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<TYPE>10-K
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<PERIOD>20020131
<FILING-DATE>20020614
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>3DFX INTERACTIVE INC
<CIK>0001010026
<ASSIGNED-SIC>7372
<IRS-NUMBER>770390421
<STATE-OF-INCORPORATION>CA
<FISCAL-YEAR-END>0201
</COMPANY-DATA>
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<FORM-TYPE>10-K
<ACT>34
<FILE-NUMBER>000-22651
<FILM-NUMBER>02679917
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>4435 FORTRAN DR
<CITY>SAN JOSE
<STATE>CA
<ZIP>95134
<PHONE>4085913508
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<STREET1>4435 FORTRAN DR
<CITY>SAN JOSE
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<TYPE>10-K
<SEQUENCE>1
<FILENAME>d97663e10vk.txt
<DESCRIPTION>FORM 10-K FOR FISCAL YEAR END JANUARY 31, 2002
<TEXT>
<PAGE>

================================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                            -------------------------

                                    FORM 10-K

[X]      Annual report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the fiscal year ended January 31, 2002

                                       or

[ ]      Transition report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the transition period from       to      .

                        Commission File Number: 000-22651

                             3DFX INTERACTIVE, INC.
             (Exact name of registrant as specified in its charter)

<Table>
<S>                                                                       <C>
                            CALIFORNIA                                                   77-0390421
                 (State or other jurisdiction of                          (I.R.S. employer identification number)
               incorporation or organization)

                  P. O. BOX 60486, PALO ALTO, CA                                           94306
             (Address of principal executive office)                                     (Zip code)
</Table>

       Registrant's telephone number, including area code: (650) 326-7995

           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                      NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                           COMMON STOCK, NO PAR VALUE
                         PREFERRED SHARE PURCHASE RIGHTS
                                (Title of class)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [ ] No [X]

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

[ ]

         The aggregate market value of the voting stock held by non-affiliates
of the registrant, based upon the closing sale price of the common stock on May
31, 2002 of $.24 per share as reported on the OTC Bulletin Board, was
approximately $9,408,632. Shares of common stock held by each officer and
director and by each person known to the registrant who owns 5% or more of the
outstanding common stock have been excluded in that such persons may be deemed
to be affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.

      As of May 31, 2002, the registrant had outstanding 39,799,364 shares of
common stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

================================================================================



<PAGE>
                           FORWARD-LOOKING STATEMENTS

     Unless the context otherwise requires, the term "3dfx" when used in this
Form 10-K ("Report") refers to 3dfx Interactive, Inc., a California corporation,
and its consolidated subsidiaries and predecessors. This Report contains some
forward-looking statements within the meaning of the federal securities laws.
When used therein, the words "expects," "plans," "believes," "anticipating,"
"estimates," and similar expressions are intended to identify forward-looking
statements. Actual results and the timing of some events could differ materially
from those projected in or contemplated by the forward-looking statements due to
a number of factors, including without limitation those set forth under
"Management's Discussion and Analysis of Financial Condition and Results of
Discontinued Operations -- Risk Factors" below.

                                     PART I

ITEM 1. BUSINESS

      3dfx developed high performance, cost-effective graphics chips, graphics
boards, software and related technology that enabled an interactive and
realistic 3D experience across multiple hardware platforms, but is now in the
process of winding up its business. As discussed below, on March 27, 2001,
3dfx's shareholders approved proposals to liquidate, wind up and dissolve 3dfx
pursuant to a plan of dissolution and to sell certain of its assets to Nvidia US
Investment Company ("Nvidia Sub"), a wholly owned subsidiary of Nvidia
Corporation ("Nvidia"). 3dfx is continuing to wind up its affairs and dissolve.

     3dfx was incorporated in the State of California in August 1994.

