##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K


|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|  
|   |  | For the fiscal year ended
    December 31, 2005                                             
|  
|or
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|  
|   |  | For the transition period
    from           to                                             

Commission file number 001-15473


OpenTV Corp.


(Exact name of Registrant as specified in its charter)


|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|British Virgin Islands                                             |  | 98-0212376                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)
|                                                                  
|275 Sacramento Street
    San Francisco, California                |  | 94111                                   
|(Address of principal executive offices)                           |  | (Zip Code)                              

Registrants telephone number, including area code:


(415) 962-5000


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


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


Class A ordinary shares, no par value


o þ


o þ


þ o


S-K 10-K 10-K. o


12b-2


o þ o


12b-2 o þ










DOCUMENTS INCORPORATED BY REFERENCE:












---



##### 










OPENTV CORP.


2005 ANNUAL REPORT ON
FORM 10-K


|                                                       |  |                                                                                                                  |  |      |    | 
|------------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                       |  |                                                                                                                  |  | Page
|                                                       |  |                                                                                                                  |  |     
|Part 1                                                
|Item 1.                                                |  | Business                                                                                                         |  |      | 1  | 
|Item 1A.                                               |  | Risk Factors                                                                                                     |  |      | 11 | 
|Item 1B.                                               |  | Unresolved Staff Comments                                                                                        |  |      | 22 | 
|Item 2.                                                |  | Properties                                                                                                       |  |      | 22 | 
|Item 3.                                                |  | Legal Proceedings                                                                                                |  |      | 22 | 
|Item 4.                                                |  | Submission of Matters to a Vote of Security Holders                                                              |  |      | 25 | 
|Part II                                               
|Item 5.                                                |  | Market for Registrants Common Equity, Related Stockholder
    Matters and Issuer Purchases of Equity Securities |  |      | 26 | 
|Item 6.                                                |  | Selected Financial Data                                                                                          |  |      | 29 | 
|Item 7.                                                |  | Managements Discussion and Analysis of Financial Condition
    and Results of Operations                        |  |      | 30 | 
|Item 7A.                                               |  | Quantitative and Qualitative Disclosures About Market Risk                                                       |  |      | 46 | 
|Item 8.                                                |  | Financial Statements and Supplementary Data                                                                      |  |      | 47 | 
|Item 9.                                                |  | Changes in and Disagreements with Accountants on Accounting and
    Financial Disclosure                         |  |      | 47 | 
|Item 9A.                                               |  | Controls and Procedures                                                                                          |  |      | 47 | 
|Item 9B.                                               |  | Other Information                                                                                                |  |      | 51 | 
|Part III                                              
|Item 10.                                               |  | Directors and Executive Officers of OpenTV                                                                       |  |      | 52 | 
|Item 11.                                               |  | Executive Compensation                                                                                           |  |      | 52 | 
|Item 12.                                               |  | Security Ownership of Certain Beneficial Owners and Management
    and Related Stockholder Matters               |  |      | 52 | 
|Item 13.                                               |  | Certain Relationships and Related Transactions                                                                   |  |      | 52 | 
|Item 14.                                               |  | Principal Accounting Fees and Services                                                                           |  |      | 52 | 
|Part IV                                               
|Item 15.                                               |  | Exhibits, Financial Statement Schedules                                                                          |  |      | 53 | 
|                                                      
|Exhibit 3.1                                            |  | Amended and Restated Memorandum of Association of OpenTV Corp.                                                   |  |      |    | 
|Exhibit 21.1                                           |  | List of Subsidiaries                                                                                             |  |      |    | 
|Exhibit 23.1                                           |  | Consent of Independent Registered Public Accounting Firm                                                         |  |      |    | 
|Exhibit 31.1                                           |  | Certification                                                                                                    |  |      |    | 
|Exhibit 31.2                                           |  | Certification                                                                                                    |  |      |    | 
|Exhibit 32.1                                           |  | Certification                                                                                                    |  |      |    | 
|EX-3.1: AMENDED AND RESTATED MEMORANDUM OF ASSOCIATION
|EX-21.1: SUBSIDIARIES                                 
|EX-23.1: CONSENT OF KPMG LLP                          
|EX-31.1: CERTIFICATION                                
|EX-31.2: CERTIFICATION                                
|EX-32.1: CERTIFICATION                                



OpenTV, the OpenTV logo and our product names are trademarks
or registered trademarks of OpenTV Corp. or its subsidiaries in
the United States and other countries. Other product names
mentioned herein may be trademarks or registered trademarks of
their respective owners.




---



##### Table of Contents



This Annual Report on
Form 10-K,
including Managements Discussion and Analysis of
Financial Condition and Results of Operations in
Item 7, contains forward-looking statements that involve
risks and uncertainties, as well as assumptions, that, if they
never materialize or prove incorrect, could cause the results of
OpenTV Corp. and its consolidated subsidiaries to differ
materially from those expressed or implied by such
forward-looking statements. All statements, other than
statements of historical fact, are statements that could be
deemed forward-looking statements, including any: projections of
revenue, gross margin, expenses, earnings or losses from
operations; statements of the plans, strategies and objectives
of management for future operations; statements concerning
developments, performance or market conditions relating to
products or services; statements regarding future economic
conditions or performance; statements of expectation or belief;
and statements of assumptions underlying any of the foregoing.
You should not place undue reliance on these forward-looking
statements, which speak only as of the date of this Annual
Report on
Form 10-K. All
these forward-looking statements are based on information
available to us at this time, and we assume no obligation to
update any of these statements. Actual results could differ
materially from those projected in these forward-looking
statements as a result of many factors, including those
identified in Item 1A Risk Factors and
elsewhere. We urge you to review and consider the various
disclosures made by us in this report, and those detailed from
time to time in our filings with the Securities and Exchange
Commission, that attempt to advise you of the risks and factors
that may affect our future results.





PART I







|        |         
|------- | --------
|Item 1. | Business

Overview








1



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end-to








Recent Events




2



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | eliminated a restriction formerly contained in our memorandum of
    association that prohibited us from issuing additional
    Class B ordinary shares or options, rights or warrants to
    subscribe for additional Class B ordinary shares; and                                                                                                                                                                                                                                                   
|
| |  | deleted provisions formerly contained in our memorandum of
    association that required each Class B ordinary share to
    automatically convert into a Class A ordinary share under
    certain circumstances, including upon the transfer of any
    Class B ordinary shares to a person who was not a
    stockholder, or an affiliate of such stockholder, prior to the
    initial public offering of our Class A ordinary shares, and
    the procedures relating to that automatic conversion.



Our Operating Businesses






| |                                       
| | --------------------------------------
| | Middleware and Integrated Technologies





3



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OpenTV Core Middleware.






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Basic and Advanced Set-top Boxes. OpenTV Core can operate
    with the relatively limited processing power and memory found in
    most mass-market digital set-top boxes currently deployed by
    network operators. OpenTV Core is also suitable for more
    advanced digital set-top boxes expected to be deployed in the
    future, which contain increased processing power and memory.
    This capability permits us to offer technical solutions that
    address the limited capabilities of many set-top boxes that are
    currently deployed by various network operators, while
    simultaneously offering a solution that will position network
    operators to take advantage of more powerful set-top boxes in
    the future.
|
| |  | Digital/ Personal Video Recording. Our OpenTV PVR is an
    extension to OpenTV Core that allows network operators to
    deliver advanced personal video recording services to their
    subscribers, including the ability to record multiple broadcast
    or on-demand programs simultaneously and play back those
    programs using VCR-style controls such as pause, fast forward
    and rewind, on set-top boxes that contain internal hard drives.
    We are developing PVR technology to enable both series recording
    and the recording of an interactive TV broadcast that retains
    interactive content for future playback simultaneously with the
    recorded broadcast.                                                    
|
| |  | Video-on-Demand. OpenTV Core also supports
    video-on-demand, or
    VOD, services. It enables media rich user interfaces for
    browsing VOD titles and underlying protocols to establish
    sessions and control streams with VCR-style controls.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | HTML Applications. Our OpenTV HTML Package is an
    extension to OpenTV Core, which allows network operators to
    deliver existing Web-based HTML and JavaScript content to their
    subscribers through a digital set-top box.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Connectivity. OpenTV Core provides solutions for
    broadcast or
    point-to-multipoint
    networks as well as high bandwidth, bi-directional,
    point-to-point
    networks. OpenTV Core includes modules that support common
    digital television-related communication protocols, including
    the DOCSIS communications protocol, which provides a data return
    channel for cable modem set-top boxes that enables viewers to
    retrieve information from the Internet at broadband speed.                                                                                                                                                                                                                                        
|
| |  | Localization. OpenTV Core supports text input and
    presentation of substantially all languages in common use,
    including double byte Asian languages, and allows for
    localization of interactive television services for different
    countries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | OpenTV Measure. OpenTV Core has been extended to enable
    network operators, programmers and advertisers to collect
    information and data regarding viewer preferences, viewing
    habits and other analytical information that helps to assess the
    efficacy of programming and advertising.                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | OpenTV IPTV Solution. OpenTV is developing an IPTV
    solution based on the OpenTV Core 2.0 and PVR platforms for
    cable, satellite and telecommunications operators. OpenTV Core
    2.0 for IPTV will                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

4



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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | be an extension to OpenTV Core that allows cable, satellite and
    telecommunications operators to deliver existing digital
    television services via two-way broadband IP networks, including
    broadcast TV programming, on-demand programming, PVR services,
    interactive TV services and downloadable applications. The IPTV
    extension to OpenTV Core will provide cable television operators
    the ability to seamlessly extend their existing digital TV
    services to new broadband IP customers using the same broadcast,
    video-on-demand,
    billing and conditional access systems already in place, and
    will provide telecommunications operators the ability to enter
    the digital TV market with a stand-alone IPTV solution.

OpenTV Device Mosaic.


OpenTV Enterprise Solutions.


OpenTV Development Tools and Support for Third Party
Application Developers.




| |                      
| | ---------------------
| | Applications Business





| |   |                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | permit targeted and addressable advertising;                                                                                                            
|
| |  | provide traffic and billing solutions for the delivery of
    advertisements by network operators;                                                      
|
| |  | facilitate purchase and sales transactions through a
    viewers remote control;                                                                       
|
| |  | facilitate requests for information from advertisers or
    programmers in real-time as the viewer sees the advertisement or
    television program; and
|
| |  | provide audience and media research capabilities to determine
    viewing preferences.                                                                  







OpenTV Advanced Advertising Solutions.


5



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | OpenTV AdVision and OpenTV Eclipse. Both OpenTV AdVision
    and OpenTV Eclipse are advertising sales and inventory
    management systems, or traffic and billing systems, that manage
    various media platforms and outlets, simultaneously providing
    network operators the tools to manage local cable television,
    cable networks, and proprietary broadband networks by scheduling
    and monitoring the display of advertising, and billing the
    advertisers based upon such monitoring. In September 2005, we
    acquired CAM Systems, which developed the Eclipse advertising
    sales and inventory management system and was a leading provider
    of services in this sector. That acquisition helped us
    significantly extend our market share in the advertising sales
    and inventory management segment. Our solutions are currently
    deployed in 15 of the top 25 U.S. cable television markets.
    We believe sales and inventory management systems, such as our
    Advision and Eclipse solutions, will be critical to addressing
    the ongoing changes in the advertising market. Neither OpenTV
    AdVision nor OpenTV Eclipse is dependent on a network operator
    deploying OpenTVs middleware solutions.                                                                                                                                                                                                                                                                                                              
|
| |  | OpenTV SpotOn. OpenTV SpotOn enables network operators to
    offer addressable advertising that can be delivered to
    particular households based on individual profiles. OpenTV
    SpotOn is not dependent on a network operator deploying
    OpenTVs middleware solutions. Advertisers have the ability
    to develop different ads for the same product or service that
    are designed for specific audiences. This ability helps ensure
    that the message appeals to all of the audience for the
    commercial. Different advertising messages can be simultaneously
    targeted to households through the use of technology that
    permits set-top boxes to seamlessly jump between video signals.
    With this technology, a network operator can, for example,
    deliver an advertisement for a
    pick-up truck to one
    household while simultaneously delivering an advertisement, in
    the same interval, for a sedan or sports coupe to a different
    household based on demographic profiles. The network operator
    can also measure and track each addressable spot and receive
    valuable aggregate viewer data, enabling advertisers to build
    profiles, and help drive improved analysis and research for
    future marketing and planning. We carefully review and assess,
    with our customers, the privacy issues associated with this type
    of product, and expect to deploy this product in a manner that
    addresses the various privacy laws, regulations and practices
    that are evolving in the sector.
|
| |  | OpenTV Inject. OpenTV Inject is a post-production video
    editing tool that enables producers to easily insert
    triggers into an analog or digital video stream. The
    trigger is detected by a set-top box when the video plays. An
    on-screen prompt is automatically displayed, alerting the viewer
    that additional interactive content is available.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | OpenTV NMI. OpenTV National Marketing Interconnect is an
    end-to-end managed
    service that operates as a national interconnect for cable
    system operators, managing promotional inventory and certain
    advanced advertising applications.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

6



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | OpenTV Ad Producer. OpenTV Ad Producer is a
    template-based tool that allows a third party, an ad agency for
    example, to create interactive advertising content by assembling
    graphic assets following a step-by-step process. OpenTV Ad
    Producer guides the user through the application creation
    process, based on the chosen template, and is designed
    specifically for users with minimal interactive television
    production software experience. OpenTV Ad Producer outputs
    Extensible Markup Language, or XML, that can be easily
    interpreted by the OpenTV Ad Manager system.
|
| |  | OpenTV Ad Manager. OpenTV Ad Manager is a Windows-based
    software tool that enables cable and satellite operators to take
    the XML file generated by the OpenTV Ad Producer and preview it,
    verify the content, authenticate the content, transcode the
    content to binary code that each set-top box can interpret and
    schedule the application for broadcast.                                                                                                                                                                                                                                      

OpenTV Enhanced Content.


PlayJam.








| |                     
| | --------------------
| | BettingCorp Business



Ultimate One Platform.


7



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Participation TV.


Professional Services and Support


end-to


Customer and Industry Relationships






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Network Operators. Over 36 network operators in 96
    countries around the world have launched our middleware
    platform, including Austar Entertainment Pty Ltd. and FOXtel in
    Australia, Bell ExpressVu in Canada, BSkyB in the United
    Kingdom, Dong Fang Cable Network Co. Ltd. in China,
    EchoStars DISH Network in the United States, Multichoice
    in Africa, TPS in France, Sky Italia in Italy, Liberty Global in
    Europe and Viasat in Sweden. In January 2006, we also announced
    a licensing agreement with Indias largest cable and
    satellite operator, Essel Group. The number of network operators
    that have deployed our software may change from year to year as
    network operators continue to consolidate or merge.
|
| |  | Set-top Box Manufacturers. Our software has been
    ported by 38 manufacturers on over 115 models of set-top boxes,
    including models produced by Advanced Digital Broadcast,
    Amstrad, Matsushita Electric, Motorola, Inc., Phillips, Pace
    Micro Technology, Sagem, Samsung, Scientific-Atlanta, Inc.,
    Thomson and UEC Technologies (Pty) Ltd.                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Chipset Manufacturers. OpenTV middleware has been ported
    to most of the major chipset vendors for set-top boxes,
    including Broadcom, Connexant, NEC and ST Microelectronics.
    OpenTV middleware is currently being ported to the latest
    generation of chipsets supporting MPEG4/AVC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Programming Networks. We have worked with numerous
    programming networks including American Broadcasting Company,
    Turner Broadcasting System, Inc., Discovery Communications,
    Inc., QVC Shopping Network, Playboy Enterprises, Inc. and
    Showtime Networks, Inc. to enhance programming content and
    advertising on their networks.                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Conditional Access Providers: We have integrated our
    middleware with conditional access software provided by Irdeto,
    Motorola, Nagravision, NDS Group plc, Scientific-Atlanta and
    Viaccess.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



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Sales and Marketing




Competition






| |                                       
| | --------------------------------------
| | Middleware and Integrated Technologies









9



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end-to


Gemstar-TV




| |             
| | ------------
| | Applications



Gemstar-TV




| |            
| | -----------
| | BettingCorp



Regulations




10



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Intellectual Property and Research and Development




Employees




Available Information


http://www.opentv.com 10-K, 10-Q, 8-K


1-800-SEC-0330. http://www.sec.gov







|         |             
|-------- | ------------
|Item 1A. | Risk Factors

Factors That May Affect Future Results


10-K,


We have a history of net losses, and we may continue to
experience net losses in the future.




11



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We have historically derived a significant percentage of
our revenues from licensing our middleware to network operators.
Our opportunities for future revenue growth with middleware are
limited by the actual number of worldwide network operators and
by technology decisions they make from time to time.








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | network operators that have selected our middleware may switch
    to another middleware platform for the provision of interactive
    services, reduce their pace of set-top box deployment or stop
    deploying set-top boxes enabled with our middleware, decrease or
    stop their use of our support services, or choose not to upgrade
    or add additional features to the version of our middleware
    running on their networks;
|
| |  | network operators that have not selected our middleware may
    choose another middleware platform for the provision of
    interactive services, which could include the selection of
    standards-based solutions such as MHP or OCAP in various
    countries; or                                                                                                                                                                        
|
| |  | a meaningful opportunity to deploy our middleware in the markets
    that have not yet adopted interactive television on a large
    scale may never develop or may develop at a very slow pace.                                                                                                                                                                                                                                             



We offer volume discounts to certain customers, which may,
over time, depress our average pricing. While deployments of our
software may continue to grow, those discounts, as they are
triggered, may limit the rate of our royalty growth in the
future.




We expect a more significant portion of our revenue growth
in the future to be derived from interactive applications that
we develop and market. If we are not successful in developing
and marketing interactive applications, our future revenue
growth may be limited.




12



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##### Table of Contents





Two of our potential North American cable customers, Cox
Communications and Comcast Corporation, joined together in early
2005 to acquire certain assets from Liberate Technologies, one
of our direct competitors in the middleware business. That
acquisition, which closed in April 2005, is likely to eliminate
Cox and Comcast as potential customers for our middleware, which
could adversely affect our ability to grow.




A significant percentage of our revenues are currently
provided by entities affiliated with The News Corporation, which
also controls companies that compete with us in certain market
segments. Those circumstances may make it more difficult for us,
over the long-term, to sell products, technologies or services
to News Corporation affiliates in market segments in which other
News Corporation affiliates offer competing products.


Gemstar-TV


We have concluded that our internal control over financial
reporting and disclosure controls were not effective as of
December 31, 2005. If we do not properly address identified
weaknesses and implement additional controls to remedy those
weaknesses, the reliability of our financial statements could be
implicated and, ultimately, our financial results and our stock
price could suffer.




13



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##### Table of Contents



10-K




We may be unable in the future to raise additional capital
required to support our operating activities.






We realize a percentage of our revenue from revenue
sharing and subscription-based arrangements, especially in our
applications business. We are not certain that those revenue
models will be generally acceptable to our customers over the
long-term or that they will offer us significant opportunities
for revenue growth, which could adversely affect the growth
opportunities for our applications business.




14



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The market for our products and services is subject to
significant competition, which could adversely affect our
business.




The trend of consolidation among industry participants may
adversely impact our business, results of operations and future
prospects.


Gemstar-TV




Unanticipated fluctuations in our quarterly operating
results could affect our stock price.


quarter-to






| |   |                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Changes in the rate of capital spending and the rollout of
    interactive television-related products and services by network
    operators;   
|
| |  | The number, size and scope of network operators deploying
    OpenTV-enabled interactive services and the associated rollout
    to subscribers;
|
| |  | Increased competition in general and any changes in our pricing
    policies that may result from increased competitive pressures;              
|
| |  | Potential downturns in our customers businesses or in the
    domestic or international markets for our products and services;                 

15



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| |   |                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The ability to generate applications-related revenue from
    existing and potential customers;                                                           
|
| |  | Changes in technology, whether or not developed by us;                                                                                                    
|
| |  | Our ability to develop and introduce on a timely basis new or
    enhanced versions of our products that can compete favorably in
    the marketplace; and
|
| |  | The timing of revenue recognition associated with major
    licensing and services agreements.                                                            

quarter-to


We depend upon key personnel, including our senior
executives and technical and engineering staff, to operate our
business effectively, and we may be unable to attract or retain
such personnel.




We continue to evaluate our business operations and may
implement structural and other changes that affect the conduct
of our worldwide business operations. As we continue to align
our resources appropriately with our evolving business, we may
face unintended consequences or suffer adverse effects on our
operations or personnel.




Interactive television remains an emerging business and it
may not attract widespread market acceptance or demand.




Because much of our success and value lie in our ownership
and use of our intellectual property, our failure to protect our
intellectual property and develop new proprietary technology may
negatively affect us.




16



---



##### Table of Contents







Intellectual property infringement claims may be asserted
against us, which could have the effect of disrupting our
business.




