



TRIPATH TECHNOLOGY INC.By:

/s/    DR. ADYA S.
TRIPATHIDr. Adya S. Tripathi President and Chief Executive Officer, Chairman of the
Board




Dated: December 15, 2005



Pursuant to the requirements
of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                                                |  |                                                                                                  |  |                  
|----------------------------------------------- |  | ------------------------------------------------------------------------------------------------ |  | -----------------
|Signature                                       |  | Title                                                                                            |  | Date             
|                                                |  |                                                                                                 
|/S/    DR. ADYA S.
TRIPATHIDr. Adya S.
Tripathi |  | President and Chief Executive Officer (Principal Executive Officer)                              |  | December 15, 2005
|                                                |  |                                                                                                 
|/S/    JEFFREY L.
GARONJeffrey L.
Garon         |  | Vice President, Finance and Chief Financial Officer (Principal Financial and Accounting Officer) |  | December 15, 2005
|                                                |  |                                                                                                 
|*A.K. Acharya                                   |  | Director                                                                                         |  | December 15, 2005
|                                                |  |                                                                                                 
|*Y.S. Fu                                        |  | Director                                                                                         |  | December 15, 2005
|                                                |  |                                                                                                 
|*Andy Jasuja                                    |  | Director                                                                                         |  | December 15, 2005
|                                                |  |                                                                                                 
|*Akifumi Goto                                   |  | Director                                                                                         |  | December 15, 2005

|                                                                                            |  |                                                
|------------------------------------------------------------------------------------------- |  | -----------------------------------------------
|                                                                                            | 
|*By:                                                                                        |  | /S/    DR. ADYA S.
TRIPATHIDr. Adya S.
Tripathi
|                                                                                           
|Pursuant to Powers of Attorney filed previously with the Securities and Exchange Commission



37



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EXHIBIT INDEX



|       |  |                                                                                                                                                                                                                                                                                                                                                    
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |  | Description of Document                                                                                                                                                                                                                                                                                                                            
|       | 
|3.1    |  | Restated Certificate of Incorporation of Tripath Technology Inc. (incorporated by reference to Exhibit 3.1 of Tripaths registration statement on Form S-1, registration number 333-35028,
as amended)                                                                                                                                             
|       | 