SERIES B PREFERRED STOCK FINANCING


         On June 13, 2002, 3dfx entered into a Series B Preferred Stock Purchase
Agreement with SF Capital Partners Ltd. whereby SF Capital agreed to invest
between $25 and $35 million in 3dfx in exchange for shares of 3dfx's Series B
Preferred Stock (the "Series B Financing"). The amount of the investment will be
based on the sum at closing of 3dfx's fixed and determinable liabilities,
maximum reasonably known undeterminable liabilities and anticipated expenses
reasonably necessary to complete the liquidation, winding-up and dissolution of
3dfx. The agreement with SF Capital provides that once the amount of all of
3dfx's liabilities is determined, or if some liabilities are not determinable
then the maximum amount of all undetermined liabilities shall be reasonably
known to 3dfx and SF Capital, and subject to the satisfaction of certain other
specified conditions, then SF Capital will place the purchase price for the
shares of Series B Preferred Stock into escrow pending closing. The purchase
price will be released to 3dfx from escrow, and the closing of the Series B
Financing will occur, upon the satisfaction of conditions that 3dfx and SF
Capital specify in the escrow agreement. The number of shares of Series B
Preferred Stock of 3dfx issuable to SF Capital at closing will be equal to the
quotient derived by dividing (x) the sum of the investment amount and a
specified percent of the investment amount by (y) the average closing price of
Nvidia common stock for the five trading days preceding the closing. The
"specified percentage of the investment amount" referred to in the preceding
formula ranges from 25% to 40%, and varies based on the price of Nvidia common
stock preceding the closing (the higher the price of Nvidia common stock, the
higher the "specified percentage of the investment amount").

         The Series B Preferred Stock will not be entitled to dividends, subject
to redemption or conversion, and will have no voting rights, but it will have
priority for payment upon the liquidation, winding-up or dissolution of 3dfx. If
3dfx is in the process of liquidating, dissolving or winding up, immediately
upon its receipt of 500,000 or more shares of Nvidia common stock, 3dfx shall
distribute to the holders of the Series B Preferred Stock, at 3dfx's election,
either (i) $90 cash per share of Series B Preferred Stock or (ii) one share of
Nvidia stock per share of Series B Preferred Stock (the "Liquidation
Preference"). In the meantime, the prior written consent of the holders of not
less than a majority of the outstanding shares of Series B Preferred Stock is
required for 3dfx to make any dividends, distributions or redemptions on any
other securities, or for 3dfx to issue any debt or equity securities, or for
3dfx to enter into any merger, sale of shares of capital stock having voting
power with respect to 35% or more of its outstanding capital stock, or any
transaction in which all or substantially all of the assets of 3dfx are sold.
The holders of Series B Preferred Stock will have certain other rights designed
to protect their investment in 3dfx. The stock purchase agreement with SF
Capital is terminable if the funding amount exceeds the $35 million level or
falls under the $25 million level, if the Nvidia closing price is equal to or
less than $26, if the transaction fails to close within one year, if 3dfx is in
material default of the agreement or if the Nvidia common stock is delisted from
the Nasdaq National Market.

NVIDIA ASSET SALE TERMS

     On December 15, 2000, 3dfx entered into an asset purchase agreement with
Nvidia and Nvidia Sub under which Nvidia Sub would acquire certain of 3dfx's
assets, including its core graphics processor assets. Under the terms of the
asset purchase agreement, Nvidia Sub agreed to pay 3dfx $70.0 million in cash
and 2,000,000 shares of registered Nvidia common stock (after giving effect to a
recent Nvidia stock split), subject to the satisfaction of certain conditions
specified in the asset purchase agreement as described below. Upon signing the
asset purchase agreement, Nvidia Sub loaned to 3dfx $15.0 million in cash for
working capital.