We grant certain indemnification rights to our customers
when we license our software technologies. We may, therefore,
become subject to third party infringement claims through those
commercial arrangements. In addition, the damages to which we
are subject may be increased by the use of our technologies in
our customers products.






The adoption of industry-wide standards for interactive
television, such as the OpenCable initiative in North America,
could adversely affect our ability to sell our products and
services or place downward pressure on our pricing.




17



---



##### Table of Contents





Our failure to participate in certain industry standards
setting organizations, including CableLabs, may adversely affect
our ability to sell products or services to network operators or
other potential customers that are members of those
organizations




The adoption of incompatible standards by our industry and
rapid technological advances could render our products and
services obsolete or non-competitive.








Government regulations may adversely affect our
business.




18



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##### Table of Contents



Changes to current accounting policies or in how such
policies are interpreted or applied to our business could have a
significant effect on our reported financial results or the way
in which we conduct our business and could make it difficult for
investors to assess properly our financial condition or
operating results.






| |   |                                                                                       
| | - | --------------------------------------------------------------------------------------
| |  | Revenue recognition;                                                                  
|
| |  | Accounting for share-based compensation;                                              
|
| |  | Accounting for income taxes; and                                                      
|
| |  | Accounting for business combination, related goodwill and other
    intangible assets.





Through the use of our technology, we have the ability to
collect personal and confidential information from set-top
boxes. If we fail to protect this information from security
breaches or misuse this information, then our operations could
be disrupted and we could be subject to litigation and liability
under privacy laws.




19



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##### Table of Contents





If we continue to develop and seek to market gaming and
gambling applications, we must assess the legality of these
types of activities in different jurisdictions. Our inability to
launch these applications legally, the uncertain regulatory
landscape for these applications and the significant costs
associated with ongoing evaluations regarding the state of
gaming and gambling laws around the world may adversely affect
our business.




Our multinational operations expose us to special risks
that could increase our expenses, adversely affect our operating
results and require increased time and attention of
management.






| |   |                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------
| |  | differing legal and regulatory requirements and changes in those
    requirements;                                                          
|
| |  | potential loss of proprietary information due to piracy,
    misappropriation or weaker laws regarding intellectual property
    protection;
|
| |  | export and import restrictions, tariffs and other trade barriers;                                                                           
|
| |  | currency fluctuations and devaluations;                                                                                                     
|
| |  | difficulties in staffing and managing offices as a result of,
    among other things, distance, language and cultural differences;          
|
| |  | longer payment cycles and problems in collecting accounts
    receivable;                                                                   
|
| |  | political and economic instability; and                                                                                                     
|
| |  | potentially adverse tax consequences.                                                                                                       



20



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Our software products may contain errors, which could
cause us to lose revenue and incur unexpected expenses.






The interests of our majority owner may differ from yours
and may result in OpenTV acting in a manner inconsistent with
your general interests.




Because we are controlled by Liberty Media, we are exempt
from certain listing requirements of the Nasdaq National Market
relating to corporate governance matters.




Because we are a British Virgin Islands company, you may
not be able to enforce judgments against us that are obtained in
United States courts.






21



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##### Table of Contents



Because we are a British Virgin Islands company, your
rights as a stockholder may be less clearly established as
compared to the rights of stockholders of companies incorporated
in other jurisdictions.




Certain provisions contained in our charter documents
could deter a change of control of us.









|         |                          
|-------- | -------------------------
|Item 1B. | Unresolved Staff Comments








|        |           
|------- | ----------
|Item 2. | Properties








|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

OpenTV, Inc. v. Liberate Technologies, Inc.




22



---



##### Table of Contents







Initial Public Offering Securities Litigation. Brody v. OpenTV Corp., et al. In re OpenTV Corp. Initial Public Offering
Securities Litigation In re Initial Public
Offering Securities Litigation


In re Wink Communications, Inc.
Initial Public Offering Securities Litigation In
re Initial Public Offering Securities Litigation


23



---



##### Table of Contents





Litigation Relating to the Acquisition of ACTV, Inc.


Broadcast Innovation Matter.


24



---



##### Table of Contents



Personalized Media Communications, LLC.


Other Matters.









|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders



|                  |  |           |             |  |                |  |           | 
|----------------- |  | --------- | ----------- |  | -------------- |  | --------- | 
|NOMINEE           |  | VOTES FOR |             |  | VOTES WITHHELD | 
|                  |  |           |             |  |                | 
|Robert R. Bennett |  |           | 375,985,193 |  |                |  | 6,901,807 | 
|J. Timothy Bryan  |  |           | 382,109,996 |  |                |  | 777,004   | 
|James A. Chiddix  |  |           | 374,995,408 |  |                |  | 7,891,592 | 
|Jerry Machovina   |  |           | 382,093,654 |  |                |  | 793,346   | 
|J. David Wargo    |  |           | 382,099,094 |  |                |  | 787,906   | 
|Anthony G. Werner |  |           | 376,652,184 |  |                |  | 6,234,816 | 
|Michael Zeisser   |  |           | 375,995,284 |  |                |  | 6,891,716 | 



|                                                                                                                                    |  |           |             |  |               |  |           |                 |  |  |         | 
|----------------------------------------------------------------------------------------------------------------------------------- |  | --------- | ----------- |  | ------------- |  | --------- | --------------- |  |  | ------- | 
|                                                                                                                                    |  | VOTES FOR |             |  | VOTES AGAINST |  |           | VOTES ABSTAINED | 
|                                                                                                                                    |  |           |             |  |               |  |           |                 | 
|Approval of the OpenTV Corp. 2005 Incentive Plan.                                                                                   |  |           | 328,388,046 |  |               |  | 3,381,259 |                 |  |  | 373,788 | 
|Ratification of the appointment of KPMG LLP as independent
    auditors for OpenTV Corp. for the year ending December 31,
    2005. |  |           | 382,694,110 |  |               |  | 148,584   |                 |  |  | 44,306  | 



25



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##### Table of Contents






PART II







|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities

Market Information






|     |                |                 |   |      |     |  |   |      | 
|---- | -------------- | --------------- | - | ---- | --- |  | - | ---- | 
|     |                | Nasdaq National |  
|     |                | Market          |  
|     |                |                 |  
|     |                | High            |   |      | Low | 
|     |                |                 |   |      |     | 
|2005 |                |                 |   |      |     |  |   |     
|     | First Quarter  |                 | $ | 3.90 |     |  | $ | 2.29 | 
|     | Second Quarter |                 |   | 2.96 |     |  |   | 2.07 | 
|     | Third Quarter  |                 |   | 3.45 |     |  |   | 2.47 | 
|     | Fourth Quarter |                 |   | 2.90 |     |  |   | 2.09 | 
|2004 |                |                 |   |      |     |  |   |     
|     | First Quarter  |                 | $ | 3.82 |     |  | $ | 2.70 | 
|     | Second Quarter |                 |   | 3.60 |     |  |   | 2.00 | 
|     | Third Quarter  |                 |   | 3.31 |     |  |   | 1.82 | 
|     | Fourth Quarter |                 |   | 4.14 |     |  |   | 2.97 | 

Holders




Dividends




Certain Aspects of British Virgin Islands Law






26



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##### Table of Contents







Securities Authorized for Issuance Under Equity Compensation
Plans




Equity Compensation Plan Information


|                                                           |  |                      |            |     |                      |   |      |                         |  |  |           |    
|---------------------------------------------------------- |  | -------------------- | ---------- | --- | -------------------- | - | ---- | ----------------------- |  |  | --------- | ---
|                                                           |  | (a)                  |            |     | (b)                  |   |      | (c)                     | 
|                                                           |  | Number of Securities |            |     | Weighted-Average     |   |      | Number of Securities    | 
|                                                           |  | to be Issued Upon    |            |     | Exercise Price of    |   |      | Remaining Available for | 
|                                                           |  | Exercise of          |            |     | Outstanding Options, |   |      | Future Issuance         | 
|                                                           |  | Outstanding Options, |            |     | Warrants and         |   |      | (excluding Securities   | 
|Plan Category                                              |  | Warrants and Rights  |            |     | Rights               |   |      | reflected in column(a)) | 
|                                                           |  |                      |            |     |                      |   |      |                         | 
|Equity compensation plans approved by security holders     |  |                      | 10,116,724 | (1) |                      | $ | 5.38 |                         |  |  | 6,497,000 | (2)
|Equity compensation plans not approved by security holders |  |                      | 891,414    | (3) |                      | $ | 3.48 | (4)                     |  |  |          |    
|                                                           |  |                      |            |     |                      |   |      |                         | 
|Total                                                      |  |                      | 11,008,138 |     |                      | $ | 5.35 | (4)                     |  |  | 6,497,000 |    
|                                                           |  |                      |            |     |                      |   |      |                         | 








| |   |                                                                                       
| | - | --------------------------------------------------------------------------------------
| |  | our Amended and Restated 1999 Share Option/ Share Issuance
    Plan (the 1999 Plan);
|
| |  | our 2001 Nonstatutory Stock Option Plan (the 2001
    Plan); and                    
|
| |  | our 2003 Incentive Plan (the 2003 Plan).                                            





|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents (i) 3,363,549 Class A ordinary shares
    issuable upon the exercise of options outstanding under the 1999
    Plan, (ii) 95,628 Class A ordinary shares
    issuable upon the exercise of outstanding options assumed in
    connection with our acquisition of Spyglass, Inc. in July 2000,
    (iii) 4,770,882 Class A ordinary shares issuable upon
    the exercise of options outstanding under the 2003 Plan,
    (iv) 1,883,665 Class A ordinary shares issuable upon
    the exercise of outstanding options, assumed in connection with
    our acquisition of ACTV, Inc. in July 2003, and (v) 3,000
    Class A ordinary shares issuable upon the exercise of
    options outstanding under the 2005 Plan.
|   
|(2) | Represents (i) 5,997,000 Class A ordinary shares
    available for future issuance under the 2005 Plan and
    (ii) 500,000 Class A ordinary shares available for
    future issuance under the ESPP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(3) | Represents (i) 146,986 Class A ordinary shares
    issuable upon exercise of outstanding stock options granted
    under the 2001 Plan, and (ii) 744,428 Class A ordinary
    shares issuable upon the exercise of exchange rights granted
    under our 2000 Exchange Plan, or the Exchange Plan.                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(4) | Does not include information regarding weighted-average exercise
    price of Class A ordinary shares issuable under the
    Exchange Plan because such issuances do not involve the payment
    of an exercise price or the provision of other monetary
    consideration.                                                                                                                                                                                                                                                                                                                                                                                                                                                      

27



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2000 Exchange Plan




2001 Nonstatutory Stock Option Plan




Share Reserve.


Administration.


Eligibility.




| |   |                                                                     
| | - | --------------------------------------------------------------------
| |  | employees (other than employees who are executive
    officers); and
|
| |  | consultants.                                                        

Structure of Plan.


Corporate Transaction.


Amendment and Termination.


Recent Sales of Unregistered Securities


8-K


28



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##### Table of Contents








|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

Item 7. Managements
Discussion and Analysis of Financial Condition and Results of
Operations,


|                       |                                          |                                                    |   |         |      |  |   |         |   |  |      |         |   |      |   |          |   |  |   |            |  
|---------------------- | ---------------------------------------- | -------------------------------------------------- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - | ---- | - | -------- | - |  | - | ---------- | -
|                       |                                          | Year Ended December 31,                            |  
|                       |                                          |                                                    |  
|                       |                                          | 2005                                               |   |         | 2004 |  |   | 2003    |   |  | 2002 |         |   | 2001 |  
|                       |                                          |                                                    |   |         |      |  |   |         |   |  |      |         |   |      |  
|                       |                                          | (In thousands, except share and per share amounts) |  
|Results of operations: |                                          |                                                    |   |         |      |  |   |         |   |  |      |         |   |      |   |          |   |  |   |           
|                       | Revenues                                 |                                                    | $ | 87,380  |      |  | $ | 77,169  |   |  | $    | 64,197  |   |      | $ | 59,686   |   |  | $ | 86,927     |  
|                       | Cost of revenues                         |                                                    |   | 34,802  |      |  |   | 39,264  |   |  |      | 50,373  |   |      |   | 56,211   |   |  |   | 48,904     |  
|                       | Gross profit                             |                                                    |   | 52,578  |      |  |   | 37,905  |   |  |      | 13,824  |   |      |   | 3,475    |   |  |   | 38,023     |  
|                       | Operating expenses(1)                    |                                                    |   | 65,538  |      |  |   | 62,531  |   |  |      | 67,295  |   |      |   | 662,105  |   |  |   | 1,319,917  |  
|                       | Loss from operations                     |                                                    |   | (12,960 | )    |  |   | (24,626 | ) |  |      | (53,471 | ) |      |   | (658,630 | ) |  |   | (1,281,894 | )
|                       | Net loss(2)                              |                                                    |   | (8,473  | )    |  |   | (21,962 | ) |  |      | (54,094 | ) |      |   | (802,564 | ) |  |   | (1,304,282 | )
|                       | Net loss per share, basic and diluted(2) |                                                    |   | (0.07   | )    |  |   | (0.18   | ) |  |      | (0.57   | ) |      |   | (11.17   | ) |  |   | (19.20     | )






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | 2005 included $2,545 for restructuring and impairment costs;
    2004 included $(4,600) for NASCAR amendment and $893 for
    restructuring and impairment costs; 2003 included $6,587 for
    restructuring and impairment costs and $1,497 for impairment of
    intangible assets; 2002 included $29,414 for restructuring and
    impairment costs, $24,796 for impairment of intangible assets
    and $514,501 for impairment of goodwill; 2001 included $394,495
    for amortization of goodwill and $816,247 for impairment of
    goodwill.
|   
|(2) | 2002 included $10,923 for impairment of equity investments and
    notes receivable and $129,852 for cumulative effect of
    accounting change, net of tax. The cumulative effect of
    accounting change, net of tax contributed $1.81 net loss
    per share; 2001 included $14,915 for impairment of equity
    investment and notes receivable and $24,014 for realized loss on
    sale of marketable equity securities.                                                                                                                      

|                    |                                                       |                    |   |         |      |  |   |         |  |  |      |         |  |      |   |         |  |  |   |         | 
|------------------- | ----------------------------------------------------- | ------------------ | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- |  | ---- | - | ------- |  |  | - | ------- | 
|                    |                                                       | As of December 31, |  
|                    |                                                       |                    |  
|                    |                                                       | 2005               |   |         | 2004 |  |   | 2003    |  |  | 2002 |         |  | 2001 |  
|                    |                                                       |                    |   |         |      |  |   |         |  |  |      |         |  |      |  
|                    |                                                       | (In thousands)     |  
|Financial position: |                                                       |                    |   |         |      |  |   |         |  |  |      |         |  |      |   |         |  |  |   |        
|                    | Cash, cash equivalents and marketable debt securities |                    | $ | 64,472  |      |  | $ | 63,020  |  |  | $    | 73,496  |  |      | $ | 87,707  |  |  | $ | 189,542 | 
|                    | Working capital                                       |                    |   | 38,535  |      |  |   | 19,981  |  |  |      | 19,395  |  |      |   | 30,276  |  |  |   | 100,083 | 
|                    | Total assets                                          |                    |   | 202,065 |      |  |   | 192,411 |  |  |      | 219,555 |  |      |   | 197,336 |  |  |   | 966,199 | 
|                    | Total shareholders equity                            |                    |   | 152,512 |      |  |   | 145,175 |  |  |      | 156,983 |  |      |   | 140,996 |  |  |   | 928,358 | 

29



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations



Overview








Recent Events




8-K


30



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##### Table of Contents



Critical Accounting Policies and Estimates








| |                    
| | -------------------
| | Revenue Recognition

97-2, 81-1, 97-2




31



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##### Table of Contents









| |                     
| | --------------------
| | Valuation Allowances







| |                                                         
| | --------------------------------------------------------
| | Valuation of Investments in Privately-Held
    Companies





| |                                             
| | --------------------------------------------
| | Impairment of Goodwill and Long-lived Assets





| |                    
| | -------------------
| | Restructuring Costs



32



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Recent Accounting Pronouncements


Share-Based
Payment.




03-1, 03-1-a, 03-1, 115-1, 03-1 D-44, 03-1 115-1 115-1




Managements Assessment of Internal Control Over
Financial Reporting and Disclosure Controls




33



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##### Table of Contents



10-K,


13a-15(f) 15d-15(f)


10-K,




10-K


Years Ended December 31, 2005, 2004, and 2003




| |         
| | --------
| | Revenues





|                       |  |                         |      |  |   |  |      |      |  |   |      |  |  |      |      |  |   |   |      |  |  |  |      | 
|---------------------- |  | ----------------------- | ---- |  | - |  | ---- | ---- |  | - | ---- |  |  | ---- | ---- |  | - | - | ---- |  |  |  | ---- | 
|                       |  | Year Ended December 31, |     
|                       |  |                         |     
|                       |  | 2005                    |      |  | % |  |      | 2004 |  |   | %    |  |  | 2003 |      |  | % |  
|                       |  |                         |      |  |   |  |      |      |  |   |      |  |  |      |      |  |   |  
|Royalties and licenses |  | $                       | 55.1 |  |   |  | 63%  |      |  | $ | 48.9 |  |  |      | 63%  |  |   | $ | 28.7 |  |  |  | 45%  | 
|Services and other     |  |                         | 32.3 |  |   |  | 37%  |      |  |   | 28.3 |  |  |      | 37%  |  |   |   | 35.5 |  |  |  | 55%  | 
|                       |  |                         |      |  |   |  |      |      |  |   |      |  |  |      |      |  |   |  
|Total Revenues         |  | $                       | 87.4 |  |   |  | 100% |      |  | $ | 77.2 |  |  |      | 100% |  |   | $ | 64.2 |  |  |  | 100% | 
|                       |  |                         |      |  |   |  |      |      |  |   |      |  |  |      |      |  |   |  

Royalties and licenses.


34



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97-2








35



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Services and Other.








36



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| |                   
| | ------------------
| | Operating Expenses



|                                   |  |                         |       |      |         |  |     |      |      |   |         |   |  |      |     |    |         |   |       |  |  |  |     |  
|---------------------------------- |  | ----------------------- | ----- | ---- | ------- |  | --- | ---- | ---- | - | ------- | - |  | ---- | --- | -- | ------- | - | ----- |  |  |  | --- | -
|                                   |  | Year Ended December 31, |      
|                                   |  |                         |      
|                                   |  |                         |       | % of |         |  |     |      | % of |   |         |   |  | % of |    
|                                   |  | 2005                    |       |      | Revenue |  |     | 2004 |      |   | Revenue |   |  | 2003 |     |    | Revenue |  
|                                   |  |                         |       |      |         |  |     |      |      |   |         |   |  |      |     |    |         |  
|Cost of Royalties and licenses     |  | $                       | 6.4   |      |         |  | 7   | %    |      | $ | 8.2     |   |  |      | 11  | %  |         | $ | 10.7  |  |  |  | 17  | %
|Cost of Services and other         |  |                         | 28.4  |      |         |  | 33  | %    |      |   | 31.1    |   |  |      | 40  | %  |         |   | 39.7  |  |  |  | 62  | %
|                                   |  |                         |       |      |         |  |     |      |      |   |         |   |  |      |     |    |         |  
|Total Cost of Revenues             |  |                         | 34.8  |      |         |  | 40  | %    |      |   | 39.3    |   |  |      | 51  | %  |         |   | 50.4  |  |  |  | 79  | %
|NASCAR amendment                   |  |                         |      |      |         |  |    |      |      |   | (4.6    | ) |  |      | (6  | )% |         |   |      |  |  |  |    |  
|Research and development           |  |                         | 33.9  |      |         |  | 39  | %    |      |   | 29.7    |   |  |      | 39  | %  |         |   | 23.1  |  |  |  | 36  | %
|Sales and marketing                |  |                         | 11.5  |      |         |  | 13  | %    |      |   | 15.1    |   |  |      | 20  | %  |         |   | 13.8  |  |  |  | 21  | %
|General and administrative         |  |                         | 15.9  |      |         |  | 18  | %    |      |   | 17.9    |   |  |      | 23  | %  |         |   | 17.4  |  |  |  | 27  | %
|Restructuring and impairment costs |  |                         | 2.5   |      |         |  | 3   | %    |      |   | 0.9     |   |  |      | 1   | %  |         |   | 6.6   |  |  |  | 10  | %
|Amortization of intangible assets  |  |                         | 1.7   |      |         |  | 2   | %    |      |   | 3.5     |   |  |      | 4   | %  |         |   | 4.9   |  |  |  | 8   | %
|Impairment of intangible assets    |  |                         |      |      |         |  |    |      |      |   |        |   |  |      |    |    |         |   | 1.5   |  |  |  | 2   | %
|                                   |  |                         |       |      |         |  |     |      |      |   |         |   |  |      |     |    |         |  
|Total Operating Expenses           |  | $                       | 100.3 |      |         |  | 115 | %    |      | $ | 101.8   |   |  |      | 132 | %  |         | $ | 117.7 |  |  |  | 183 | %
|                                   |  |                         |       |      |         |  |     |      |      |   |         |   |  |      |     |    |         |  

Cost of Royalties and Licenses. patent-related


patent-related




Cost of Services and Other.