|3.2    |  | Bylaws of Tripath Technology Inc. (incorporated by reference to Exhibit 3.2 of Tripaths transition report on Form 10-K/T, filed on February 3, 2005)                                                                                                                                                                                              
|       | 
|4.1    |  | Specimen common stock certificate (incorporated by reference to Exhibit 4.1 of Tripaths registration statement on Form S-1, registration number 333-35028, as amended)                                                                                                                                                                            
|       | 
|4.2    |  | Form of Common Stock Purchase Warrant, dated March 2, 1998 (incorporated by reference to Exhibit 4.2 of Tripaths registration statement on Form S-1, registration number 333-123551, as
amended)                                                                                                                                                  
|       | 
|4.3    |  | Second Amended and Restated Shareholder Rights Agreement, dated September 15, 1998, between Tripath Technology Inc. and Certain Stockholders of Tripath Technology Inc. (incorporated by
reference to Exhibit 10.6 of Tripaths registration statement on Form S-1, registration number 333-35028, as amended)                                     
|       | 
|4.4    |  | Form of Common Stock Purchase Warrant, dated July 28, 2000 (incorporated by reference to Exhibit 4.4 of Tripaths registration statement on Form S-1, registration number 333-123551,
as amended)                                                                                                                                                  
|       | 
|4.5    |  | Registration Rights Agreement, dated January 24, 2002, by and among Tripath Technology Inc. and Certain Stockholders of Tripath Technology Inc. (incorporated by reference to Exhibit 4.1 of
Tripaths current report on Form 8-K filed on January 30, 2002)                                                                                       
|       | 
|4.6    |  | Registration Rights Agreement, dated March 3, 2005, by and among Tripath Technology Inc. and certain stockholders of Tripath Technology Inc. (incorporated by reference to Exhibit 4.6 of
Tripaths registration statement on Form S-1, registration number 333-123551, as amended)                                                                
|       | 
|4.7    |  | Form of Common Stock Purchase Warrant issued in connection with Securities Purchase Agreement, dated March 3, 2005, by and among Tripath Technology Inc. and certain stockholders of Tripath
Technology Inc. (incorporated by reference to Exhibit 4.7 of Tripaths registration statement on Form S-1, registration number 333-123551, as amended)
|       | 
|4.8    |  | Form of 6% Senior Secured Convertible Debenture issued in connection with Securities Purchase Agreement, dated November 8, 2005 by and among Tripath Technology Inc. and the signatories
thereto (incorporated by reference to Exhibit 4.1 of Tripaths current report on Form 8-K filed November 9, 2005)                                         
|       | 
|4.9    |  | Form of Series A/Series B Common Stock Purchase Warrant issued in connection with Securities Purchase Agreement, dated November 8, 2005 by and among Tripath Technology Inc. and the
signatories thereto (incorporated by reference to Exhibit 4.2 of Tripaths current report on Form 8-K filed November 9, 2005)                                 
|       | 
|4.10   |  | Registration Rights Agreement dated November 8, 2005 by and among Tripath Technology Inc. and the purchasers named in the Securities Purchase Agreement dated November 8, 2005 (incorporated by
reference to Exhibit 4.3 of Tripaths current report on Form 8-K filed November 9, 2005)                                                           
|       | 
|9.1    |  | Voting Agreement dated November 8, 2005 by Dr. Adya S. Tripathi (incorporated by reference to Exhibit 9.1 of Tripaths current report on Form 8-K filed November 9,
2005).                                                                                                                                                                         
|       | 
|10.1*  |  | Form of Indemnification Agreement, between Tripath Technology Inc. and each of its directors and officers (incorporated by reference to Exhibit 10.1 of Tripaths registration statement
on Form S-1, registration number 333-35028, as amended)                                                                                                   