     The asset sale to Nvidia Sub was approved by 3dfx shareholders on March 27,
2001, and on April 18, 2001 substantially all of 3dfx's assets were sold to
Nvidia Sub. Upon closing, 3dfx received $55.0 million in cash, which amount was
net of repayment of the $15.0 million cash loan 3dfx received upon signing the
asset purchase agreement. In addition, under the terms of the asset purchase


                                       1
<PAGE>

agreement, 3dfx and Nvidia Sub caused the pending patent litigation between the
parties to be dismissed with prejudice. Under the terms of the asset purchase
agreement, 3dfx may receive part or all of a one-time post-closing cash payment
of up to $25.0 million upon its request if it is not in breach of the asset
purchase agreement, it has expended all or substantially all of the $70.0
million cash consideration in payment of its liabilities and determines in good
faith that (i) the remaining portion of the cash consideration previously
received by it is not sufficient to pay its remaining liabilities, and (ii) such
remaining liabilities could and would be satisfied if 3dfx received the
post-closing cash payment and applied it to the payment of such liabilities, and
if Nvidia Sub does not determine in good faith that the requested amount would
not permit 3dfx to pay in full its remaining liabilities. In the event that 3dfx
were to receive the post-closing cash payment, the 2,000,000 shares of Nvidia
common stock comprising the remaining consideration otherwise payable to 3dfx
under the asset purchase agreement will be reduced by the number of shares equal
to the quotient determined by dividing the amount of the post-closing cash
payment by $25. 3dfx made arrangements to obtain the Series B Financing because
it does not currently believe that it will satisfy all of the conditions to
receipt of the post-closing cash payment from Nvidia sub.

     The 2,000,000 shares of Nvidia common stock will only become deliverable to
3dfx upon satisfaction of certain conditions specified in the asset purchase
agreement, including the completion of the winding up of the business of 3dfx
pursuant to 3dfx's plan of dissolution, and 3dfx's certification that (i) all
liabilities of 3dfx and its subsidiaries have been paid in full or otherwise
provided for and (ii) 3dfx has or will be validly dissolved. In the event the
remaining consideration from Nvidia is not paid, 3dfx will have to explore other
options, including filing for bankruptcy. The ultimate total value of the Nvidia
stock received by 3dfx, if any, is dependent on the number and market value of
shares received given the conditions described above.

LIQUIDATION, WINDING UP AND DISSOLUTION

     On December 15, 2000, the board of directors of 3dfx also approved a plan
of dissolution and on March 27, 2001 this plan of dissolution was approved by
3dfx's shareholders. On March 30, 2001, 3dfx filed a certificate of election to
liquidate, wind up and dissolve with the California Secretary of State's office.
3dfx is proceeding to wind up its affairs and is no longer operating or
generating revenues in the normal course of business.

     During the one-year period ending January 31, 2002 (fiscal 2002), 3dfx
substantially reduced its costs in order to conserve its resources. These
cost-cutting measures included the termination of virtually all employees,
reduction in leased space and other efforts to reduce non-essential expenses.
During this period, 3dfx also continued to liquidate its remaining assets,
negotiate with third parties for resolutions of various litigation matters that
would be agreeable to all parties involved, and to reach settlements with its
vendors in reduction of its accounts payable, as well as to reach mutually
satisfactory settlements with the lessors of its facilities and equipment
leases.

     The 3dfx plan of dissolution provides for the liquidation of 3dfx's
remaining assets, the winding up of its business and operations, and its
dissolution. To the extent that there are any remaining assets after the payment
of, or the provision for the payment of 3dfx's and its subsidiaries' debts and
liabilities, 3dfx will distribute the Liquidation Preference to the holders of
the Series B Preferred Stock and any remaining assets will be distributed to its
common shareholders.