37



---



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NASCAR Amendment.


Research and Development.








Sales and Marketing.






General and Administrative.




38



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Restructuring and Impairment Costs.








| |                                                 
| | ------------------------------------------------
| | Impairment and Amortization of Intangible Assets





| |                
| | ---------------
| | Interest Income





| |                               
| | ------------------------------
| | Other Income and Expense Items





39



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##### Table of Contents





| |                  
| | -----------------
| | Minority Interest

co-owned




| |             
| | ------------
| | Income Taxes





Business Segment Results


Disclosure
about Segments of an Enterprise and Related
Information.




non-GAAP


40



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##### Table of Contents









|                                       |                        |                                                   |      |      |      |  |     |      |    |   |      |      |      |      |     |    |    |   |      |      |      |  |     |    |    |  
|-------------------------------------- | ---------------------- | ------------------------------------------------- | ---- | ---- | ---- |  | --- | ---- | -- | - | ---- | ---- | ---- | ---- | --- | -- | -- | - | ---- | ---- | ---- |  | --- | -- | -- | -
|                                       |                        | Year Ended December 31,                           |     
|                                       |                        |                                                   |     
|                                       |                        | 2005                                              |      |      | %    |  |     | 2004 |    |   | %    |      |      | 2003 |     |    | %  |  
|                                       |                        |                                                   |      |      |      |  |     |      |    |   |      |      |      |      |     |    |    |  
|Middleware and Integrated Technologies |                        |                                                   |      |      |      |  |     |      |    |   |      |      |      |      |     |    |    |   |      |      |      |  |     |   
|                                       | Royalties and licenses |                                                   | $    | 54.4 |      |  |     | 62   | %  |   | $    | 48.8 |      |      |     | 63 | %  |   | $    | 28.0 |      |  |     | 43 | % 
|                                       | Services and other     |                                                   |      | 13.9 |      |  |     | 16   | %  |   |      | 14.3 |      |      |     | 19 | %  |   |      | 21.6 |      |  |     | 34 | % 
|                                       |                        |                                                   |      |      |      |  |     |      |    |   |      |      |      |      |     |    |    |  
|                                       |                        | Subtotal  Middleware and Integrated Technologies |      |      | 68.3 |  |     |      | 78 | % |      |      | 63.1 |      |     |    | 82 | % |      |      | 49.6 |  |     |    | 77 | %
|Applications                           |                        |                                                   |      |      |      |  |     |      |    |   |      |      |      |      |     |    |    |   |      |      |      |  |     |   
|                                       | Royalties and licenses |                                                   | $    | 0.7  |      |  |     | 1    | %  |   | $    | 0.1  |      |      |     | 0  | %  |   | $    | 0.7  |      |  |     | 1  | % 
|                                       | Services and other     |                                                   |      | 13.4 |      |  |     | 15   | %  |   |      | 12.0 |      |      |     | 16 | %  |   |      | 13.6 |      |  |     | 21 | % 
|                                       |                        |                                                   |      |      |      |  |     |      |    |   |      |      |      |      |     |    |    |  
|                                       |                        | Subtotal  Applications                           |      |      | 14.1 |  |     |      | 16 | % |      |      | 12.1 |      |     |    | 16 | % |      |      | 14.3 |  |     |    | 22 | %
|BettingCorp                            |                        |                                                   |      |      |      |  |     |      |    |   |      |      |      |      |     |    |    |   |      |      |      |  |     |   
|                                       | Royalties and licenses |                                                   | $    |     |      |  |     | 0    | %  |   | $    |     |      |      |     | 0  | %  |   | $    |     |      |  |     | 0  | % 
|                                       | Services and other     |                                                   |      | 5.0  |      |  |     | 6    | %  |   |      | 2.0  |      |      |     | 2  | %  |   |      | 0.3  |      |  |     | 1  | % 
|                                       |                        |                                                   |      |      |      |  |     |      |    |   |      |      |      |      |     |    |    |  
|                                       |                        | Subtotal  BettingCorp                            |      |      | 5.0  |  |     |      | 6  | % |      |      | 2.0  |      |     |    | 2  | % |      |      | 0.3  |  |     |    | 1  | %
|                                       |                        |                                                   |      |      |      |  |     |      |    |   |      |      |      |      |     |    |    |  
|Total Revenues                         |                        | $                                                 | 87.4 |      |      |  | 100 | %    |    | $ | 77.2 |      |      |      | 100 | %  |    | $ | 64.2 |      |      |  | 100 | % 
|                                       |                        |                                                   |      |      |      |  |     |      |    |   |      |      |      |      |     |    |    |  



| |                                       
| | --------------------------------------
| | Middleware and Integrated Technologies



set-top


41



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##### Table of Contents







| |             
| | ------------
| | Applications





| |            
| | -----------
| | BettingCorp





| |                                
| | -------------------------------
| | Contribution Margins by Segment



|                                       |                           |                         |       |      |      |  |       |      |  |  |       |      |  
|-------------------------------------- | ------------------------- | ----------------------- | ----- | ---- | ---- |  | ----- | ---- |  |  | ----- | ---- | -
|                                       |                           | Year Ended December 31, |      
|                                       |                           |                         |      
|                                       |                           | 2005                    |       |      | 2004 |  |       | 2003 | 
|                                       |                           |                         |       |      |      |  |       |      | 
|Contribution Margin:                   |                           |                         |       |      |      |  |       |      |  |  |       |     
|Middleware and Integrated Technologies |                           |                         | 28.8  |      |      |  | 26.3  |      |  |  | 17.7  |     
|Applications                           |                           |                         | (4.4  | )    |      |  | (6.8  | )    |  |  | (17.9 | )   
|BettingCorp                            |                           |                         | (4.8  | )    |      |  | (4.5  | )    |  |  | (1.5  | )   
|                                       |                           |                         |       |      |      |  |       |      | 
|                                       | Total Contribution Margin |                         |       | 19.6 |      |  |       | 15.0 |  |  |       | (1.7 | )
|Unallocated corporate overhead         |                           |                         | (20.4 | )    |      |  | (29.1 | )    |  |  | (26.3 | )   
|NASCAR amendment                       |                           |                         |      |      |      |  | 4.6   |      |  |  |      |     
|BSkyB Contract amendment               |                           |                         |      |      |      |  |      |      |  |  | 1.2   |     
|DirectTV Market development costs      |                           |                         |      |      |      |  |      |      |  |  | 3.8   |     
|Restructuring and impairment costs     |                           |                         | (2.6  | )    |      |  | (0.9  | )    |  |  | (6.6  | )   

42



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##### Table of Contents



|                                         |                          |                         |      |      |      |  |      |       |   |  |       |       |  
|---------------------------------------- | ------------------------ | ----------------------- | ---- | ---- | ---- |  | ---- | ----- | - |  | ----- | ----- | -
|                                         |                          | Year Ended December 31, |     
|                                         |                          |                         |     
|                                         |                          | 2005                    |      |      | 2004 |  |      | 2003  |  
|                                         |                          |                         |      |      |      |  |      |       |  
|Depreciation and amortization            |                          |                         | (3.8 | )    |      |  | (5.9 | )     |   |  | (7.5  | )    
|Amortization of intangible assets        |                          |                         | (5.8 | )    |      |  | (8.2 | )     |   |  | (14.7 | )    
|Amortization of share-based compensation |                          |                         |     |      |      |  |     |       |   |  | (0.2  | )    
|Interest income                          |                          |                         | 1.7  |      |      |  | 0.8  |       |   |  | 1.6   |      
|Other income/ (expense)                  |                          |                         | 3.8  |      |      |  | 0.5  |       |   |  | (1.1  | )    
|Minority interest                        |                          |                         | 0.1  |      |      |  | 0.5  |       |   |  | 0.2   |      
|Impairment of intangible assets          |                          |                         |     |      |      |  |     |       |   |  | (1.5  | )    
|                                         |                          |                         |      |      |      |  |      |       |  
|                                         | Loss before income taxes |                         |      | (7.4 | )    |  |      | (22.7 | ) |  |       | (52.8 | )
|Income tax (expense)/ benefit            |                          |                         | (1.1 | )    |      |  | 0.8  |       |   |  | (1.3  | )    
|                                         |                          |                         |      |      |      |  |      |       |  
|                                         | Net loss                 |                         | $    | (8.5 | )    |  | $    | (21.9 | ) |  | $     | (54.1 | )
|                                         |                          |                         |      |      |      |  |      |       |  



| |                                       
| | --------------------------------------
| | Middleware and Integrated Technologies





| |             
| | ------------
| | Applications





| |            
| | -----------
| | BettingCorp



Deferred Revenue


97-2, 81-1






43



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##### Table of Contents









|                         |  |                      |      | 
|------------------------ |  | -------------------- | ---- | 
|                         |  | Expected Recognition |     
|Year Ending December 31, |  | of Unearned Revenue  |     
|                         |  |                      |     
|                         |  | (In millions)        |     
|2006                     |  | $                    | 10.9 | 
|2007                     |  |                      | 3.1  | 
|Thereafter               |  |                      | 3.7  | 
|                         |  |                      |     
|                         |  | $                    | 17.7 | 
|                         |  |                      |     



Liquidity and Capital Resources








44



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##### Table of Contents











Commitments and Contractual Obligations




|                                    |  |       |      |        |      |   |        |           |  |        |           |  |         |       |     |  |  |   |     | 
|----------------------------------- |  | ----- | ---- | ------ | ---- | - | ------ | --------- |  | ------ | --------- |  | ------- | ----- | --- |  |  | - | --- | 
|                                    |  |       |      |        |      |   |        |           |  | Due in |          
|                                    |  |       |      | Due in |      |   | Due in |           |  | Due in |           |  | 2011 or |      
|                                    |  | Total |      |        | 2006 |   |        | 2007-2008 |  |        | 2009-2010 |  |         | After |    
|                                    |  |       |      |        |      |   |        |           |  |        |           |  |         |       |    
|Operating leases obligations        |  | $     | 15.0 |        |      | $ | 4.0    |           |  | $      | 7.1       |  |         | $     | 3.8 |  |  | $ | 0.1 | 
|Noncancellable purchase obligations |  |       | 2.2  |        |      |   | 2.1    |           |  |        | 0.1       |  |         |       |    |  |  |   |    | 
|                                    |  |       |      |        |      |   |        |           |  |        |           |  |         |       |    
|Total contractual obligations       |  | $     | 17.2 |        |      | $ | 6.1    |           |  | $      | 7.2       |  |         | $     | 3.8 |  |  | $ | 0.1 | 
|                                    |  |       |      |        |      |   |        |           |  |        |           |  |         |       |    





45



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##### Table of Contents





10-K,


Indemnification









|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk



Fixed Income Investment Risk








46



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##### Table of Contents





|                           |  |                 |        |              |                |   |              |                |  |              |                |  |              |                |        |  |  |   |        | 
|-------------------------- |  | --------------- | ------ | ------------ | -------------- | - | ------------ | -------------- |  | ------------ | -------------- |  | ------------ | -------------- | ------ |  |  | - | ------ | 
|                           |  |                 |        | Valuation of |                |   | Valuation of |                |  | Valuation of |                |  | Valuation of |               
|                           |  | Fair Value as   |        |              | Securities if  |   |              | Securities if  |  |              | Securities if  |  |              | Securities if  |       
|                           |  | of December 31, |        |              | Interest Rates |   |              | Interest Rates |  |              | Interest Rates |  |              | Interest Rates |       
|                           |  | 2005            |        |              | Decrease 1%    |   |              | Increase 1%    |  |              | Decrease 2%    |  |              | Increase 2%    |       
|                           |  |                 |        |              |                |   |              |                |  |              |                |  |              |                |       
|Marketable debt securities |  | $               | 17,243 |              |                | $ | 17,368       |                |  | $            | 17,118         |  |              | $              | 17,493 |  |  | $ | 16,993 | 



Foreign Currency Exchange Rate Risk











|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure





|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures



| |                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------
| | a.     Managements Annual
    Report on Internal Control over Financial Reporting as of
    December 31, 2005.





47



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##### Table of Contents







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Companys financial reporting process did not provide
    for effective account analysis for certain financial statement
    accounts. Specifically, the accounting for accruals, long-term
    other assets, and deferred-tax assets was not adequately
    analyzed. This material weakness resulted in errors, which were
    material in the aggregate, in the Companys preliminary
    2005 financial statements.                                               
|
| |  | The Company did not have sufficient personnel with adequate
    technical expertise to analyze effectively, and review in a
    timely manner, its accounting for revenue and income taxes.
    These material weaknesses resulted in material errors in the
    Companys accounting for: (a) certain complex
    multiple-element software license and professional service
    arrangements; and (b) income taxes and related financial
    statement note disclosures.



10-K.




| |                                                                               
| | ------------------------------------------------------------------------------
| | b.     Correction of Material
    Errors in Consolidated Financial Statements.





| |                                                             
| | ------------------------------------------------------------
| | c.     Evaluation of Disclosure
    Controls and Procedures.









| |                                                                
| | ---------------------------------------------------------------
| | d.     Changes in Internal
    Control Over Financial Reporting



48



---



##### Table of Contents







| |                                                                                        
| | ---------------------------------------------------------------------------------------
| | 1) Certain Duties within the Companys Financial Group
    were not Properly Segregated





| |                                                                                                     
| | ----------------------------------------------------------------------------------------------------
| | 2) Certain Controls Associated with the Financial Reporting
    and Close Process were not Effective





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Managements review of certain year-end accruals was not
    effective in 2004. Specifically, this review did not identify
    that an accrual was not adequately supported by reasonable
    assumptions and sufficient documentation. We implemented new
    procedures during 2005 that require the Companys financial
    group to collect, analyze and monitor all necessary and relevant
    supporting documentation for accrual balances and any
    adjustments. We also introduced additional procedures to ensure
    a more thorough review of financial data in the financial
    reporting and close process. As noted above in Item 9A.a.,
    management has identified a material weakness as of
    December 31, 2005 related to its analysis of certain
    financial statement accounts in connection with the financial
    reporting process. Management has concluded that it had not
    remediated the deficiency described in this paragraph as of
    December 31, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Managements ineffective review of certain detailed
    schedules prepared in connection with the Companys
    financial reporting process for 2004 to support the
    Companys financial statements and related note disclosures
    led to errors in the statement of cash flows, lease commitments
    and tax notes and required modification of those notes as
    included in the our 2004 audited financial statements. We
    implemented certain changes in our Internal Control during 2005,
    including the introduction of additional procedures to ensure a
    more thorough review of financial data in the financial
    reporting and close process. As a result of the foregoing
    changes in Internal Control, management believes that it had
    remediated this material weakness as of December 31, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | The Company did not have sufficient internal personnel and
    technical expertise to properly apply accounting principles to
    certain non-routine matters. As a result, the Company
    inappropriately applied the provisions of Statement of Financial
    Accounting Standards No. 142, Goodwill and Other
    Intangibles(SFAS No. 142) in conducting its
    annual analysis for potential impairment that led to an error in
    the accounting for goodwill that was identified and subsequently
    corrected. The Company hired a new Chief Financial Officer in
    May 2005, added additional staff to its financial department and
    also appointed a new Controller in the summer of 2005.
    Management did not identify any errors associated with the
    application of SFAS 142 in 2005. As noted above in
    Item 9A.a., however, management has identified the lack of
    sufficient internal personnel with adequate technical expertise
    to analyze effectively, and review in a timely manner, its
    accounting with respect to certain complex multiple-element
    software license and professional service arrangements and
    income taxes and related financial statement note disclosures as
    a material weakness at December 31, 2005. Management has
    concluded that it had not remediated the deficiency described in
    this paragraph as of December 31, 2005.

49



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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


















| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Companys financial reporting process did not provide
    for effective account analysis for certain financial statement
    accounts. Specifically, the accounting for accruals, long-term
    other assets, and deferred-tax assets was not adequately
    analyzed. This material weakness resulted in errors, which were
    material in the aggregate, in the Companys preliminary
    2005 financial statements.                                               
|
| |  | The Company did not have sufficient personnel with adequate
    technical expertise to analyze effectively, and review in a
    timely manner, its accounting for revenue and income taxes.
    These material weaknesses resulted in material errors in the
    Companys accounting for: (a) certain complex
    multiple-element software license and professional service
    arrangements; and (b) income taxes and related financial
    statement note disclosures.

50



---



##### Table of Contents









| |             
| | ------------
| | /s/ KPMG LLP










|         |                  
|-------- | -----------------
|Item 9B. | Other Information



51



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##### Table of Contents






PART III







|         |                                           
|-------- | ------------------------------------------
|Item 10. | Directors and Executive Officers of OpenTV

10-K









|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accounting Fees and Services



52



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##### Table of Contents






PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules



|       |                                                             
|------ | ------------------------------------------------------------
|(a)(1) | Financial Statements Included in Part II of this
    Report:

|                                                                                                                                    |  |      |     | 
|----------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                                    |  | Page |    
|                                                                                                                                    |  |      |    
|Index to Consolidated Financial
    Statements                                                                                      |  |      | F-1 | 
|Report of Independent Registered Public
    Accounting Firm                                                                         |  |      | F-2 | 
|Consolidated Balance Sheets as of
    December 31, 2005 and 2004                                                                    |  |      | F-3 | 
|Consolidated Statements of Operations for
    the years ended December 31, 2005, 2004 and 2003                                      |  |      | F-4 | 
|Consolidated Statements of
    Shareholders Equity and Comprehensive Loss for the years
    ended December 31, 2005, 2004 and 2003 |  |      | F-5 | 
|Consolidated Statements of Cash Flows for
    the years ended December 31, 2005, 2004 and 2003                                      |  |      | F-6 | 
|Notes to the Consolidated Financial
    Statements                                                                                  |  |      | F-7 | 



|    |                             
|--- | ----------------------------
|(2) | Financial Statement Schedule





|    |         
|--- | --------
|(3) | Exhibits

| |    |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | -- | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2  | .1  |  | Asset Purchase Agreement, dated as of September 7, 2005, by
    and among OpenTV Corp., OpenTV Advertising Holdings, Inc., CAM
    Systems, L.L.C., StarNet, L.P., StarNet Management, L.L.C.,
    H. Chase Lenfest, H.F. Lenfest and HCL Family Holdings,
    L.P. (incorporated by reference to Exhibit 2.1 to the
    Current Report on Form 8-K of OpenTV Corp., as filed with
    the Securities and Exchange Commission on September 9,
    2005).
| | 3  | .1* |  | Amended and Restated Memorandum of Association of OpenTV Corp.                                                                                                                                                                                                                                                                                                                                                                                          
| | 3  | .2  |  | Articles of Association of OpenTV Corp. (incorporated by
    reference to Exhibit 3(ii) to the Quarterly Report on
    Form 10-Q of OpenTV Corp. for the quarterly period ended
    September 30, 2002, as filed with the Securities and
    Exchange Commission on November 14, 2002).                                                                                                                                                                 
| | 4  | .1  |  | Specimen Certificate for Class A ordinary shares of OpenTV
    Corp. (incorporated by reference to Exhibit 4.1 of
    Amendment No. 1 (the First F-1 Amendment) to
    the F-1 Registration Statement, as filed with the Securities and
    Exchange Commission on November 10, 1999).                                                                                                                                                                
| | 10 | .1  |  | Form of Indemnification Agreement for directors and officers of
    OpenTV Corp. (incorporated by reference to Exhibit 10.1 to
    the Annual Report on Form 10-K of OpenTV Corp., as filed
    with the Securities and Exchange Commission on March 16,
    2005 (the 2005 10-K)).                                                                                                                                                                   
| | 10 | .2  |  | OpenTV Corp.s Amended and Restated 1999 Employee Stock
    Purchase Plan (incorporated by reference to Exhibit 4.2 to
    the Annual Report on Form 20-F of OpenTV Corp. for the year
    ended December 31, 2000 (the 2000 20-F).                                                                                                                                                                                                                   
| | 10 | .3  |  | OpenTV Corp.s Amended and Restated 1999 Share Option/
    Share Issuance Plan (incorporated by reference to
    Exhibit 10.3 of Amendment No. 3 (the Third F-1
    Amendment) to the F-1 Registration Statement, as filed
    with the Securities and Exchange Commission on November 19,
    1999).                                                                                                                                                 
| | 10 | .4  |  | Shareholders Agreement among OTV Holdings Limited, OpenTV
    Corp. and Sun TSI Subsidiary, Inc. dated October 23, 1999
    (incorporated by reference to Exhibit 10.4 to the Third F-1
    Amendment).                                                                                                                                                                                                                                                
| | 10 | .5  |  | Trademark License Agreement between Sun Microsystems, Inc. and
    OpenTV, Inc. dated March 20, 1998 (incorporated by
    reference to Exhibit 10.5 to the Third F-1 Amendment).                                                                                                                                                                                                                                                                        
| | 10 | .6  |  | Technology License and Distribution Agreement between Sun
    Microsystems, Inc. and OpenTV, Inc. dated March 20, 1998
    (incorporated by reference to Exhibit 10.6 to the Third F-1
    Amendment).                                                                                                                                                                                                                                                  
| | 10 | .7  |  | First Amendment to Technology License and Distribution Agreement
    between Sun Microsystems, Inc. and OpenTV, Inc. dated
    June 30, 1999 (incorporated by reference to
    Exhibit 10.7 to the Third F-1 Amendment).                                                                                                                                                                                                                                