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|       |  |                                                                                                                                                                                                                                                                                  
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |  | Description of Document                                                                                                                                                                                                                                                          
|       | 
|10.2   |  | License and Supply Agreement, dated July 9, 1999, between STMicroelectronics, Inc. and Tripath Technology Inc. (incorporated by reference to Exhibit 10.2 of Tripaths registration
statement on Form S-1, registration number 333-35028, as amended)                            
|       | 
|10.3*  |  | 1995 Stock Plan and form of option agreement (incorporated by reference to Exhibit 4.8 of Tripaths registration statement on Form S-8, registration number 333-108178)                                                                                                          
|       | 
|10.4*  |  | 2000 Stock Plan and form of option agreement (incorporated by reference to Tripaths definitive proxy statement on Schedule 14A filed on May 19, 2003)                                                                                                                           
|       | 
|10.5*  |  | 2000 Employee Stock Purchase Plan, as amended (incorporated by reference to Exhibit 10.5 of Tripaths quarterly report on Form 10-Q for the quarter ended September 30,
2003)                                                                                                    
|       | 
|10.6*  |  | Form of Restricted Stock Purchase Agreement between Tripath Technology Inc. and an Executive Officer. (incorporated by reference to Exhibit 10.6 of Tripaths annual report on Form 10-K
filed on March 9, 2004)                                                                 
|       | 
|10.7   |  | Sublease Agreement, dated July 18, 2002, between Nortel Networks, Inc. and Tripath Technology Inc. (incorporated by reference to Exhibit 10.11 of Tripaths quarterly report on Form 10-Q
for the quarter ended September 30, 2002)                                              
|       | 
|10.8   |  | Distributor Agreement, dated July 1, 1998 between Uniquest Corporation and Tripath Technology Inc. (incorporated by reference to Exhibit 10.8 of Tripaths annual report on Form 10-K
filed on March 9, 2004)                                                                    
|       | 
|10.9   |  | Distributor Agreement, dated February 3, 1999 between Macnica, Inc and Tripath Technology Inc. (incorporated by reference to Exhibit 10.9 of Tripaths annual report on Form 10-K filed on
March 9, 2004)                                                                        
|       | 
|10.10  |  | Security Agreement dated March 8, 2004 between Tripath Technology Inc. and Union Bank of California, N.A. (incorporated by reference to Exhibit 10.1 of Tripaths quarterly report on
Form 10-Q filed on May 21, 2004)                                                           
|       | 
|10.11  |  | Form of Stock Purchase Agreement dated August 1, 2004 between Tripath Technology Inc. and certain investors of Tripath Technology Inc. (incorporated by reference to Exhibit 10.11 of
Tripaths transition report on Form 10-K/T, filed on February 3, 2005)                     
|       | 
|10.12  |  | Severance Agreement and Release, dated March 2, 2005, between Tripath Technology Inc. and Clarke Seniff (incorporated by reference to Exhibit 10.1 of Tripaths current report on Form 8-K
filed on March 7, 2005)                                                               
|       | 
|10.13  |  | Securities Purchase Agreement, dated March 3, 2005 by and among Tripath Technology Inc. and the signatories thereto (incorporated by reference to Exhibit 10.12 of Tripaths registration
statement on Form S-1, registration number 333-123551, as amended)                     
|       | 
|10.14  |  | Business Financing Agreement, dated August 4, 2005 by and among Tripath Technology Inc. and Bridge Bank, National Association (incorporated by reference to Exhibit 10.14 of Tripaths
annual report on Form 10-K filed on December 7, 2005)                                     
|       | 
|10.15  |  | Intellectual Property Security Agreement, dated August 4, 2005 by and among Tripath Technology Inc. and Bridge Bank, National Association (incorporated by reference to Exhibit 10.15 of
Tripaths annual report on Form 10-K filed on December 7, 2005)                         
|       | 
|10.16  |  | Securities Purchase Agreement, dated November 8, 2005 by and among Tripath Technology Inc. and the signatories thereto (incorporated by reference to Exhibit 10.1 of Tripaths current
report on Form 8-K filed on November 9, 2005)                                             
|       | 
|10.17  |  | Security Agreement dated November 8, 2005 by and among Tripath Technology Inc. and the Purchasers named in the Securities Purchase Agreement dated November 8, 2005 (incorporated by reference
to Exhibit 10.2 of Tripaths current report on Form 8-K filed on November 9, 2005)
|       | 
|16.1   |  | Letter, dated as of April 17, 2003, from PricewaterhouseCoopers LLP regarding its concurrence with Tripaths statement regarding change of accountants (incorporated by reference to
Exhibit 16.2 of Tripaths current report on Form 8-K filed April 17, 2003)                  



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|       |  |                                                                                                                                                                                                                                                           
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |  | Description of Document                                                                                                                                                                                                                                   
|       | 
|16.2   |  | Letter, dated as of October 22, 2004, from BDO Seidman, LLP regarding its concurrence with Tripaths statement regarding change of accountants (incorporated by reference to Exhibit 16.1
of Tripaths current report on Form 8-K filed October 22, 2004).
|       | 
|21.1   |  | List of subsidiaries of Tripath Technology Inc. (incorporated by reference to Exhibit 21.1 of Tripaths transition report on Form 10-K/T, filed on February 3, 2005)                                                                                      
|       | 
|23.1   |  | Consent of Stonefield Josephson Inc., Independent Registered Public Accounting Firm                                                                                                                                                                       
|       | 
|24.1   |  | Power of Attorney (incorporated by reference to the signature page of Tripaths annual report on Form 10-K filed on December 7, 2005)                                                                                                                     
|       | 
|31.1   |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                       
|       | 
|31.2   |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                       
|       | 
|32.1   |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                             

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|* | Indicates management contract or compensatory plan or arrangement.
|- | ------------------------------------------------------------------