     The plan of dissolution grants broad discretion and authority to 3dfx's
board of directors in the administration of the plan of dissolution, including
the engagement of employees and consultants to facilitate the dissolution of
3dfx, the provision for indemnification of 3dfx's directors and officers,
payment of all of its and its subsidiaries' debts and liabilities, establishment
of a liquidating trust and the determination of the timing and amount of
distributions. Further, the plan of dissolution authorizes 3dfx's board of
directors to do any and all things proper or convenient for the purpose of
winding up, settling and liquidating the affairs of 3dfx, and to take such
further actions and execute such documents as may in their judgment be necessary
or desirable in order to wind up expeditiously the affairs of 3dfx and complete
the liquidation thereof. In addition, the plan of dissolution provides that
3dfx's board of directors may amend the plan of dissolution, unless the board of
directors determines that such amendment would materially and adversely affect
shareholders' interests.

     The actual amount and timing of, and record dates for, any distributions to
3dfx's common shareholders are not known at this time. These matters will be
determined in the sole discretion of the 3dfx board of directors or the trustees
of the liquidating trust, as the case may be, and will depend upon a variety of
factors, including whether and when the Series B Financing will close, whether
3dfx will be able to satisfy all conditions necessary to its receipt of the
shares of Nvidia stock provided for under the Nvidia asset purchase agreement,
the proceeds derived by 3dfx from the sale of its remaining assets, the ultimate
amount of known and unknown debts and liabilities of 3dfx and its subsidiaries
(including tax liabilities), the resolution of litigation, lease obligations and
other contingent liabilities, and the amount of liquidation-related expenses
that must be satisfied out of 3dfx's assets. Claims, liabilities and expenses
continue to accrue, and 3dfx anticipates that expenses for professional fees and
other expenses of liquidation will be significant. These expenses will reduce
the amount of the assets available for distribution to 3dfx common shareholders.

     At this time, 3dfx cannot determine if there will be any assets remaining
after paying for, or providing for the payment of, 3dfx's liquidation expenses
and all of its and its subsidiaries' debts and liabilities, as well as the
distribution of the Liquidation Preference to the holders of the Series B
Preferred Stock. 3dfx believes that it will shortly be in a position to
voluntarily petition a California court to take jurisdiction over the final
steps of its winding up. In connection with this judicial process, 3dfx expects
that it will be able to






                                       2
<PAGE>

finally determine the total amount of its liabilities, including the maximum
amount of its undeterminable liabilities, and also expects that it will be able
to close the Series B Financing and satisfy the conditions to its receipt of the
shares of Nvidia stock. However, there can be no assurance as to the total
amount of 3dfx's liabilities or whether it will be able to close the Series B
Financing or satisfy the conditions to receiving the shares of Nvidia stock. If
any of these or other matters cannot be satisfactorily resolved, 3dfx will have
to explore other options, including filing for bankruptcy.

     Because of the uncertainties as to the settlement amount of 3dfx's and its
subsidiaries' debts and liabilities, as well as the volatility in the market
price of Nvidia's stock, 3dfx cannot at this time determine the timing or amount
of distributions that may be made to its common shareholders, if any. Only if
there are assets remaining after the payment of all debts and liabilities, and
the distribution of the Liquidation Preference, will 3dfx common shareholders
receive a distribution of those assets.

     Assuming the Series B Financing is closed, following 3dfx's receipt of
500,000 or more shares of Nvidia common stock, 3dfx will be obligated to
distribute the Liquidation Preference to the holders of the Series B Preferred
Stock in advance of any distribution to 3dfx's common shareholders. Assuming
3dfx continues to hold shares of Nvidia common stock after it has distributed
the Liquidation Preference, 3dfx may distribute shares of Nvidia common stock at
or about the time of its dissolution directly to its common shareholders, or it
may sell these shares in the open market or contribute the shares to a
liquidating trust for the benefit of 3dfx's common shareholders. Further, 3dfx
may elect to directly distribute shares of Nvidia common stock to some of its
common shareholders, while distributing an equivalent per share value in cash to
others who would otherwise be entitled to receive a fractional amount or small
number of shares of Nvidia common stock. At this time, 3dfx is unable to provide
specific information about the type or types of assets that 3dfx's common
shareholders may receive or what the value of those assets might be at the time
of distribution, if a distribution is made to 3dfx's common shareholders by 3dfx
or a liquidating trust at all.