53



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| |    |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                               
| | -- | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10 | .8  |  | Source Code License and Binary Distribution Agreement between
    Sun Microsystems, Inc. and OpenTV, Inc. effective July 1,
    1996 (incorporated by reference to Exhibit 10.10 to the
    Third F-1 Amendment).                                                                                                                                                                                                             
| | 10 | .9  |  | Source Code License and Binary Distribution Agreement between
    Sun Microsystems, Inc. and OpenTV, Inc. effective April 1,
    1998 (incorporated by reference to Exhibit 10.9 to the
    Third F-1 Amendment).                                                                                                                                                                                                             
| | 10 | .10 |  | Convertible Preferred Stock Purchase Agreement between OpenTV
    Corp. and Sun TSI Subsidiary, Inc. dated October 23, 1999
    (incorporated by reference to Exhibit 10.11 to the Second
    F-1 Amendment).                                                                                                                                                                                                                 
| | 10 | .11 |  | Convertible Preferred Stock and Warrant Purchase Agreement among
    OpenTV Corp., America Online, Inc., General Instrument
    Corporation, LDIG OTV, Inc., News America Incorporated and
    TWI-OTV Holdings, Inc., dated October 23, 1999
    (incorporated by reference to Exhibit 10.11 to the
    First F-1 Amendment).                                                                                                
| | 10 | .12 |  | Exchange Agreement between OpenTV Corp., OpenTV, Inc. and Sun
    TSI Subsidiary, Inc., dated October 23, 1999 (incorporated
    by reference to Exhibit 10.12 to the First F-1 Amendment).                                                                                                                                                                                                                                   
| | 10 | .13 |  | Investors Rights Agreement among OpenTV Corp., America
    Online, Inc., General Instrument Corporation, LDIG OTV, Inc.,
    News America Incorporated, TWI-OTV Holdings, Inc., OTV Holdings
    Limited, Sun TSI Subsidiary, Inc. and MIH (BVI) Ltd., dated
    October 23, 1999 (incorporated by reference to
    Exhibit 10.14 to the Second F-1 Amendment).                                                              
| | 10 | .14 |  | Amended and Restated Stockholders Agreement among OpenTV
    Corp., OpenTV, Inc., OTV Holdings Limited, Sun Microsystems,
    Inc. and Sun TSI Subsidiary, Inc., dated October 23, 1999
    (incorporated by reference to Exhibit 10.15 to the Second
    F-1 Amendment).                                                                                                                                                    
| | 10 | .15 |  | OpenTVs Amended and Restated 2000 Exchange Plan
    (incorporated by reference to Exhibit 10.1 to the
    Form 6-K of OpenTV Corp., as filed with the Securities and
    Exchange Commission on August 30, 2000).                                                                                                                                                                                                            
| | 10 | .16 |  | Registration Rights Agreement by and among OpenTV Corp., General
    Instrument Corporation and Cable Soft Communications, Inc. dated
    November 13, 2000 (incorporated by reference to
    Exhibit 4.1 to the Form 6-K of OpenTV Corp., as filed
    with the Securities and Exchange Commission on December 1,
    2000).                                                                                                 
| | 10 | .17 |  | Marketing Agreement dated as of January 22, 2001 by and
    between British Sky Broadcasting Limited and OpenTV, Inc.
    (incorporated by reference to Exhibit 4.22 to the 2000
    20-F).                                                                                                                                                                                                                                   
| | 10 | .18 |  | Second Amendment to Technology License and Distribution
    Agreement between Sun Microsystems, Inc. and OpenTV, Inc., dated
    December 20, 2000 (incorporated by reference to
    Exhibit 4.23 to the 2000 20-F).                                                                                                                                                                                                          
| | 10 | .19 |  | OpenTVs 2001 Nonstatutory Stock Option Plan (incorporated
    by reference to Exhibit 4.1 to the Registration Statement
    on Form S-8 of OpenTV Corp. (File No. 333-74026), as
    filed with the Securities and Exchange Commission on
    November 27, 2001).                                                                                                                                                            
| | 10 | .20 |  | Letter Agreement between MIH Limited and OpenTV Corp. dated
    May 8, 2002 (incorporated by reference to Exhibit 4.34
    to the 2001 20-F).                                                                                                                                                                                                                                                                                 
| | 10 | .21 |  | License Agreement for OpenTV Interactive Applications and
    Enterprise and Network Solutions, dated as of August 16,
    2002, by and among OpenTV, Inc., MultiChoice Africa Limited and
    MIH Limited (incorporated by reference to Exhibit 10.31 to
    the Registration Statement on Form S-4 of OpenTV Corp.
    (File No. 333-102944), as filed with the Securities and
    Exchange Commission on February 4, 2003).
| | 10 | .22 |  | OpenTV Corp. 2003 Incentive Plan (incorporated by reference to
    Exhibit 10.32 to Amendment No. 1 to the Registration
    Statement on Form S-4 of OpenTV Corp.(File
    No. 333-102944), as filed with the Securities and Exchange
    Commission on April 25, 2003).                                                                                                                                                      
| | 10 | .23 |  | Letter Agreement between OpenTV, Inc. and Mark Allen dated
    July 9, 2004. (incorporated by reference to
    Exhibit 10.23 to the 2005 10-K).                                                                                                                                                                                                                                                                               
| | 10 | .24 |  | Letter Agreement between OpenTV, Inc. and Mazin Jadallah dated
    July 26, 2004. (incorporated by reference to
    Exhibit 10.24 to the 2005 10-K).                                                                                                                                                                                                                                                                          
| | 10 | .25 |  | Form of Incentive Stock Option Agreement for OpenTV Corp.
    Amended and Restated 1999 Share Option/ Share Issuance
    Plan. (incorporated by reference to Exhibit 10.25 to the
    2005 10-K).                                                                                                                                                                                                                             
| | 10 | .26 |  | Form of Nonstatutory Stock Option Agreement for OpenTV Corp.
    2001 Nonstatutory Stock Option Plan. (incorporated by reference
    to Exhibit 10.26 to the 2005 10-K).                                                                                                                                                                                                                                                      
| | 10 | .27 |  | Form of Incentive Stock Option Agreement for OpenTV Corp. 2003
    Incentive Plan. (incorporated by reference to Exhibit 10.27
    to the 2005 10-K).                                                                                                                                                                                                                                                                         

54



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##### Table of Contents



| |    |     |  |                                                                                                                                                                                                                                                                                                                                                                              
| | -- | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10 | .28 |  | Retention Agreement, dated March 30, 2005, between OpenTV,
    Inc. and Vincent Dureau (incorporated by reference to
    Exhibit 10.28 to the Current Report on Form 8-K of
    OpenTV Corp. (the 2005 Current Report), as filed
    with the Securities and Exchange Commission on April 1,
    2005).                                                                    
| | 10 | .29 |  | Retention Agreement, dated March 30, 2005, between OpenTV,
    Inc. and Joel Hassell (incorporated by reference to
    Exhibit 10.29 to the 2005 Current Report).                                                                                                                                                                                                            
| | 10 | .30 |  | Retention Agreement, dated March 30, 2005, between OpenTV,
    Inc. and Wesley Hoffman (incorporated by reference to
    Exhibit 10.30 to the 2005 Current Report).                                                                                                                                                                                                          
| | 10 | .31 |  | Retention Agreement, dated March 30, 2005, between OpenTV,
    Inc. and Scott Wornow (incorporated by reference to
    Exhibit 10.31 to the 2005 Current Report).                                                                                                                                                                                                            
| | 10 | .32 |  | Letter Agreement, dated March 30, 2005, between OpenTV
    Corp. and Richard Hornstein (incorporated by reference to
    Exhibit 10.32 to the 2005 Current Report).                                                                                                                                                                                                          
| | 10 | .33 |  | Offer Letter to Shum Mukherjee dated May 27, 2005
    (incorporated by reference to Exhibit 10.33 to the Current
    Report on Form 8-K of OpenTV Corp., as filed with the
    Securities and Exchange Commission on May 31, 2005).                                                                                                                                          
| | 10 | .34 |  | Employment Agreement, dated as of March 23, 2004, between
    OpenTV Corp. and James Chiddix (incorporated by reference to
    Exhibit 10.1 to the Quarterly Report on Form 10-Q of
    OpenTV Corp., as filed with the Securities and Exchange
    Commission on May 10, 2004).                                                                                             
| | 10 | .35 |  | Offer Letter to Tim Evard dated December 1, 2004
    (incorporated by reference to Exhibit 10.1 to the Current
    Report on Form 8-K of OpenTV Corp., as filed with the
    Securities and Exchange Commission on December 17, 2004).                                                                                                                                       
| | 10 | .36 |  | OpenTV Corp. 2005 Incentive Plan (incorporated by reference to
    Annex A to the 2005 Proxy Statement on Schedule 14A of
    OpenTV Corp., as filed with the Securities and Exchange
    Commission on October 14, 2005).                                                                                                                                                   
| | 10 | .37 |  | Form of Incentive Stock Option Agreement for OpenTV Corp. 2005
    Incentive Plan (incorporated by reference to Exhibit 4.3 to
    the Registration Statement on Form S-8 of OpenTV Corp., as
    filed with the Securities and Exchange Commission on
    December 21, 2005 (the 2005 S-8)).                                                                              
| | 10 | .38 |  | Form of Non-Qualified Stock Option Agreement for OpenTV Corp.
    2005 Incentive Plan (incorporated by reference to
    Exhibit 4.4 to the 2005 S-8).                                                                                                                                                                                                                        
| | 10 | .39 |  | Form of Independent Director Stock Option Agreement for OpenTV
    Corp. 2005 Incentive Plan (incorporated by reference to
    Exhibit 4.5 to the 2005 S-8).                                                                                                                                                                                                                 
| | 10 | .40 |  | Registration Rights Agreement, dated as of September 7,
    2005, by and among OpenTV Corp., CAM Systems, L.L.C. and
    StarNet, L.P. (incorporated by reference to Exhibit 10.34
    to Quarterly Report on Form 10-Q of OpenTV Corp. for the
    quarterly period ended September 30, 2005, as filed with
    the Securities and Exchange Commission on November 7, 2005).
| | 10 | .41 |  | Letter Agreement, dated February 10, 2006, between OpenTV
    Corp. and Liberty Media Corporation (incorporated by reference
    to Exhibit 10.41 to the Current Report on Form 8-K of
    OpenTV Corp., as filed with the Securities and Exchange
    Commission on February 13, 2006).                                                                                     
| | 18 | .1  |  | Letter from KPMG LLP dated March 12, 2004 regarding change
    in accounting principle (incorporated by reference to
    Exhibit 18.1 to the Annual Report on Form 10-K of
    OpenTV Corp. for the year ended December 31, 2003, as filed
    with the Securities and Exchange Commission on March 15,
    2004).                                                           
| | 21 | .1* |  | List of Subsidiaries.                                                                                                                                                                                                                                                                                                                                                        
| | 23 | .1* |  | Consent of Independent Registered Public Accounting Firm (KPMG
    LLP).                                                                                                                                                                                                                                                                                                     
| | 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* |  | Certifications of Chief Executive Officer and Chief Financial
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.                                                                                                                                                                                                                                     






|  |               
|- | --------------
|* | Filed Herewith

55



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##### Table of Contents



SIGNATURES






| |                                     
| | ------------------------------------
| | OPENTV CORP.                        
|
| | /s/ James A. Chiddix                
| |                                     
| | James A. Chiddix                    
| | Chairman and Chief Executive Officer





|                                       |  |                                                                                            |  |                |  | 
|-------------------------------------- |  | ------------------------------------------------------------------------------------------ |  | -------------- |  | 
|Name                                   |  | Title                                                                                      |  | Date          
|                                       |  |                                                                                            |  |               
|                                      
|/s/ James A. ChiddixJames A. Chiddix   |  | Chairman and Chief Executive Officer
    (Principal Executive Officer)                     |  | March 30, 2006
|                                      
|/s/ Shum MukherjeeShum Mukherjee       |  | Chief Financial Officer
    (Principal Financial Officer and Principal Accounting Officer) |  | March 30, 2006
|                                      
|/s/ Robert R. BennettRobert R. Bennett |  | Director                                                                                   |  | March 30, 2006
|                                      
|/s/ J. Timothy BryanJ. Timothy Bryan   |  | Director                                                                                   |  | March 30, 2006
|                                      
|/s/ Jerry MachovinaJerry Machovina     |  | Director                                                                                   |  | March 30, 2006
|                                      
|/s/ J. David WargoJ. David Wargo       |  | Director                                                                                   |  | March 30, 2006
|                                      
|/s/ Anthony G. WernerAnthony G. Werner |  | Director                                                                                   |  | March 30, 2006
|                                      
|/s/ Michael ZeisserMichael Zeisser     |  | Director                                                                                   |  | March 30, 2006

56



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PART IV


OPENTV CORP.


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


|                                                                                                                                    |  |          |      | 
|----------------------------------------------------------------------------------------------------------------------------------- |  | -------- | ---- | 
|                                                                                                                                    |  | Page No. |     
|                                                                                                                                    |  |          |     
|Report of Independent Registered Public
    Accounting Firm                                                                         |  |          | F-2  | 
|Consolidated Balance Sheets as of
    December 31, 2005 and 2004                                                                    |  |          | F-3  | 
|Consolidated Statements of Operations for
    the years ended December 31, 2005, 2004, and 2003                                     |  |          | F-4  | 
|Consolidated Statements of
    Shareholders Equity and Comprehensive Loss for the years
    ended December 31, 2005, 2004 and 2003 |  |          | F-5  | 
|Consolidated Statements of Cash Flows for
    the years ended December 31, 2005, 2004 and 2003                                      |  |          | F-6  | 
|Notes to the Consolidated Financial
    Statements                                                                                  |  |          | F-7  | 
|Schedule II  Valuation and
    Qualifying Accounts                                                                                 |  |          | F-39 | 

F-1



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##### Table of Contents






Report of Independent Registered Public Accounting
Firm
















| |             
| | ------------
| | /s/ KPMG LLP





F-2



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##### Table of Contents



OPENTV CORP.





CONSOLIDATED BALANCE SHEETS


(In thousands, except share amounts)


|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |   |         |            |         | 
|----------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------- | ------- | ---------- | ------------ | - | ------- | ---------- | ------- | 
|                                                                  |                                                                                                                                                                                                                   | December 31,                |         |            | December 31, |  
|                                                                  |                                                                                                                                                                                                                   | 2005                        |         |            | 2004         |  
|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |  
|ASSETS                                                           
|Current assets:                                                   |                                                                                                                                                                                                                   |                             |         |            |              |   |         |           
|                                                                  | Cash and cash equivalents                                                                                                                                                                                         |                             | $       | 47,229     |              |   | $       | 35,660     |        
|                                                                  | Short-term marketable debt securities                                                                                                                                                                             |                             |         | 9,030      |              |   |         | 1,986      |        
|                                                                  | Accounts receivable, net of allowance for doubtful accounts of
    $305 and $559 at December 31, 2005 and 2004, respectively                                                                                      |                             |         | 16,873     |              |   |         | 17,797     |        
|                                                                  | Prepaid expenses and other current assets                                                                                                                                                                         |                             |         | 4,638      |              |   |         | 3,073      |        
|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |  
|                                                                  |                                                                                                                                                                                                                   | Total current assets        |         |            | 77,770       |   |         |            | 58,516  | 
|Long-term marketable debt securities                              |                                                                                                                                                                                                                   |                             | 8,213   |            |              |   | 25,374  |           
|Property and equipment, net                                       |                                                                                                                                                                                                                   |                             | 5,863   |            |              |   | 6,858   |           
|Goodwill                                                          |                                                                                                                                                                                                                   |                             | 80,124  |            |              |   | 70,466  |           
|Intangible assets, net                                            |                                                                                                                                                                                                                   |                             | 27,150  |            |              |   | 25,108  |           
|Other assets                                                      |                                                                                                                                                                                                                   |                             | 2,945   |            |              |   | 6,089   |           
|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |  
|                                                                  |                                                                                                                                                                                                                   | Total assets                |         | $          | 202,065      |   |         | $          | 192,411 | 
|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |  
|                                                                 
|LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS
    EQUITY      
|Current liabilities:                                              |                                                                                                                                                                                                                   |                             |         |            |              |   |         |           
|                                                                  | Accounts payable                                                                                                                                                                                                  |                             | $       | 4,361      |              |   | $       | 3,870      |        
|                                                                  | Accrued liabilities                                                                                                                                                                                               |                             |         | 18,568     |              |   |         | 22,363     |        
|                                                                  | Accrued restructuring                                                                                                                                                                                             |                             |         | 1,931      |              |   |         | 1,394      |        
|                                                                  | Due to Liberty Media                                                                                                                                                                                              |                             |         | 182        |              |   |         | 388        |        
|                                                                  | Current portion of deferred revenue                                                                                                                                                                               |                             |         | 14,193     |              |   |         | 10,520     |        
|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |  
|                                                                  |                                                                                                                                                                                                                   | Total current liabilities   |         |            | 39,235       |   |         |            | 38,535  | 
|Long-term liabilities:                                            |                                                                                                                                                                                                                   |                             |         |            |              |   |         |           
|                                                                  | Deferred rent                                                                                                                                                                                                     |                             |         | 1,404      |              |   |         | 1,553      |        
|                                                                  | Deferred revenue                                                                                                                                                                                                  |                             |         | 8,391      |              |   |         | 6,563      |        
|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |  
|                                                                  |                                                                                                                                                                                                                   | Total long-term liabilities |         |            | 9,795        |   |         |            | 8,116   | 
|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |  
|                                                                  |                                                                                                                                                                                                                   | Total liabilities           |         |            | 49,030       |   |         |            | 46,651  | 
|Commitments and contingencies (Note 13)                           |                                                                                                                                                                                                                   |                             |         |            |              |   |         |           
|Minority interest                                                 |                                                                                                                                                                                                                   |                             | 523     |            |              |   | 585     |           
|Shareholders equity:                                             |                                                                                                                                                                                                                   |                             |         |            |              |   |         |           
|                                                                  | Class A ordinary shares, no par value,
    500,000,000 shares authorized; 98,105,119 and
    91,552,293 shares issued and outstanding, including
    treasury shares, at December 31, 2005 and 2004, respectively |                             |         | 2,230,398  |              |   |         | 2,213,951  |        
|                                                                  | Class B ordinary shares, no par value,
    200,000,000 shares authorized; 30,631,746 shares
    issued and outstanding                                                                                            |                             |         | 35,953     |              |   |         | 35,953     |        
|                                                                  | Additional paid-in capital                                                                                                                                                                                        |                             |         | 470,596    |              |   |         | 470,453    |        
|                                                                  | Treasury shares at cost, 76,327 shares                                                                                                                                                                            |                             |         | (38        | )            |   |         | (38        | )      
|                                                                  | Deferred share-based compensation                                                                                                                                                                                 |                             |         | (2         | )            |   |         | (10        | )      
|                                                                  | Accumulated other comprehensive income                                                                                                                                                                            |                             |         | (265       | )            |   |         | 523        |        
|                                                                  | Accumulated deficit                                                                                                                                                                                               |                             |         | (2,584,130 | )            |   |         | (2,575,657 | )      
|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |  
|                                                                  |                                                                                                                                                                                                                   | Total shareholders equity  |         |            | 152,512      |   |         |            | 145,175 | 
|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |  
|Total liabilities, minority interest and shareholders
    equity |                                                                                                                                                                                                                   | $                           | 202,065 |            |              | $ | 192,411 |           
|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |  



F-3



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##### Table of Contents



OPENTV CORP.





CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands, except share and per share amounts)


|                                                        |                                    |                          |             |        |        |   |             |        |         |   |            |        |         |  
|------------------------------------------------------- | ---------------------------------- | ------------------------ | ----------- | ------ | ------ | - | ----------- | ------ | ------- | - | ---------- | ------ | ------- | -
|                                                        |                                    | Year Ended December 31,  |            
|                                                        |                                    |                          |            
|                                                        |                                    | 2005                     |             |        | 2004   |   |             | 2003   |        
|                                                        |                                    |                          |             |        |        |   |             |        |        
|Revenues:                                               |                                    |                          |             |        |        |   |             |        |         |   |            |       
|                                                        | Royalties and licenses             |                          | $           | 55,083 |        |   | $           | 48,857 |         |   | $          | 28,648 |        
|                                                        | Services and other                 |                          |             | 32,297 |        |   |             | 28,312 |         |   |            | 35,549 |        
|                                                        |                                    |                          |             |        |        |   |             |        |        
|                                                        |                                    | Total revenues(1)        |             |        | 87,380 |   |             |        | 77,169  |   |            |        | 64,197  |  
|Cost of revenues:                                       |                                    |                          |             |        |        |   |             |        |         |   |            |       
|                                                        | Royalties and licenses             |                          |             | 6,393  |        |   |             | 8,210  |         |   |            | 10,672 |        
|                                                        | Services and other(2)              |                          |             | 28,409 |        |   |             | 31,054 |         |   |            | 39,701 |        
|                                                        |                                    |                          |             |        |        |   |             |        |        
|                                                        |                                    | Total cost of revenues   |             |        | 34,802 |   |             |        | 39,264  |   |            |        | 50,373  |  
|                                                        |                                    |                          |             |        |        |   |             |        |        
|Gross profit                                            |                                    |                          | 52,578      |        |        |   | 37,905      |        |         |   | 13,824     |       
|Operating expenses:                                     |                                    |                          |             |        |        |   |             |        |         |   |            |       
|                                                        | NASCAR amendment (Note 8)          |                          |             |       |        |   |             | (4,600 | )       |   |            |       |        
|                                                        | Research and development(3)        |                          |             | 33,903 |        |   |             | 29,753 |         |   |            | 23,082 |        
|                                                        | Sales and marketing(4)             |                          |             | 11,448 |        |   |             | 15,103 |         |   |            | 13,833 |        
|                                                        | General and administrative(5)      |                          |             | 15,904 |        |   |             | 17,876 |         |   |            | 17,407 |        
|                                                        | Restructuring and impairment costs |                          |             | 2,545  |        |   |             | 893    |         |   |            | 6,587  |        
|                                                        | Amortization of intangible assets  |                          |             | 1,738  |        |   |             | 3,506  |         |   |            | 4,889  |        
|                                                        | Impairment of intangible assets    |                          |             |       |        |   |             |       |         |   |            | 1,497  |        
|                                                        |                                    |                          |             |        |        |   |             |        |        
|                                                        |                                    | Total operating expenses |             |        | 65,538 |   |             |        | 62,531  |   |            |        | 67,295  |  
|                                                        |                                    |                          |             |        |        |   |             |        |        
|Loss from operations                                    |                                    |                          | (12,960     | )      |        |   | (24,626     | )      |         |   | (53,471    | )     
|Interest income                                         |                                    |                          | 1,678       |        |        |   | 858         |        |         |   | 1,572      |       
|Other income/ (expense), net                            |                                    |                          | 3,823       |        |        |   | 499         |        |         |   | (1,103     | )     
|Minority interest                                       |                                    |                          | 62          |        |        |   | 490         |        |         |   | 171        |       
|                                                        |                                    |                          |             |        |        |   |             |        |        
|                                                        |                                    | Loss before income taxes |             |        | (7,397 | ) |             |        | (22,779 | ) |            |        | (52,831 | )
|Income tax (expense)/ benefit                           |                                    |                          | (1,076      | )      |        |   | 817         |        |         |   | (1,263     | )     
|                                                        |                                    |                          |             |        |        |   |             |        |        
|                                                        |                                    | Net loss                 |             | $      | (8,473 | ) |             | $      | (21,962 | ) |            | $      | (54,094 | )
|                                                        |                                    |                          |             |        |        |   |             |        |        
|Net loss per share, basic and diluted:                  |                                    | $                        | (0.07       | )      |        | $ | (0.18       | )      |         | $ | (0.57      | )     
|                                                        |                                    |                          |             |        |        |   |             |        |        
|Shares used in per share calculation, basic and diluted |                                    |                          | 124,812,584 |        |        |   | 121,308,965 |        |         |   | 94,818,278 |       
|                                                        |                                    |                          |             |        |        |   |             |        |        






|    |                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------
|(1) | Inclusive of $10, $52 and $1,107 of related party revenue for
    the years ended December 31, 2005, 2004 and 2003,
    respectively.
|   
|(2) | Inclusive of $8, $25 and $55 of share-based compensation for the
    years ended December 31, 2005, 2004 and 2003, respectively.     
|   
|(3) | Inclusive of $0, $1 and $59 of share-based compensation for the
    years ended December 31, 2005, 2004 and 2003, respectively.      
|   
|(4) | Inclusive of $0, $0 and $24 of share-based compensation for the
    years ended December 31, 2005, 2004 and 2003, respectively.      
|   
|(5) | Inclusive of $0, $0 and $33 of share-based compensation for the
    years ended December 31, 2005, 2004 and 2003, respectively.      



F-4



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##### Table of Contents



OPENTV CORP.





CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND
COMPREHENSIVE LOSS


(In thousands, except share amounts)


|                                                                                                     |  |         |            |   |         |   |           |            |  |  |            |       |          |             |        |               |        |   |         |              |  |   |        |   |               |         |      |   |       |   |      |      |  |   |            |   |  |   |         |   |  |   |         |  
|---------------------------------------------------------------------------------------------------- |  | ------- | ---------- | - | ------- | - | --------- | ---------- |  |  | ---------- | ----- | -------- | ----------- | ------ | ------------- | ------ | - | ------- | ------------ |  | - | ------ | - | ------------- | ------- | ---- | - | ----- | - | ---- | ---- |  | - | ---------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                                                     |  |         |            |   |         |   |           |            |  |  |            |       |          |             |        | Accumulated   |        |   |         |              |  |   |       
|                                                                                                     |  |         |            |   |         |   |           |            |  |  |            | Other |          |             |        |               |        |   |        
|                                                                                                     |  | Class A |            |   | Class B |   |           | Additional |  |  |            |       | Deferred |             |        | Comprehensive |        |   |         |              |  |   | Other  |  
|                                                                                                     |  |         |            |   |         |   |           | Paid-In    |  |  | Treasury   |       |          | Share-based |        |               | Income |   |         | Accumulated  |  |   |        |   | Comprehensive |        
|                                                                                                     |  | Shares  |            |   | Amount  |   |           | Shares     |  |  | Amount     |       |          | Capital     |        |               | Shares |   |         | Compensation |  |   | (Loss) |   |               | Deficit |      |   | Total |   |      | Loss | 
|                                                                                                     |  |         |            |   |         |   |           |            |  |  |            |       |          |             |        |               |        |   |         |              |  |   |        |   |               |         |      |   |       |   |      |      | 
|Balances, December 31, 2002                                                                          |  |         | 41,587,033 |   |         | $ | 2,143,124 |            |  |  | 30,631,746 |       |          | $           | 35,953 |               |        | $ | 461,263 |              |  | $ | (16    | ) |               | $       | (221 | ) |       | $ | 494  |      |  | $ | (2,499,601 | ) |  | $ | 140,996 |   |  |   |         |  
|Share options exercised                                                                              |  |         | 1,526,637  |   |         |   | 2,453     |            |  |  |           |       |          |             |       |               |        |   | (13     | )            |  |   |       |   |               |         |     |   |       |   |     |      |  |   |           |   |  |   | 2,440   |   |  |   |         |  
|Shares issued for employee and director compensation                                                 |  |         | 125,155    |   |         |   | 160       |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   |           |   |  |   | 160     |   |  |   |         |  
|Cashless exercise of stock options                                                                   |  |         | 73,332     |   |         |   | 140       |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   |           |   |  |   | 140     |   |  |   |         |  
|Shares issued for ACTV acquisition                                                                   |  |         | 41,648,399 |   |         |   | 54,559    |            |  |  |           |       |          |             |       |               |        |   | 3,948   |              |  |   |       |   |               |         | (36  | ) |       |   |     |      |  |   |           |   |  |   | 58,471  |   |  |   |         |  
|Shares issued for BettingCorp acquisition                                                            |  |         | 3,225,063  |   |         |   | 6,934     |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   |           |   |  |   | 6,934   |   |  |   |         |  
|Shares issued for purchase of minority interest                                                      |  |         | 675,676    |   |         |   | 1,000     |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   |           |   |  |   | 1,000   |   |  |   |         |  
|Shares issued in exchange for OpenTV, Inc. shares                                                    |  |         | 115,417    |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   | 277     |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   |           |   |  |   | 277     |   |  |   |         |  
|Shares retired                                                                                       |  |         | (7,162     | ) |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   |           |   |  |   |        |   |  |   |         |  
|Amortization of deferred share-based compensation                                                    |  |         |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         | 171  |   |       |   |     |      |  |   |           |   |  |   | 171     |   |  |   |         |  
|Reversal of deferred share-based compensation due to employee
    terminations                       |  |         |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   | (50     | )            |  |   |       |   |               |         | 50   |   |       |   |     |      |  |   |           |   |  |   |        |   |  |   |         |  
|Capital contribution from MIH Limited                                                                |  |         |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   | 793     |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   |           |   |  |   | 793     |   |  |   |         |  
|Purchase of treasury shares                                                                          |  |         |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   | 10      |              |  |   | (22    | ) |               |         |     |   |       |   |     |      |  |   |           |   |  |   | (12     | ) |  |   |         |  
|Reclassification for realized gains from sale of marketable debt
    securities, net of income taxes |  |         |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   | (246 | )    |  |   |           |   |  |   | (246    | ) |  | $ | (246    | )
|Unrealized losses on investments, net of income taxes                                                |  |         |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   | (264 | )    |  |   |           |   |  |   | (264    | ) |  |   | (264    | )
|Foreign currency translation gains                                                                   |  |         |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   | 217  |      |  |   |           |   |  |   | 217     |   |  |   | 217     |  
|Net loss                                                                                             |  |         |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   | (54,094    | ) |  |   | (54,094 | ) |  |   | (54,094 | )
|                                                                                                     |  |         |            |   |         |   |           |            |  |  |            |       |          |             |        |               |        |   |         |              |  |   |        |   |               |         |      |   |       |   |      |      | 
|Balances, December 31, 2003                                                                          |  |         | 88,969,550 |   |         |   | 2,208,370 |            |  |  | 30,631,746 |       |          |             | 35,953 |               |        |   | 466,228 |              |  |   | (38    | ) |               |         | (36  | ) |       |   | 201  |      |  |   | (2,553,695 | ) |  |   | 156,983 |   |  | $ | (54,387 | )
|                                                                                                     |  |         |            |   |         |   |           |            |  |  |            |       |          |             |        |               |        |   |         |              |  |   |        |   |               |         |      |   |       |   |      |      | 
|Share options exercised                                                                              |  |         | 1,852,898  |   |         |   | 3,448     |            |  |  |           |       |          |             |       |               |        |   | 16      |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   |           |   |  |   | 3,464   |   |  |   |         |  
|Shares issued for employee bonus                                                                     |  |         | 578,917    |   |         |   | 1,731     |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   |           |   |  |   | 1,731   |   |  |   |         |  
|Shares issued for employee and director compensation                                                 |  |         | 52,280     |   |         |   | 172       |            |  |  |           |       |          |             |       |               |        |   | 63      |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   |           |   |  |   | 235     |   |  |   |         |  
|Shares issued to Liberty Media as dividend (Note 14)                                                 |  |         | 76,982     |   |         |   | 230       |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   |           |   |  |   | 230     |   |  |   |         |  
|Shares issued in exchange for OpenTV, Inc. shares                                                    |  |         | 21,666     |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   | 68      |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   |           |   |  |   | 68      |   |  |   |         |  
|Amortization of deferred share-based compensation                                                    |  |         |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         | 26   |   |       |   |     |      |  |   |           |   |  |   | 26      |   |  |   |         |  
|Proceeds from BettingCorp liquidity guarantee                                                        |  |         |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   | 4,078   |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   |           |   |  |   | 4,078   |   |  |   |         |  
|Unrealized losses on investments, net of income taxes                                                |  |         |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   | (115 | )    |  |   |           |   |  |   | (115    | ) |  | $ | (115    | )
|Foreign currency translation gains                                                                   |  |         |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   | 437  |      |  |   |           |   |  |   | 437     |   |  |   | 437     |  
|Net loss                                                                                             |  |         |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   | (21,962    | ) |  |   | (21,962 | ) |  |   | (21,962 | )
|                                                                                                     |  |         |            |   |         |   |           |            |  |  |            |       |          |             |        |               |        |   |         |              |  |   |        |   |               |         |      |   |       |   |      |      | 
|Balances, December 31, 2004                                                                          |  |         | 91,552,293 |   |         | $ | 2,213,951 |            |  |  | 30,631,746 |       |          | $           | 35,953 |               |        | $ | 470,453 |              |  | $ | (38    | ) |               | $       | (10  | ) |       | $ | 523  |      |  | $ | (2,575,657 | ) |  | $ | 145,175 |   |  | $ | (21,640 | )
|                                                                                                     |  |         |            |   |         |   |           |            |  |  |            |       |          |             |        |               |        |   |         |              |  |   |        |   |               |         |      |   |       |   |      |      | 
|Share options exercised                                                                              |  |         | 145,764    |   |         |   | 183       |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   |           |   |  |   | 183     |   |  |   |         |  
|Shares issued for employee bonus                                                                     |  |         | 1,162,180  |   |         |   | 3,180     |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   |           |   |  |   | 3,180   |   |  |   |         |  
|Shares issued for employee and director compensation                                                 |  |         | 12,420     |   |         |   | 34        |            |  |  |           |       |          |             |       |               |        |   | 117     |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   |           |   |  |   | 151     |   |  |   |         |  
|Shares issued in connection with acquisition of CAM Systems                                          |  |         | 5,221,462  |   |         |   | 13,050    |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   |           |   |  |   | 13,050  |   |  |   |         |  
|Shares issued in exchange for OpenTV, Inc. shares                                                    |  |         | 11,000     |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   | 26      |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   |           |   |  |   | 26      |   |  |   |         |  
|Amortization of deferred share-based compensation                                                    |  |         |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         | 8    |   |       |   |     |      |  |   |           |   |  |   | 8       |   |  |   |         |  
|Unrealized gains on investments, net of income taxes                                                 |  |         |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   | 3    |      |  |   |           |   |  |   | 3       |   |  | $ | 3       |  
|Foreign currency translation losses                                                                  |  |         |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   | (791 | )    |  |   |           |   |  |   | (791    | ) |  |   | (791    | )
|Net loss                                                                                             |  |         |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |       |   |               |         |     |   |       |   |     |      |  |   | (8,473     | ) |  |   | (8,473  | ) |  |   | (8,473  | )
|                                                                                                     |  |         |            |   |         |   |           |            |  |  |            |       |          |             |        |               |        |   |         |              |  |   |        |   |               |         |      |   |       |   |      |      | 
|Balances, December 31, 2005                                                                          |  |         | 98,105,119 |   |         | $ | 2,230,398 |            |  |  | 30,631,746 |       |          | $           | 35,953 |               |        | $ | 470,596 |              |  | $ | (38    | ) |               | $       | (2   | ) |       | $ | (265 | )    |  | $ | (2,584,130 | ) |  | $ | 152,512 |   |  | $ | (9,261  | )
|                                                                                                     |  |         |            |   |         |   |           |            |  |  |            |       |          |             |        |               |        |   |         |              |  |   |        |   |               |         |      |   |       |   |      |      | 



F-5



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##### Table of Contents



OPENTV CORP.





CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)


|                                                                                                                |                                                         |                                                       |         |        |        |   |         |       |         |   |         |        |         |  
|--------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------- | ----------------------------------------------------- | ------- | ------ | ------ | - | ------- | ----- | ------- | - | ------- | ------ | ------- | -
|                                                                                                                |                                                         | Year Ended December 31,                               |        
|                                                                                                                |                                                         |                                                       |        
|                                                                                                                |                                                         | 2005                                                  |         |        | 2004   |   |         | 2003  |        
|                                                                                                                |                                                         |                                                       |         |        |        |   |         |       |        
|Cash flows provided from/(used in) operating activities:                                                        |                                                         |                                                       |         |        |        |   |         |       |         |   |         |       
|Net loss                                                                                                        |                                                         | $                                                     | (8,473  | )      |        | $ | (21,962 | )     |         | $ | (54,094 | )     
|Adjustments to reconcile net loss to net cash provided
    from/(used in) operating activities:                 |                                                         |                                                       |         |        |        |   |         |       |         |   |         |       
|                                                                                                                | Impairment of intangible assets                         |                                                       |         |       |        |   |         |      |         |   |         | 1,497  |        
|                                                                                                                | Depreciation and amortization of property and equipment |                                                       |         | 3,843  |        |   |         | 5,941 |         |   |         | 7,490  |        
|                                                                                                                | Amortization of intangible assets                       |                                                       |         | 5,758  |        |   |         | 8,228 |         |   |         | 14,679 |        
|                                                                                                                | Amortization of share-based compensation                |                                                       |         | 8      |        |   |         | 26    |         |   |         | 171    |        
|                                                                                                                | Non-cash employee compensation                          |                                                       |         | 151    |        |   |         | 1,089 |         |   |         | 889    |        
|                                                                                                                | (Reduction in)/provision for doubtful accounts          |                                                       |         | (142   | )      |   |         | (187  | )       |   |         | 168    |        
|                                                                                                                | Non-cash impairment costs                               |                                                       |         | 602    |        |   |         | 1,020 |         |   |         | 532    |        
|                                                                                                                | Gain on sale of cost investment                         |                                                       |         | (3,126 | )      |   |         |      |         |   |         |       |        
|                                                                                                                | Minority interest                                       |                                                       |         | (62    | )      |   |         | (490  | )       |   |         | (171   | )      
|                                                                                                                | Changes in operating assets and liabilities:            |                                                       |         |        |        |   |         |       |         |   |         |        |        
|                                                                                                                |                                                         | Accounts receivable                                   |         |        | 1,066  |   |         |       | (5,327  | ) |         |        | (1,454  | )
|                                                                                                                |                                                         | Prepaid expenses and other current assets             |         |        | (991   | ) |         |       | 1,024   |   |         |        | 602     |  
|                                                                                                                |                                                         | Other assets                                          |         |        | (1,107 | ) |         |       | 7,289   |   |         |        | 2,308   |  
|                                                                                                                |                                                         | Accounts payable                                      |         |        | 491    |   |         |       | (1,948  | ) |         |        | (923    | )
|                                                                                                                |                                                         | Accrued liabilities and deferred rent                 |         |        | (1,037 | ) |         |       | (6,273  | ) |         |        | (5,558  | )
|                                                                                                                |                                                         | Accrued restructuring                                 |         |        | 537    |   |         |       | (6,395  | ) |         |        | (11,873 | )
|                                                                                                                |                                                         | Due to Liberty Media                                  |         |        | (206   | ) |         |       | (242    | ) |         |        | (526    | )
|                                                                                                                |                                                         | Deferred revenue                                      |         |        | 5,051  |   |         |       | 2,033   |   |         |        | 3,777   |  
|                                                                                                                |                                                         |                                                       |         |        |        |   |         |       |        
|                                                                                                                |                                                         | Net cash provided from/(used in) operating activities |         |        | 2,363  |   |         |       | (16,174 | ) |         |        | (42,486 | )
|Cash flows provided from investing activities:                                                                  |                                                         |                                                       |         |        |        |   |         |       |         |   |         |       
|Purchase of property and equipment                                                                              |                                                         |                                                       | (3,075  | )      |        |   | (2,070  | )     |         |   | (2,944  | )     
|Sale of assets                                                                                                  |                                                         |                                                       |        |        |        |   |        |       |         |   | 1,000   |       
|Cash (used in)/provided from acquisitions, net of cash acquired
    (Note 3)                                    |                                                         |                                                       | (4,199  | )      |        |   | 4,078   |       |         |   | (10,130 | )     
|Proceeds from sale of cost investment                                                                           |                                                         |                                                       | 7,126   |        |        |   |        |       |         |   |        |       
|Proceeds from sale of marketable debt securities                                                                |                                                         |                                                       | 40,155  |        |        |   | 22,541  |       |         |   | 111,697 |       
|Purchase of marketable debt securities                                                                          |                                                         |                                                       | (30,035 | )      |        |   | (24,267 | )     |         |   | (51,384 | )     
|Private equity investments                                                                                      |                                                         |                                                       | (300    | )      |        |   |        |       |         |   |        |       
|                                                                                                                |                                                         |                                                       |         |        |        |   |         |       |        
|                                                                                                                |                                                         | Net cash provided from investing activities           |         |        | 9,672  |   |         |       | 282     |   |         |        | 48,239  |  
|Cash flows provided from financing activities:                                                                  |                                                         |                                                       |         |        |        |   |         |       |         |   |         |       
|Proceeds from issuance of ordinary shares                                                                       |                                                         |                                                       | 183     |        |        |   | 3,464   |       |         |   | 2,466   |       
|Capital contribution from MIH Limited                                                                           |                                                         |                                                       |        |        |        |   |        |       |         |   | 793     |       
|                                                                                                                |                                                         |                                                       |         |        |        |   |         |       |        
|                                                                                                                |                                                         | Net cash provided from financing activities           |         |        | 183    |   |         |       | 3,464   |   |         |        | 3,259   |  
|Effect of exchange rate changes on cash and cash equivalents                                                    |                                                         |                                                       | (649    | )      |        |   | 341     |       |         |   | 167     |       
|                                                                                                                |                                                         |                                                       |         |        |        |   |         |       |        
|Net increase/ (decrease) in cash and cash equivalents                                                           |                                                         |                                                       | 11,569  |        |        |   | (12,087 | )     |         |   | 9,179   |       
|Cash and cash equivalents, beginning of year                                                                    |                                                         |                                                       | 35,660  |        |        |   | 47,747  |       |         |   | 38,568  |       
|                                                                                                                |                                                         |                                                       |         |        |        |   |         |       |        
|Cash and cash equivalents, end of year                                                                          |                                                         | $                                                     | 47,229  |        |        | $ | 35,660  |       |         | $ | 47,747  |       
|                                                                                                                |                                                         |                                                       |         |        |        |   |         |       |        
|Supplemental disclosure of cash flow information:                                                               |                                                         |                                                       |         |        |        |   |         |       |         |   |         |       
|Cash (paid)/received for income taxes                                                                           |                                                         | $                                                     | (1,088  | )      |        | $ | (451    | )     |         | $ | 150     |       
|                                                                                                                |                                                         |                                                       |         |        |        |   |         |       |        
|Non-cash investing and financing activities                                                                     |                                                         |                                                       |         |        |        |   |         |       |         |   |         |       
|Value of shares issued in connection with acquisitions and
    establishment of companies and intangible assets |                                                         | $                                                     |        |        |        |   |        |       |         | $ | 61,493  |       
|                                                                                                                |                                                         |                                                       |         |        |        |   |         |       |        
|Value of shares issued for purchase of minority interest                                                        |                                                         | $                                                     |        |        |        | $ |        |       |         | $ | 1,000   |       
|                                                                                                                |                                                         |                                                       |         |        |        |   |         |       |        
|Deferred compensation arising from issuance of options                                                          |                                                         | $                                                     |        |        |        | $ |        |       |         | $ | 36      |       
|                                                                                                                |                                                         |                                                       |         |        |        |   |         |       |        
|Value of bonus shares issued to employees                                                                       |                                                         | $                                                     | 3,180   |        |        | $ | 1,731   |       |         | $ |        |       
|                                                                                                                |                                                         |                                                       |         |        |        |   |         |       |        
|Value of shares issued in connection with acquisition of CAM
    Systems (Note 3)                               |                                                         | $                                                     | 13,050  |        |        | $ |        |       |         | $ |        |       
|                                                                                                                |                                                         |                                                       |         |        |        |   |         |       |        



F-6



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##### Table of Contents






OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2005




|        |                                 
|------- | --------------------------------
|Note 1. | Ownership and Business of OpenTV









|        |                                           
|------- | ------------------------------------------
|Note 2. | Summary of Significant Accounting Policies



| |                                                          
| | ---------------------------------------------------------
| | Principles of Consolidation and Basis of
    Presentation







| |                     
| | --------------------
| | Management Estimates





| |                          
| | -------------------------
| | Cash and Cash Equivalents





| |                           
| | --------------------------
| | Marketable Debt Securities



Accounting for Certain Investments
in Debt and Equity Securities.




F-7



---



##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                    
| | -----------------------------------
| | Fair Value of Financial Instruments





| |                             
| | ----------------------------
| | Concentration of Credit Risk





| |                       
| | ----------------------
| | Property and Equipment







| |                                     
| | ------------------------------------
| | Long-Term Private Equity Investments



F-8



---



##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                               
| | ------------------------------
| | Goodwill and Intangible Assets

Goodwill and Other
Intangible Assets,




Accounting for the Impairment or Disposal of Long-Lived
Assets.






| |                  
| | -----------------
| | Long-Lived Assets

Accounting for Impairment or Disposal of Long-Lived
Assets,




| |                    
| | -------------------
| | Revenue Recognition



Royalties and licenses. 97-2, 97-2 97-2,


Services and other.


F-9



---



##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Revenue Recognition.


98-9, Modification of SOP
No. 97-2 with
Respect to Certain Transactions.


99-19, Reporting Revenue Gross as a Principal versus Net as an
Agent












| |                                  
| | ---------------------------------
| | Other Revenue Accounting Policies



F-10



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






01-09, Accounting for Consideration Given by a Vendor to a
Customer or Reseller of the Vendors Products. 01-09,




| |                 
| | ----------------
| | Deferred Revenue





| |                         
| | ------------------------
| | Research and Development

Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise
Marketed.




| |            
| | -----------
| | Advertising





| |            
| | -----------
| | 401(k) Plan





| |               
| | --------------
| | Employee Bonus



F-11



---



##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                 
| | ----------------
| | Operating Leases





| |             
| | ------------
| | Income Taxes





| |                         
| | ------------------------
| | Share-Based Compensation

Accounting for Stock
Issued to Employees, Accounting for
Stock-Based Compensation  Transition and
Disclosure,


|                                                                                                                                                    |             |                        |       |       |      |   |       |       |   |   |       |       |  
|--------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | ---------------------- | ----- | ----- | ---- | - | ----- | ----- | - | - | ----- | ----- | -
|                                                                                                                                                    |             | Year Ended December 31 |      
|                                                                                                                                                    |             |                        |      
|                                                                                                                                                    |             | 2005                   |       |       | 2004 |   |       | 2003  |  
|                                                                                                                                                    |             |                        |       |       |      |   |       |       |  
|Net loss, as reported                                                                                                                               |             | $                      | (8.5  | )     |      | $ | (21.9 | )     |   | $ | (54.1 | )    
|Add: Share-based employee compensation expense included in
    reported net loss, net of related tax effects                                        |             |                        |      |       |      |   |      |       |   |   | 0.2   |      
|(Deduct) Add: Share-based employee compensation expense
    determined under fair value-based method for all awards, net of
    related tax effects |             |                        | (4.6  | )     |      |   | (2.9  | )     |   |   | 1.1   |      
|                                                                                                                                                    |             |                        |       |       |      |   |       |       |  
|Pro-forma net loss                                                                                                                                  |             | $                      | (13.1 | )     |      | $ | (24.8 | )     |   | $ | (52.8 | )    
|                                                                                                                                                    |             |                        |       |       |      |   |       |       |  
|Net loss per share, basic and diluted:                                                                                                              |             |                        |       |       |      |   |       |       |   |   |       |      
|                                                                                                                                                    | As reported |                        | $     | (0.07 | )    |   | $     | (0.18 | ) |   | $     | (0.57 | )
|                                                                                                                                                    |             |                        |       |       |      |   |       |       |  
|                                                                                                                                                    | Pro-forma   |                        | $     | (0.11 | )    |   | $     | (0.21 | ) |   | $     | (0.56 | )
|                                                                                                                                                    |             |                        |       |       |      |   |       |       |  

F-12



---



##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                               |  |      |             |  |      |  |             |      |  |  |             | 
|------------------------------ |  | ---- | ----------- |  | ---- |  | ----------- | ---- |  |  | ----------- | 
|                               |  | 2005 |             |  | 2004 |  |             | 2003 | 
|                               |  |      |             |  |      |  |             |      | 
|Risk-free interest rate        |  |      | 3.71%-4.57% |  |      |  | 2.65%-3.85% |      |  |  | 2.40%-3.63% | 
|Average expected life (months) |  |      | 75          |  |      |  | 60          |      |  |  | 60          | 
|Volatility                     |  |      | 99%-105%    |  |      |  | 106%        |      |  |  | 131%        | 
|Dividend yield                 |  |      |            |  |      |  |            |      |  |  |            | 





| |                            
| | ---------------------------
| | Comprehensive Income (loss)

Reporting Comprehensive Income.




| |                             
| | ----------------------------
| | Foreign Currency Translation





| |                   
| | ------------------
| | Net Loss Per Share



|                                                                                                                                                                                             |  |      |            |  |      |  |           |      |  |  |           | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- |  | ---- |  | --------- | ---- |  |  | --------- | 
|                                                                                                                                                                                             |  | 2005 |            |  | 2004 |  |           | 2003 | 
|                                                                                                                                                                                             |  |      |            |  |      |  |           |      | 
|Class A ordinary shares issuable upon exercise of stock
    options                                                                                                                          |  |      | 10,035,530 |  |      |  | 8,415,387 |      |  |  | 9,011,456 | 
|Class A ordinary shares issuable for shares of OpenTV, Inc.
    Class A common stock (including shares of OpenTV, Inc.
    Class A common stock issuable upon exercise of stock
    options) |  |      | 746,628    |  |      |  | 755,428   |      |  |  | 777,094   | 
|Class B ordinary shares issuable for shares of OpenTV, Inc.
    Class B common stock                                                                                                         |  |      | 7,594,796  |  |      |  | 7,594,796 |      |  |  | 7,594,796 | 

F-13



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                 
| | --------------------------------
| | Recent Accounting Pronouncements

Share-Based
Payment. Statement of Cash Flows.


Share-Based
Payment, share-based


03-1, The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments. 03-1 Implementation Guidance for the Application of
Paragraph 16 of EITF Issue
No. 03-1, The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments. 03-1 Recognition of Other-Than-Temporary
Impairment upon the Planned Sale of a Security Whose Cost
Exceeds Fair Value. 03-1 03-01


Accounting Changes and Error Corrections  A
Replacement of APB Opinion No. 20 and FASB Statement
No. 3.


F-14



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|        |             
|------- | ------------
|Note 3. | Acquisitions



| |                 
| | ----------------
| | ACTV Acquisition





|                             |          |          |      |      | 
|---------------------------- | -------- | -------- | ---- | ---- | 
|                             |          | Purchase |     
|                             |          | Price    |     
|                             |          |          |     
|Tangible net assets acquired |          | $        | 26.7 |     
|Intangible assets acquired:  |          |          |      |     
|                             | Patents  |          |      | 16.3 | 
|                             | Goodwill |          |      | 18.7 | 
|                             |          |          |     
|                             |          | $        | 61.7 |     
|                             |          |          |     





|                                                        |  |      |             |  
|------------------------------------------------------- |  | ---- | ----------- | -
|                                                        |  | 2003 |            
|                                                        |  |      |            
|Revenues                                                |  | $    | 68.4        |  
|Net loss before cumulative effect of accounting change  |  | $    | (79.6       | )
|Net loss                                                |  | $    | (79.6       | )
|Net loss per share, basic and diluted                   |  | $    | (0.69       | )
|Shares used in per share calculation, basic and diluted |  |      | 115,642,478 |  



F-15



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                        
| | -----------------------
| | BettingCorp Acquisition





|                             |                      |          |      |     | 
|---------------------------- | -------------------- | -------- | ---- | --- | 
|                             |                      | Purchase |     
|                             |                      | Price    |     
|                             |                      |          |     
|Tangible net assets acquired |                      | $        | 0.1  |    
|Intangible assets acquired:  |                      |          |      |    
|                             | Developed technology |          |      | 4.4 | 
|                             | Customer base        |          |      | 0.4 | 
|                             | Goodwill             |          |      | 6.5 | 
|                             |                      |          |     
|                             |                      | $        | 11.4 |    
|                             |                      |          |     







| |                        
| | -----------------------
| | CAM Systems Acquisition





|                             |  |          |      | 
|---------------------------- |  | -------- | ---- | 
|                             |  | Purchase |     
|                             |  | Price    |     
|                             |  |          |     
|Tangible net assets acquired |  | $        | 0.3  | 
|Intangible assets acquired   |  |          | 7.8  | 
|Goodwill                     |  |          | 9.4  | 
|                             |  |          |     
|                             |  | $        | 17.5 | 
|                             |  |          |     

F-16



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|        |                                        
|------- | ---------------------------------------
|Note 4. | Balance Sheet Components (in thousands)

|                                           |                                                |              |        |         |      |   |        |         |  
|------------------------------------------ | ---------------------------------------------- | ------------ | ------ | ------- | ---- | - | ------ | ------- | -
|                                           |                                                | December 31, |       
|                                           |                                                |              |       
|                                           |                                                | 2005         |        |         | 2004 |  
|                                           |                                                |              |        |         |      |  
|Prepaid expenses and other current assets: |                                                |              |        |         |      |   |        |        
|                                           | Federal income tax refund                      |              | $      | 440     |      |   | $      | 440     |  
|                                           | Value added tax                                |              |        | 522     |      |   |        | 296     |  
|                                           | Current deferred tax asset                     |              |        | 298     |      |   |        |        |  
|                                           | Other                                          |              |        | 3,378   |      |   |        | 2,337   |  
|                                           |                                                |              |        |         |      |  
|                                           |                                                | $            | 4,638  |         |      | $ | 3,073  |        
|                                           |                                                |              |        |         |      |  
|Property and equipment:                    |                                                |              |        |         |      |   |        |        
|                                           | Computers and equipment                        |              | $      | 15,648  |      |   | $      | 15,078  |  
|                                           | Software                                       |              |        | 5,662   |      |   |        | 5,500   |  
|                                           | Furniture and fixtures                         |              |        | 1,924   |      |   |        | 2,483   |  
|                                           | Leasehold improvements                         |              |        | 2,183   |      |   |        | 2,403   |  
|                                           |                                                |              |        |         |      |  
|                                           |                                                |              | 25,417 |         |      |   | 25,464 |        
|                                           | Less accumulated depreciation and amortization |              |        | (19,554 | )    |   |        | (18,606 | )
|                                           |                                                |              |        |         |      |  
|                                           |                                                | $            | 5,863  |         |      | $ | 6,858  |        
|                                           |                                                |              |        |         |      |  
|Other assets:                              |                                                |              |        |         |      |   |        |        
|                                           | Private equity investment                      |              | $      |        |      |   | $      | 4,000   |  
|                                           | Deposits                                       |              |        | 612     |      |   |        | 671     |  
|                                           | Notes receivable                               |              |        | 492     |      |   |        | 743     |  
|                                           | Other                                          |              |        | 1,841   |      |   |        | 675     |  
|                                           |                                                |              |        |         |      |  
|                                           |                                                | $            | 2,945  |         |      | $ | 6,089  |        
|                                           |                                                |              |        |         |      |  
|Accrued liabilities:                       |                                                |              |        |         |      |   |        |        
|                                           | Accrued payroll and related liabilities        |              | $      | 8,192   |      |   | $      | 8,081   |  
|                                           | Accrued professional fees                      |              |        | 2,011   |      |   |        | 2,947   |  
|                                           | Accrued marketing                              |              |        | 1,892   |      |   |        | 1,840   |  
|                                           | Accrued income taxes                           |              |        | 2,230   |      |   |        | 1,879   |  
|                                           | Other                                          |              |        | 4,243   |      |   |        | 7,616   |  
|                                           |                                                |              |        |         |      |  
|                                           |                                                | $            | 18,568 |         |      | $ | 22,363 |        
|                                           |                                                |              |        |         |      |  

F-17



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|        |                           
|------- | --------------------------
|Note 5. | Marketable Debt Securities



|                                |                                             |           |       |        |            |   |            |   |  |            |     |      |   |   |       |        | 
|------------------------------- | ------------------------------------------- | --------- | ----- | ------ | ---------- | - | ---------- | - |  | ---------- | --- | ---- | - | - | ----- | ------ | 
|                                |                                             | 2005      |      
|                                |                                             |           |      
|                                |                                             | Purchase/ |       |        | Gross      |   | Gross      |   |  |           
|                                |                                             | Amortized |       |        | Unrealized |   | Unrealized |   |  | Estimated  |    
|                                |                                             | Cost      |       |        | Gains      |   | Losses     |   |  | Fair Value |    
|                                |                                             |           |       |        |            |   |            |   |  |            |    
|Corporate debt securities       |                                             | $         | 4,588 |        |            | $ |           |   |  | $          | (18 | )    |   | $ | 4,570 |       
|Money market securities         |                                             |           | 493   |        |            |   |           |   |  |            | (1  | )    |   |   | 492   |       
|U.S. government debt securities |                                             |           | 4,000 |        |            |   |           |   |  |            | (32 | )    |   |   | 3,968 |       
|                                |                                             |           |       |        |            |   |            |   |  |            |     |     
|                                | Total short-term marketable debt securities |           |       | 9,081  |            |   |            |  |  |            |     | (51  | ) |   |       | 9,030  | 
|Corporate debt securities       |                                             |           | 5,771 |        |            |   |           |   |  |            | (52 | )    |   |   | 5,719 |       
|U.S. government debt securities |                                             |           | 496   |        |            |   |           |   |  |            | (2  | )    |   |   | 494   |       
|Certificates of deposit         |                                             |           | 2,000 |        |            |   |           |   |  |            |    |      |   |   | 2,000 |       
|                                |                                             |           |       |        |            |   |            |   |  |            |     |     
|                                | Total long-term marketable debt securities  |           |       | 8,267  |            |   |            |  |  |            |     | (54  | ) |   |       | 8,213  | 
|                                |                                             |           |       |        |            |   |            |   |  |            |     |     
|                                | Total marketable debt securities            |           | $     | 17,348 |            |   | $          |  |  |            | $   | (105 | ) |   | $     | 17,243 | 
|                                |                                             |           |       |        |            |   |            |   |  |            |     |     

|                                |                                             |           |        |        |            |   |            |   |  |            |     |      |   |   |        |        | 
|------------------------------- | ------------------------------------------- | --------- | ------ | ------ | ---------- | - | ---------- | - |  | ---------- | --- | ---- | - | - | ------ | ------ | 
|                                |                                             | 2004      |       
|                                |                                             |           |       
|                                |                                             | Purchase/ |        |        | Gross      |   | Gross      |   |  |           
|                                |                                             | Amortized |        |        | Unrealized |   | Unrealized |   |  | Estimated  |    
|                                |                                             | Cost      |        |        | Gains      |   | Losses     |   |  | Fair Value |    
|                                |                                             |           |        |        |            |   |            |   |  |            |    
|U.S. government debt securities |                                             | $         | 2,000  |        |            | $ |           |   |  | $          | (14 | )    |   | $ | 1,986  |       
|                                |                                             |           |        |        |            |   |            |   |  |            |     |     
|                                | Total short-term marketable debt securities |           |        | 2,000  |            |   |            |  |  |            |     | (14  | ) |   |        | 1,986  | 
|Auction rate securities         |                                             |           | 16,900 |        |            |   |           |   |  |            |    |      |   |   | 16,900 |       
|Corporate debt securities       |                                             |           | 2,567  |        |            |   |           |   |  |            | (45 | )    |   |   | 2,522  |       
|U.S. government debt securities |                                             |           | 4,000  |        |            |   |           |   |  |            | (48 | )    |   |   | 3,952  |       
|Certificates of deposit         |                                             |           | 2,000  |        |            |   |           |   |  |            |    |      |   |   | 2,000  |       
|                                |                                             |           |        |        |            |   |            |   |  |            |     |     
|                                | Total long-term marketable debt securities  |           |        | 25,467 |            |   |            |  |  |            |     | (93  | ) |   |        | 25,374 | 
|                                |                                             |           |        |        |            |   |            |   |  |            |     |     
|                                | Total marketable debt securities            |           | $      | 27,467 |            |   | $          |  |  |            | $   | (107 | ) |   | $      | 27,360 | 
|                                |                                             |           |        |        |            |   |            |   |  |            |     |     



03-01, The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments


F-18



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                |       |                     |       |        |                   |   |     |       |       |   |            |       |  |       |     |     |            |   |        |        |  |   |     |      |  
|------------------------------- | ----- | ------------------- | ----- | ------ | ----------------- | - | --- | ----- | ----- | - | ---------- | ----- |  | ----- | --- | --- | ---------- | - | ------ | ------ |  | - | --- | ---- | -
|                                |       | Less than 12 Months |       |        | 12 Months or More |   |     | Total |      
|                                |       |                     |       |        |                   |   |     |       |      
|                                |       |                     |       | Gross  |                   |   |     |       | Gross |   |            |       |  | Gross |    
|                                |       | Fair                |       |        | Unrealized        |   |     | Fair  |       |   | Unrealized |       |  | Fair  |     |     | Unrealized |  
|                                |       | Value               |       |        | Losses            |   |     | Value |       |   | Losses     |       |  | Value |     |     | Losses     |  
|                                |       |                     |       |        |                   |   |     |       |       |   |            |       |  |       |     |     |            |  
|Corporate debt securities       |       | $                   | 9,988 |        |                   | $ | (66 | )     |       | $ | 301        |       |  | $     | (4  | )   |            | $ | 10,289 |        |  | $ | (70 | )   
|Money market securities         |       |                     | 986   |        |                   |   | (3  | )     |       |   |           |       |  |       |    |     |            |   | 986    |        |  |   | (3  | )   
|U.S. government debt securities |       |                     |      |        |                   |   |    |       |       |   | 3,968      |       |  |       | (32 | )   |            |   | 3,968  |        |  |   | (32 | )   
|                                |       |                     |       |        |                   |   |     |       |       |   |            |       |  |       |     |     |            |  
|                                | Total |                     |       | 10,974 |                   |   |     | (69   | )     |   |            | 4,269 |  |       |     | (36 | )          |   |        | 15,243 |  |   |     | (105 | )
|                                |       |                     |       |        |                   |   |     |       |       |   |            |       |  |       |     |     |            |  





|        |         
|------- | --------
|Note 6. | Goodwill



|                                       |  |      |      |  |      |   |      | 
|-------------------------------------- |  | ---- | ---- |  | ---- | - | ---- | 
|                                       |  | 2005 |      |  | 2004 |  
|                                       |  |      |      |  |      |  
|Middleware and Integrated Technologies |  | $    | 57.7 |  |      | $ | 57.5 | 
|Applications                           |  |      | 20.1 |  |      |   | 10.7 | 
|BettingCorp                            |  |      | 2.3  |  |      |   | 2.3  | 
|                                       |  |      |      |  |      |  
|Total goodwill                         |  | $    | 80.1 |  |      | $ | 70.5 | 
|                                       |  |      |      |  |      |  



|                                                                         |  |      |      |  |      |   |      |      |  |   |      |  
|------------------------------------------------------------------------ |  | ---- | ---- |  | ---- | - | ---- | ---- |  | - | ---- | -
|                                                                         |  | 2005 |      |  | 2004 |   |      | 2003 | 
|                                                                         |  |      |      |  |      |   |      |      | 
|Beginning balance                                                        |  | $    | 70.5 |  |      | $ | 70.4 |      |  | $ | 45.4 |  
|Acquisition of Wink                                                      |  |      |     |  |      |   |     |      |  |   | (0.4 | )
|Acquisition of ACTV                                                      |  |      |     |  |      |   |     |      |  |   | 18.7 |  
|Acquisition of BettingCorp                                               |  |      |     |  |      |   |     |      |  |   | 6.5  |  
|Acquisition of CAM Systems                                               |  |      | 9.4  |  |      |   |     |      |  |   |     |  
|Reclassification of certain other assets related to Wink
    acquisition |  |      | 0.2  |  |      |   |     |      |  |   |     |  
|Goodwill related to exchangeable shares                                  |  |      |     |  |      |   | 0.1  |      |  |   | 0.2  |  
|                                                                         |  |      |      |  |      |   |      |      | 
|Ending balance                                                           |  | $    | 80.1 |  |      | $ | 70.5 |      |  | $ | 70.4 |  
|                                                                         |  |      |      |  |      |   |      |      | 





F-19



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|        |                       
|------- | ----------------------
|Note 7. | Intangible Assets, Net



|                   |                             |         |  |      |          |                   |      |              |                   |     |          |      |     |          |      |      |  |   |      |      | 
|------------------ | --------------------------- | ------- |  | ---- | -------- | ----------------- | ---- | ------------ | ----------------- | --- | -------- | ---- | --- | -------- | ---- | ---- |  | - | ---- | ---- | 
|                   |                             |         |  |      |          | December 31, 2005 |      |              | December 31, 2004 |    
|                   |                             |         |  |      |          |                   |      |              |                   |    
|                   |                             | Useful  |  |      | Gross    |                   |      |              |                   | Net |          |      | Net |         
|                   |                             | Life in |  |      | Carrying |                   |      | Accumulated  |                   |     | Carrying |      |     | Carrying |     
|                   |                             | Years   |  |      | Amount   |                   |      | Amortization |                   |     | Amount   |      |     | Amount   |     
|                   |                             |         |  |      |          |                   |      |              |                   |     |          |      |     |          |     
|Intangible assets: |                             |         |  |      |          |                   |      |              |                   |     |          |      |     |          |      |      |  |   |      |     
|                   | Patents                     |         |  | 5-13 |          |                   | $    | 20.7         |                   |     | $        | (6.0 | )   |          | $    | 14.7 |  |   | $    | 16.8 | 
|                   | Developed technologies      |         |  | 3-5  |          |                   |      | 11.3         |                   |     |          | (4.4 | )   |          |      | 6.9  |  |   |      | 4.6  | 
|                   | Contracts and relationships |         |  | 2-5  |          |                   |      | 9.8          |                   |     |          | (4.5 | )   |          |      | 5.3  |  |   |      | 3.6  | 
|                   | Trademarks                  |         |  | 4    |          |                   |      | 0.3          |                   |     |          |     |     |          |      | 0.3  |  |   |      |     | 
|                   | Purchased technologies      |         |  | 5    |          |                   |      | 0.4          |                   |     |          | (0.4 | )   |          |      |     |  |   |      | 0.1  | 
|                   |                             |         |  |      |          |                   |      |              |                   |     |          |      |     |          |     
|                   |                             |         |  |      |          | $                 | 42.5 |              |                   | $   | (15.3    | )    |     | $        | 27.2 |      |  | $ | 25.1 |     
|                   |                             |         |  |      |          |                   |      |              |                   |     |          |      |     |          |     





|                         |  |              |      | 
|------------------------ |  | ------------ | ---- | 
|                         |  | Amortization |     
|Year Ending December 31, |  | Expense      |     
|                         |  |              |     
|2006                     |  |              | 7.0  | 
|2007                     |  |              | 6.1  | 
|2008                     |  |              | 3.5  | 
|2009                     |  |              | 2.0  | 
|2010                     |  |              | 1.7  | 
|Thereafter               |  |              | 6.9  | 
|                         |  |              |     
|                         |  | $            | 27.2 | 
|                         |  |              |     

F-20



---



##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|        |                 
|------- | ----------------
|Note 8. | NASCAR Amendment





|        |                                   
|------- | ----------------------------------
|Note 9. | Restructuring and Impairment Costs

Accounting for
Costs Associated with Exit or Disposal Activities.










F-21



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                  |  |              |       |   |            |   |      |            |  |   |       |   |  |       |      |   |  |   |       |  
|--------------------------------- |  | ------------ | ----- | - | ---------- | - | ---- | ---------- |  | - | ----- | - |  | ----- | ---- | - |  | - | ----- | -
|                                  |  | Employee     |       |   |            |   |      |            |  |   |      
|                                  |  | Severance    |       |   | Excess     |   |      | Asset      |  |   | Legal |   |  |      
|                                  |  | and Benefits |       |   | Facilities |   |      | Write-offs |  |   | Fees  |   |  | Total |     
|                                  |  |              |       |   |            |   |      |            |  |   |       |   |  |       |     
|Balance, December 31, 2002        |  | $            | 2.3   |   |            | $ | 12.1 |            |  | $ |      |   |  | $     | 0.2  |   |  | $ | 14.6  |  
|2003 provision, net of reversals  |  |              | 4.8   |   |            |   | 1.3  |            |  |   | 0.5   |   |  |       |     |   |  |   | 6.6   |  
|ACTV restructuring reserve        |  |              | 4.5   |   |            |   | 0.2  |            |  |   |      |   |  |       |     |   |  |   | 4.7   |  
|Cash payments                     |  |              | (10.3 | ) |            |   | (7.3 | )          |  |   |      |   |  |       | (0.2 | ) |  |   | (17.8 | )
|Non-cash charges                  |  |              |      |   |            |   |     |            |  |   | (0.5  | ) |  |       |     |   |  |   | (0.5  | )
|Currency effect                   |  |              | 0.2   |   |            |   |     |            |  |   |      |   |  |       |     |   |  |   | 0.2   |  
|                                  |  |              |       |   |            |   |      |            |  |   |       |   |  |       |     
|Balance, December 31, 2003        |  |              | 1.5   |   |            |   | 6.3  |            |  |   |      |   |  |       |     |   |  |   | 7.8   |  
|2004 provision, net of reversals  |  |              | (0.2  | ) |            |   | 0.1  |            |  |   | 1.0   |   |  |       |     |   |  |   | 0.9   |  
|Cash payments                     |  |              | (1.3  | ) |            |   | (5.0 | )          |  |   |      |   |  |       |     |   |  |   | (6.3  | )
|Non-cash charges                  |  |              |      |   |            |   |     |            |  |   | (1.0  | ) |  |       |     |   |  |   | (1.0  | )
|                                  |  |              |       |   |            |   |      |            |  |   |       |   |  |       |     
|Balance, December 31, 2004        |  |              |      |   |            |   | 1.4  |            |  |   |      |   |  |       |     |   |  |   | 1.4   |  
|2005 provision, net of reversals  |  |              | 0.4   |   |            |   | 1.8  |            |  |   | 0.3   |   |  |       |     |   |  |   | 2.5   |  
|Cash payments                     |  |              | (0.2  | ) |            |   | (2.1 | )          |  |   |      |   |  |       |     |   |  |   | (2.3  | )
|Transfer from accrued liabilities |  |              |      |   |            |   | 0.6  |            |  |   |      |   |  |       |     |   |  |   | 0.6   |  
|Non-cash charges                  |  |              |      |   |            |   |     |            |  |   | (0.3  | ) |  |       |     |   |  |   | (0.3  | )
|                                  |  |              |       |   |            |   |      |            |  |   |       |   |  |       |     
|Balance, December 31, 2005        |  | $            | 0.2   |   |            | $ | 1.7  |            |  | $ |      |   |  | $     |     |   |  | $ | 1.9   |  
|                                  |  |              |       |   |            |   |      |            |  |   |       |   |  |       |     





|         |                     
|-------- | --------------------
|Note 10. | Shareholders Equity



| |                         
| | ------------------------
| | Authorized share capital



| |   |                                                 
| | - | ------------------------------------------------
| |  | 500,000,000 Class A ordinary shares             
|
| |  | 200,000,000 Class B ordinary shares             
|
| |  | 500,000,000 preference shares  none outstanding



| |       
| | ------
| | Voting



F-22



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                  
| | ---------------------------------
| | Dividends and Other Distributions





| |       
| | ------
| | Merger





| |                                      
| | -------------------------------------
| | Conversion of Class B Ordinary Shares







| |                                
| | -------------------------------
| | Exchangeable Share Arrangements





F-23



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                
| | ---------------
| | Shares Reserved



|                                                                                                                                                                       |       |  |            |            | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----- |  | ---------- | ---------- | 
|Issuable upon conversion of Class B Ordinary shares                                                                                                                    |       |  | 30,631,746 |           
|Issuable upon exchange of shares (including 62,000 shares
    issuable upon exercise of outstanding options) of OpenTV, Inc.
    common stock under 2000 Exchange Plan |       |  | 744,428    |           
|Stock options outstanding                                                                                                                                              |       |  | 10,263,710 |           
|Stock options reserved for future grant under 2005 Option Plan                                                                                                         |       |  | 5,997,000  |           
|Employee stock purchase plan                                                                                                                                           |       |  | 500,000    |           
|                                                                                                                                                                       |       |  |           
|                                                                                                                                                                       | Total |  |            | 48,136,884 | 
|                                                                                                                                                                       |       |  |           





| |         
| | --------
| | Warrants





| |                                                
| | -----------------------------------------------
| | Agreements with General Instrument and Motorola





| |                         
| | ------------------------
| | Share-based Compensation





|         |             
|-------- | ------------
|Note 11. | Option Plans



F-24



---



##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




1 48


1 48








F-25



---



##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|                                           |  |               |            |   |           |  |            |                |  |                  |                |  |  |   |       | 
|------------------------------------------ |  | ------------- | ---------- | - | --------- |  | ---------- | -------------- |  | ---------------- | -------------- |  |  | - | ----- | 
|                                           |  | Shares        |            |   |           |  |            |                | 
|                                           |  | Available for |            |   | Number of |  |            |                |  | Weighted Average |               
|                                           |  | Grant         |            |   | Shares    |  |            | Exercise Price |  |                  | Exercise Price | 
|                                           |  |               |            |   |           |  |            |                |  |                  |                | 
|Balance, December 31, 2002                 |  |               | 2,401,188  |   |           |  | 5,748,994  |                |  |                  |                |  |  | $ | 16.35 | 
|Options reserved at inception of 2003 Plan |  |               | 5,000,000  |   |           |  |           |                |  |                  |                |  |  |   |       | 
|Options related to ACTV acquisition        |  |               |           |   |           |  | 6,750,103  |                |  | $                | 0.33-$73.83    |  |  | $ | 3.63  | 
|Options granted                            |  |               | (1,607,850 | ) |           |  | 1,607,850  |                |  | $                | 1.51-$ 5.04    |  |  | $ | 2.52  | 
|Options exercised                          |  |               |           |   |           |  | (1,599,969 | )              |  | $                | 0.33-$ 2.73    |  |  | $ | 1.62  | 
|Options cancelled                          |  |               | 1,958,045  |   |           |  | (3,433,522 | )              |  | $                | 0.33-$94.56    |  |  | $ | 14.89 | 
|Shares issued as compensation              |  |               | (125,155   | ) |           |  |           |                |  |                  |                |  |  |   |       | 
|                                           |  |               |            |   |           |  |            |                |  |                  |                | 
|Balance, December 31, 2003                 |  |               | 7,626,228  |   |           |  | 9,073,456  |                |  |                  |                |  |  | $ | 6.81  | 
|Options granted                            |  |               | (2,813,050 | ) |           |  | 2,813,050  |                |  | $                | 2.16-$ 4.00    |  |  | $ | 3.06  | 
|Options exercised                          |  |               |           |   |           |  | (1,852,898 | )              |  | $                | 0.33-$ 2.73    |  |  | $ | 1.86  | 
|Options cancelled                          |  |               | 476,083    |   |           |  | (1,556,221 | )              |  | $                | 0.33-$54.25    |  |  | $ | 8.09  | 
|Shares issued to employees as bonus        |  |               | (578,917   | ) |           |  |           |                |  |                  |                |  |  |   |       | 
|Shares issued as compensation              |  |               | (52,280    | ) |           |  |           |                |  |                  |                |  |  |   |       | 
|                                           |  |               |            |   |           |  |            |                |  |                  |                | 
|Balance, December 31, 2004                 |  |               | 4,658,064  |   |           |  | 8,477,387  |                |  |                  |                |  |  | $ | 6.41  | 
|Options reserved at inception of 2005 Plan |  |               | 6,000,000  |   |           |  |           |                |  |                  |                |  |  |   |       | 
|Options granted                            |  |               | (3,266,000 | ) |           |  | 3,266,000  |                |  | $                | 2.09-$ 3.73    |  |  | $ | 2.76  | 
|Options exercised                          |  |               |           |   |           |  | (145,764   | )              |  | $                | 0.33-$ 2.73    |  |  | $ | 1.25  | 
|Options cancelled                          |  |               | (220,464   | ) |           |  | (1,271,913 | )              |  | $                | 1.05-$86.31    |  |  | $ | 5.66  | 
|Shares issued to employees as bonus        |  |               | (1,162,180 | ) |           |  |           |                |  |                  |                |  |  |   |       | 
|Shares issued as compensation              |  |               | (12,420    | ) |           |  |           |                |  |                  |                |  |  |   |       | 
|                                           |  |               |            |   |           |  |            |                |  |                  |                | 
|Balance, December 31, 2005                 |  |               | 5,997,000  |   |           |  | 10,325,710 |                |  |                  |                |  |  | $ | 5.42  | 
|                                           |  |               |            |   |           |  |            |                |  |                  |                | 



F-26



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|               |  |                     |            |                  |                               |  |      |                  |  |   |             |  |  |                  |           |  |  |   |       | 
|-------------- |  | ------------------- | ---------- | ---------------- | ----------------------------- |  | ---- | ---------------- |  | - | ----------- |  |  | ---------------- | --------- |  |  | - | ----- | 
|               |  | Options Outstanding |            |                  | Options Currently Exercisable | 
|               |  |                     |            |                  |                               | 
|               |  |                     |            | Weighted Average |                               |  |      |                  | 
|               |  | Number              |            |                  | Remaining                     |  |      | Weighted Average |  |   | Number      |  |  | Weighted Average |          
|Exercise Price |  | Outstanding         |            |                  | Contractual Life              |  |      | Exercise Price   |  |   | Exercisable |  |  | Exercise Price   |          
|               |  |                     |            |                  |                               |  |      |                  |  |   |             |  |  |                  |          
|$ 0.33-$ 1.78  |  |                     | 1,086,438  |                  |                               |  | 5.33 |                  |  | $ | 1.26        |  |  |                  | 675,337   |  |  | $ | 0.98  | 
|$ 2.02-$ 2.18  |  |                     | 1,123,682  |                  |                               |  | 1.56 |                  |  | $ | 2.17        |  |  |                  | 1,060,232 |  |  | $ | 2.18  | 
|$ 2.21-$ 2.69  |  |                     | 246,650    |                  |                               |  | 8.47 |                  |  | $ | 2.38        |  |  |                  | 28,200    |  |  | $ | 2.21  | 
|$ 2.70-$ 2.70  |  |                     | 1,520,976  |                  |                               |  | 9.13 |                  |  | $ | 2.70        |  |  |                  | 104,685   |  |  | $ | 2.70  | 
|$ 2.72-$ 2.84  |  |                     | 1,176,899  |                  |                               |  | 9.29 |                  |  | $ | 2.82        |  |  |                  | 44,399    |  |  | $ | 2.83  | 
|$ 2.85-$ 2.98  |  |                     | 91,200     |                  |                               |  | 8.24 |                  |  | $ | 2.91        |  |  |                  | 15,500    |  |  | $ | 2.88  | 
|$ 2.99-$ 2.99  |  |                     | 2,206,200  |                  |                               |  | 8.22 |                  |  | $ | 2.99        |  |  |                  |          |  |  | $ |      | 
|$ 3.00-$ 6.00  |  |                     | 1,222,552  |                  |                               |  | 5.92 |                  |  | $ | 4.16        |  |  |                  | 625,675   |  |  | $ | 4.51  | 
|$ 6.04-$10.19  |  |                     | 1,032,450  |                  |                               |  | 3.17 |                  |  | $ | 9.62        |  |  |                  | 1,032,356 |  |  | $ | 9.62  | 
|$11.10-$94.56  |  |                     | 618,663    |                  |                               |  | 4.54 |                  |  | $ | 35.93       |  |  |                  | 618,663   |  |  | $ | 35.93 | 
|               |  |                     |            |                  |                               |  |      |                  |  |   |             |  |  |                  |          
|               |  |                     | 10,325,710 |                  |                               |  | 6.46 |                  |  | $ | 5.42        |  |  |                  | 4,205,047 |  |  | $ | 9.15  | 
|               |  |                     |            |                  |                               |  |      |                  |  |   |             |  |  |                  |          



Note 12. Income Taxes




|              |  |                         |        |   |      |   |         |      |  |   |         |  
|------------- |  | ----------------------- | ------ | - | ---- | - | ------- | ---- |  | - | ------- | -
|              |  | Year Ended December 31, |       
|              |  |                         |       
|              |  | 2005                    |        |   | 2004 |   |         | 2003 | 
|              |  |                         |        |   |      |   |         |      | 
|United States |  | $                       | (8,387 | ) |      | $ | (20,644 | )    |  | $ | (49,477 | )
|International |  |                         | 990    |   |      |   | (2,135  | )    |  |   | (3,354  | )
|              |  |                         |        |   |      |   |         |      | 
|              |  | $                       | (7,397 | ) |      | $ | (22,779 | )    |  | $ | (52,831 | )
|              |  |                         |        |   |      |   |         |      | 



|                    |               |                         |       |       |      |   |      |      |   |   |       |       | 
|------------------- | ------------- | ----------------------- | ----- | ----- | ---- | - | ---- | ---- | - | - | ----- | ----- | 
|                    |               | Year Ended December 31, |      
|                    |               |                         |      
|                    |               | 2005                    |       |       | 2004 |   |      | 2003 |  
|                    |               |                         |       |       |      |   |      |      |  
|Current             |               |                         |       |       |      |   |      |      |   |   |       |      
|                    | United States |                         | $     |      |      |   | $    | (611 | ) |   | $     |      | 
|                    | International |                         |       | 1,299 |      |   |      | 66   |   |   |       | 1,163 | 
|                    | State         |                         |       | 75    |      |   |      | (272 | ) |   |       | 100   | 
|                    |               |                         |       |       |      |   |      |      |  
|                    |               | $                       | 1,374 |       |      | $ | (817 | )    |   | $ | 1,263 |      
|Deferred            |               |                         |       |       |      |   |      |      |   |   |       |      
|                    | United States |                         | $     |      |      |   | $    |     |   |   | $     |      | 
|                    | International |                         |       | (298  | )    |   |      |     |   |   |       |      | 
|                    |               |                         |       |       |      |   |      |      |  
|                    |               |                         | (298  | )     |      |   |     |      |   |   |      |      
|                    |               |                         |       |       |      |   |      |      |  
|Provision (benefit) |               | $                       | 1,076 |       |      | $ | (817 | )    |   | $ | 1,263 |      
|                    |               |                         |       |       |      |   |      |      |  

F-27



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                                        |  |                         |        |   |      |   |        |      |  |   |         |  
|------------------------------------------------------- |  | ----------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------- | -
|                                                        |  | Year Ended December 31, |       
|                                                        |  |                         |       
|                                                        |  | 2005                    |        |   | 2004 |   |        | 2003 | 
|                                                        |  |                         |        |   |      |   |        |      | 
|Income tax benefit at the federal statutory rate of 35% |  | $                       | (2,589 | ) |      | $ | (7,972 | )    |  | $ | (18,491 | )
|Current year losses not benefited                       |  |                         | 6,863  |   |      |   | 10,471 |      |  |   | 21,387  |  
|Foreign tax rate differential                           |  |                         | (3,464 | ) |      |   | (1,129 | )    |  |   | (1,768  | )
|Adjustment related to prior year taxes                  |  |                         | 191    |   |      |   | (2,264 | )    |  |   |        |  
|Other                                                   |  |                         | 75     |   |      |   | 77     |      |  |   | 135     |  
|                                                        |  |                         |        |   |      |   |        |      | 
|                                                        |  | $                       | 1,076  |   |      | $ | (817   | )    |  | $ | 1,263   |  
|                                                        |  |                         |        |   |      |   |        |      | 



|                                              |                                   |                         |     |          |      |   |   |          |  
|--------------------------------------------- | --------------------------------- | ----------------------- | --- | -------- | ---- | - | - | -------- | -
|                                              |                                   | Year Ended December 31, |    
|                                              |                                   |                         |    
|                                              |                                   | 2005                    |     |          | 2004 |  
|                                              |                                   |                         |     |          |      |  
|Current deferred tax asset, net               |                                   |                         |     |          |      |   |   |         
|                                              | Deferred revenue                  |                         | $   | 8,755    |      |   | $ | 4,986    |  
|                                              | Accrued liabilities and reserves  |                         |     | 2,793    |      |   |   | 3,079    |  
|                                              | Foreign net operating loss        |                         |     | 298      |      |   |   |         |  
|                                              | Valuation allowance               |                         |     | (11,548  | )    |   |   | (8,065   | )
|                                              |                                   |                         |     |          |      |  
|                                              |                                   | $                       | 298 |          |      | $ |  |         
|Long-term deferred tax asset (liability), net |                                   |                         |     |          |      |   |   |         
|                                              | Fixed asset, intangible and other |                         | $   | 2,098    |      |   | $ | 3,164    |  
|                                              | Net operating loss carryforwards  |                         |     | 129,190  |      |   |   | 134,322  |  
|                                              | Valuation allowance               |                         |     | (131,288 | )    |   |   | (137,486 | )
|                                              |                                   |                         |     |          |      |  
|                                              |                                   | $                       |    |          |      | $ |  |         
|                                              |                                   |                         |     |          |      |  
|Net deferred tax asset                        |                                   | $                       | 298 |          |      | $ |  |         
|                                              |                                   |                         |     |          |      |  





F-28



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|         |                              
|-------- | -----------------------------
|Note 13. | Commitments and Contingencies



| |                 
| | ----------------
| | Operating Leases





|                         |  |             |      | 
|------------------------ |  | ----------- | ---- | 
|                         |  | Minimum     |     
|Year Ending December 31, |  | Commitments |     
|                         |  |             |     
|2006                     |  | $           | 4.0  | 
|2007                     |  |             | 3.6  | 
|2008                     |  |             | 3.5  | 
|2009                     |  |             | 3.4  | 
|2010                     |  |             | 0.4  | 
|Thereafter               |  |             | 0.1  | 
|                         |  |             |     
|                         |  | $           | 15.0 | 
|                         |  |             |     





| |                  
| | -----------------
| | Other Commitments







F-29



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |              
| | -------------
| | Contingencies

OpenTV, Inc. v. Liberate Technologies, Inc.






Initial Public Offering Securities Litigation. Brody v. OpenTV Corp., et al. In re OpenTV Corp. Initial Public Offering
Securities Litigation In re Initial Public
Offering Securities Litigation


F-30



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




In re Wink Communications, Inc.
Initial Public Offering Securities Litigation In
re Initial Public Offering Securities Litigation


Litigation Relating to the Acquisition of ACTV, Inc.


Broadcast Innovation Matter.


F-31



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Personalized Media Communications, LLC.




| |                
| | ---------------
| | Indemnification



F-32



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|         |                           
|-------- | --------------------------
|Note 14. | Related Party Transactions



|                             |  |                                                 |  |                         |        |   |      |   |        |      |  |   |        |  
|---------------------------- |  | ----------------------------------------------- |  | ----------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                             |  |                                                 |  | Year Ended December 31, |       
|                             |  |                                                 |  |                         |       
|Related Party                |  | Nature of Transaction                           |  | 2005                    |        |   | 2004 |   |        | 2003 | 
|                             |  |                                                 |  |                         |        |   |      |   |        |      | 
|Shareholders:                |  |                                                 |  |                         |        |   |      |   |        |      |  |   |        |  
|Liberty Media and affiliates |  | Management fee and other costs                  |  | $                       |       |   |      | $ | (442   | )    |  | $ | (2,382 | )
|Liberty Media                |  | Employee benefits                               |  |                         | (2,039 | ) |      |   | (1,923 | )    |  |   |       |  
|Liberty Media affiliates     |  | Revenues                                        |  |                         | 10     |   |      |   | 52     |      |  |   | 1,107  |  
|Sun Microsystems             |  | Software technology license and equipment costs |  |                         | 480    |   |      |   | (3,540 | )    |  |   |       |  









F-33



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|         |                    
|-------- | -------------------
|Note 15. | Segment Information

Disclosure
about Segments of an Enterprise and Related
Information.








F-34



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                         |                        |                                                   |       |      |      |   |       |      |      |   |       |      |      | 
|---------------------------------------- | ---------------------- | ------------------------------------------------- | ----- | ---- | ---- | - | ----- | ---- | ---- | - | ----- | ---- | ---- | 
|                                         |                        | Year Ended December 31,                           |      
|                                         |                        |                                                   |      
|                                         |                        | 2005                                              |       |      | 2004 |   |       | 2003 |     
|                                         |                        |                                                   |       |      |      |   |       |      |     
|Revenues:                                |                        |                                                   |       |      |      |   |       |      |      |   |       |     
|Middleware and Integrated Technologies   |                        |                                                   |       |      |      |   |       |      |      |   |       |     
|                                         | Royalties and licenses |                                                   | $     | 54.4 |      |   | $     | 48.8 |      |   | $     | 28.0 |     
|                                         | Services and other     |                                                   |       | 13.9 |      |   |       | 14.3 |      |   |       | 21.6 |     
|                                         |                        |                                                   |       |      |      |   |       |      |     
|                                         |                        | Subtotal  Middleware and Integrated Technologies |       |      | 68.3 |   |       |      | 63.1 |   |       |      | 49.6 | 
|Applications                             |                        |                                                   |       |      |      |   |       |      |      |   |       |     
|                                         | Royalties and licenses |                                                   | $     | 0.7  |      |   | $     | 0.1  |      |   | $     | 0.7  |     
|                                         | Services and other     |                                                   |       | 13.4 |      |   |       | 12.0 |      |   |       | 13.6 |     
|                                         |                        |                                                   |       |      |      |   |       |      |     
|                                         |                        | Subtotal  Applications                           |       |      | 14.1 |   |       |      | 12.1 |   |       |      | 14.3 | 
|BettingCorp                              |                        |                                                   |       |      |      |   |       |      |      |   |       |     
|                                         | Royalties and licenses |                                                   | $     |     |      |   | $     |     |      |   | $     |     |     
|                                         | Services and other     |                                                   |       | 5.0  |      |   |       | 2.0  |      |   |       | 0.3  |     
|                                         |                        |                                                   |       |      |      |   |       |      |     
|                                         |                        | Subtotal  BettingCorp                            |       |      | 5.0  |   |       |      | 2.0  |   |       |      | 0.3  | 
|                                         |                        |                                                   |       |      |      |   |       |      |     
|Total Revenues                           |                        | $                                                 | 87.4  |      |      | $ | 77.2  |      |      | $ | 64.2  |     
|                                         |                        |                                                   |       |      |      |   |       |      |     
|Contribution Margin:                     |                        |                                                   |       |      |      |   |       |      |      |   |       |     
|Middleware and Integrated Technologies   |                        |                                                   | 28.8  |      |      |   | 26.3  |      |      |   | 17.7  |     
|Applications                             |                        |                                                   | (4.4  | )    |      |   | (6.8  | )    |      |   | (17.9 | )   
|BettingCorp                              |                        |                                                   | (4.8  | )    |      |   | (4.5  | )    |      |   | (1.5  | )   
|                                         |                        |                                                   |       |      |      |   |       |      |     
|Total Contribution Margin                |                        |                                                   | 19.6  |      |      |   | 15.0  |      |      |   | (1.7  | )   
|Unallocated corporate overhead           |                        |                                                   | (20.4 | )    |      |   | (29.1 | )    |      |   | (26.3 | )   
|NASCAR amendment                         |                        |                                                   |      |      |      |   | 4.6   |      |      |   |      |     
|BSkyB Contract amendment                 |                        |                                                   |      |      |      |   |      |      |      |   | 1.2   |     
|Direct TV Market development costs       |                        |                                                   |      |      |      |   |      |      |      |   | 3.8   |     
|Restructuring and impairment costs       |                        |                                                   | (2.6  | )    |      |   | (0.9  | )    |      |   | (6.6  | )   
|Depreciation and amortization            |                        |                                                   | (3.8  | )    |      |   | (5.9  | )    |      |   | (7.5  | )   
|Amortization of intangible assets        |                        |                                                   | (5.8  | )    |      |   | (8.2  | )    |      |   | (14.7 | )   
|Amortization of share-based compensation |                        |                                                   |      |      |      |   |      |      |      |   | (0.2  | )   
|Interest income                          |                        |                                                   | 1.7   |      |      |   | 0.8   |      |      |   | 1.6   |     
|Other income/(expense)                   |                        |                                                   | 3.8   |      |      |   | 0.5   |      |      |   | (1.1  | )   
|Minority interest                        |                        |                                                   | 0.1   |      |      |   | 0.5   |      |      |   | 0.2   |     
|Impairment of intangible assets          |                        |                                                   |      |      |      |   |      |      |      |   | (1.5  | )   
|                                         |                        |                                                   |       |      |      |   |       |      |     
|Loss before income taxes                 |                        |                                                   | (7.4  | )    |      |   | (22.7 | )    |      |   | (52.8 | )   
|Income tax (expense)/benefit             |                        |                                                   | (1.1  | )    |      |   | 0.8   |      |      |   | (1.3  | )   
|                                         |                        |                                                   |       |      |      |   |       |      |     
|Net loss                                 |                        | $                                                 | (8.5  | )    |      | $ | (21.9 | )    |      | $ | (54.1 | )   
|                                         |                        |                                                   |       |      |      |   |       |      |     

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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                               |                 |                         |      |      |      |  |      |      |     |   |      |      |      |      |      |     |     |   |      |      |      |  |      |     |     | 
|------------------------------ | --------------- | ----------------------- | ---- | ---- | ---- |  | ---- | ---- | --- | - | ---- | ---- | ---- | ---- | ---- | --- | --- | - | ---- | ---- | ---- |  | ---- | --- | --- | 
|                               |                 | Year Ended December 31, |     
|                               |                 |                         |     
|                               |                 | 2005                    |      |      | %    |  |      | 2004 |     |   | %    |      |      | 2003 |      |     | %   |  
|                               |                 |                         |      |      |      |  |      |      |     |   |      |      |      |      |      |     |     |  
|Europe, Africa and Middle East |                 |                         |      |      |      |  |      |      |     |   |      |      |      |      |      |     |     |   |      |      |      |  |      |    
|                               | United Kingdom  |                         | $    | 22.0 |      |  |      | 25%  |     |   | $    | 20.5 |      |      |      | 26% |     |   | $    | 17.2 |      |  |      | 27% |    
|                               | Italy           |                         |      | 10.4 |      |  |      | 12%  |     |   |      | 13.8 |      |      |      | 18% |     |   |      | 1.8  |      |  |      | 3%  |    
|                               | Other Countries |                         |      | 14.2 |      |  |      | 16%  |     |   |      | 10.9 |      |      |      | 14% |     |   |      | 11.9 |      |  |      | 18% |    
|                               |                 |                         |      |      |      |  |      |      |     |   |      |      |      |      |      |     |     |  
|                               |                 | Subtotal                |      |      | 46.6 |  |      |      | 53% |   |      |      | 45.2 |      |      |     | 58% |   |      |      | 30.9 |  |      |     | 48% | 
|Americas                       |                 |                         |      |      |      |  |      |      |     |   |      |      |      |      |      |     |     |   |      |      |      |  |      |    
|                               | United States   |                         |      | 23.9 |      |  |      | 28%  |     |   |      | 18.4 |      |      |      | 24% |     |   |      | 20.2 |      |  |      | 32% |    
|                               | Other Countries |                         |      | 4.6  |      |  |      | 5%   |     |   |      | 2.9  |      |      |      | 4%  |     |   |      | 4.0  |      |  |      | 6%  |    
|                               |                 |                         |      |      |      |  |      |      |     |   |      |      |      |      |      |     |     |  
|                               |                 | Subtotal                |      |      | 28.5 |  |      |      | 33% |   |      |      | 21.3 |      |      |     | 28% |   |      |      | 24.2 |  |      |     | 38% | 
|Asia Pacific                   |                 |                         | 12.3 |      |      |  | 14%  |      |     |   | 10.7 |      |      |      | 14%  |     |     |   | 9.1  |      |      |  | 14%  |    
|                               |                 |                         |      |      |      |  |      |      |     |   |      |      |      |      |      |     |     |  
|                               |                 | $                       | 87.4 |      |      |  | 100% |      |     | $ | 77.2 |      |      |      | 100% |     |     | $ | 64.2 |      |      |  | 100% |    
|                               |                 |                         |      |      |      |  |      |      |     |   |      |      |      |      |      |     |     |  



|           |  |              |     |  |      |  |     |      |  |  |     | 
|---------- |  | ------------ | --- |  | ---- |  | --- | ---- |  |  | --- | 
|           |  | Year Ended   |    
|           |  | December 31, |    
|           |  |              |    
|           |  | 2005         |     |  | 2004 |  |     | 2003 | 
|           |  |              |     |  |      |  |     |      | 
|Echostar   |  |              | 17% |  |      |  | 15% |      |  |  | 12% | 
|Sky Italia |  |              | 12% |  |      |  | 18% |      |  |  | 1%  | 
|DiTG       |  |              | 0%  |  |      |  | 4%  |      |  |  | 12% | 
|Motorola   |  |              | 0%  |  |      |  | 2%  |      |  |  | 10% | 







|                           |  |              |     |  |      |   |     |      |  |   |     | 
|-------------------------- |  | ------------ | --- |  | ---- | - | --- | ---- |  | - | --- | 
|                           |  | Year Ended   |    
|                           |  | December 31, |    
|                           |  |              |    
|Capital Expenditures, Net: |  | 2005         |     |  | 2004 |   |     | 2003 | 
|                           |  |              |     |  |      |   |     |      | 
|United States              |  | $            | 1.7 |  |      | $ | 1.3 |      |  | $ | 1.5 | 
|Other countries            |  |              | 1.4 |  |      |   | 0.8 |      |  |   | 1.4 | 
|                           |  |              |     |  |      |   |     |      | 
|                           |  | $            | 3.1 |  |      | $ | 2.1 |      |  | $ | 2.9 | 
|                           |  |              |     |  |      |   |     |      | 

|                      |  |              |     |  |      |   |      | 
|--------------------- |  | ------------ | --- |  | ---- | - | ---- | 
|                      |  | December 31, |    
|                      |  |              |    
|Long-lived Assets:(*) |  | 2005         |     |  | 2004 |  
|                      |  |              |     |  |      |  
|United States         |  | $            | 6.0 |  |      | $ | 10.3 | 
|Other countries       |  |              | 2.8 |  |      |   | 2.6  | 
|                      |  |              |     |  |      |  
|                      |  | $            | 8.8 |  |      | $ | 12.9 | 
|                      |  |              |     |  |      |  






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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                  
|-------- | -----------------
|Note 16. | Subsequent Events







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | eliminated a restriction formerly contained in our memorandum of
    association that prohibited us from issuing additional
    Class B ordinary shares or options, rights or warrants to
    subscribe for additional Class B ordinary shares; and                                                                                                                                                                                                                                                   
|
| |  | deleted provisions formerly contained in our memorandum of
    association that required each Class B ordinary share to
    automatically convert into a Class A ordinary share under
    certain circumstances, including upon the transfer of any
    Class B ordinary shares to a person who was not a
    stockholder, or an affiliate of such stockholder, prior to the
    initial public offering of our Class A ordinary shares, and
    the procedures relating to that automatic conversion.



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                                                  
|-------- | -------------------------------------------------
|Note 17. | Quarterly Consolidated Financial Data (Unaudited)



|                                       |         |             |        |             |              |   |        |             |   |   |          |             |   |   |        |             |  
|-------------------------------------- | ------- | ----------- | ------ | ----------- | ------------ | - | ------ | ----------- | - | - | -------- | ----------- | - | - | ------ | ----------- | -
|2005 Quarter Ended                     |         | December 31 |        |             | September 30 |   |        | June 30     |   |   | March 31 |            
|                                       |         |             |        |             |              |   |        |             |   |   |          |            
|Revenues                               |         | $           | 24,199 |             |              | $ | 19,478 |             |   | $ | 20,874   |             |   | $ | 22,829 |            
|Net profit/(loss)                      |         | $           | 2,904  |             |              | $ | (4,051 | )           |   | $ | (4,042   | )           |   | $ | (3,284 | )          
|Net profit/(loss) per share           |         |             |        |             |              |   |        |             |   |   |          |             |   |   |        |            
|                                       | basic   |             | $      | 0.02        |              |   | $      | (0.03       | ) |   | $        | (0.03       | ) |   | $      | (0.03       | )
|                                       | diluted |             | $      | 0.02        |              |   | $      | (0.03       | ) |   | $        | (0.03       | ) |   | $      | (0.03       | )
|Shares used in per share calculation  |         |             |        |             |              |   |        |             |   |   |          |             |   |   |        |            
|                                       | basic   |             |        | 128,659,079 |              |   |        | 124,751,421 |   |   |          | 123,337,922 |   |   |        | 122,501,915 |  
|                                       | diluted |             |        | 137,508,887 |              |   |        | 124,751,421 |   |   |          | 123,337,922 |   |   |        | 122,501,915 |  

|                                                             |  |             |             |   |              |   |             |         |  |   |             |   |  |   |             |  
|------------------------------------------------------------ |  | ----------- | ----------- | - | ------------ | - | ----------- | ------- |  | - | ----------- | - |  | - | ----------- | -
|2004 Quarter Ended                                           |  | December 31 |             |   | September 30 |   |             | June 30 |  |   | March 31    |  
|                                                             |  |             |             |   |              |   |             |         |  |   |             |  
|Revenues                                                     |  | $           | 24,097      |   |              | $ | 16,577      |         |  | $ | 19,097      |   |  | $ | 17,398      |  
|Net loss                                                     |  | $           | (6,300      | ) |              | $ | (4,763      | )       |  | $ | (1,962      | ) |  | $ | (8,937      | )
|Net loss per share, basic and diluted:                       |  | $           | (0.05       | ) |              | $ | (0.04       | )       |  | $ | (0.02       | ) |  | $ | (0.07       | )
|Shares used in per share calculation  basic and
    diluted |  |             | 121,980,908 |   |              |   | 121,830,392 |         |  |   | 121,420,281 |   |  |   | 120,004,281 |  



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##### Table of Contents



OPENTV CORP.





SCHEDULE II


VALUATION AND QUALIFYING ACCOUNTS


|                                 |      |                                                      |   |         |               |  |   |            |   |  |                |        |   |  |   |     | 
|-------------------------------- | ---- | ---------------------------------------------------- | - | ------- | ------------- |  | - | ---------- | - |  | -------------- | ------ | - |  | - | --- | 
|                                 |      | For the Years Ended December 31, 2005, 2004 and 2003 |  
|                                 |      |                                                      |  
|                                 |      |                                                      |   | Charged |               |  |  
|                                 |      | Balance at                                           |   |         | (Credited) to |  |   | Write-offs |   |  |               
|                                 |      | Beginning                                            |   |         | Operating     |  |   | Net of     |   |  | Balance at End |       
|                                 |      | of Year                                              |   |         | Expenses      |  |   | Recoveries |   |  | of Year        |       
|                                 |      |                                                      |   |         |               |  |   |            |   |  |                |       
|Allowance for Doubtful Accounts: |      |                                                      |   |         |               |  |   |            |   |  |                |        |   |  |   |    
|                                 | 2005 |                                                      | $ | 559     |               |  | $ | (142       | ) |  | $              | (112   | ) |  | $ | 305 | 
|                                 | 2004 |                                                      |   | 789     |               |  |   | (187       | ) |  |                | (43    | ) |  |   | 559 | 
|                                 | 2003 |                                                      |   | 1,966   |               |  |   | 168        |   |  |                | (1,345 | ) |  |   | 789 | 

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