     The directors and officers of 3dfx will continue to oversee the
liquidation, winding up and dissolution of 3dfx. However, the board of directors
may determine that the use of a liquidating trust provides a better alternative
for completing the liquidation process. If the assets and liabilities of 3dfx
are to be transferred to a liquidating trust, a common shareholder distribution
may be made immediately prior to such transfer, or alternatively, any common
shareholder distributions would be made directly from the trust after the
satisfaction of all of 3dfx's and its subsidiaries' debts and liabilities.

     Upon filing a certificate of dissolution with the California Secretary of
State's office or a California court entering an order declaring 3dfx to be
wound up and dissolved, the stock transfer books of 3dfx will be closed as of
the close of business on such date. Thereafter, no assignments or transfers of
3dfx common stock will be recorded.

PATENTS AND PROPRIETARY RIGHTS

     3dfx has sold substantially all of its intellectual property rights,
including but not limited to rights relating to patents, copyrights, trade
names, trade marks and domain names, to Nvidia Sub as part of the asset sale
that closed in April 2001. 3dfx and Nvidia Sub have entered into an agreement
whereby Nvidia Sub granted to 3dfx a non-transferable license to continue to use
the name "3dfx" solely in connection with the winding up of its operations.

EMPLOYEES

     As of January 31, 2002, 3dfx had one employee, who was located in the
United States.

ITEM 2. PROPERTIES

     3dfx leases approximately 77,805 square feet for its former headquarters in
one building in San Jose, California pursuant to a lease that expires on April
30, 2007, with an option to extend the lease for an additional five-year term.
3dfx is also currently leasing offices in Austin, Texas (27,179 square feet
expiring in August 2004). On April 19, 2002 3dfx reached a settlement with the
lessor of its Mexican manufacturing facility that provides for the termination
of the lease covering its 136,800 square foot manufacturing facility in Juarez,
Mexico, among other things. The foregoing facilities exceed 3dfx's operating
requirements and 3dfx is seeking to eliminate its lease obligations.




                                       3
<PAGE>


ITEM 3. LEGAL PROCEEDINGS

     3dfx is a party to the following legal proceedings involving certain
collection matters against 3dfx. 3dfx does not dispute that certain amounts are
owed to the parties that are pursuing these collection matters, but is
attempting to seek resolution of payment terms that are mutually acceptable to
the parties involved in each of these matters. There can be no assurance that
such resolutions will be achieved.

<Table>
<Caption>
ADVERSE PARTY                                     COURT                DATE INSTITUTED          FACTUAL BASIS AND RELIEF SOUGHT
-------------                                     -----                ---------------          -------------------------------

<S>                                         <C>                       <C>                       <C>
Aavid Thermalloy                              44th Judicial           November 8, 2000          Collection suit on unpaid invoices.
                                            District of Texas

Micron Semiconductor Products, Inc.            Santa Clara            August 17, 2000           Collection suit on unpaid contract.
                                             County Superior
                                                  Court

Quickturn Design Systems, Inc.                 Santa Clara            January 25, 2001          Collection suit on unpaid contract.
                                             County Superior
                                                  Court

Cadence Design Systems, Inc.                   Santa Clara            January 25, 2001          Collection suit on unpaid contract.
                                             County Superior
                                                  Court

California Micro Devices, Inc.                 Santa Clara           September 24, 2001         Collection suit on unpaid contract.
                                             County Superior
                                                  Court

Siliconware USA, Inc.                          Santa Clara              May 21, 2001            Collection suit on unpaid contract.
                                             County Superior
                                                  Court

Synopsis, Inc.                                 Santa Clara             August 20, 2001          Collection suit on unpaid contract.
                                             County Superior
                                                  Court
</Table>

     In addition to these collection disputes, 3dfx is a party to litigation
filed February 23, 2001 by Worldcom, Inc. in Dallas County on an open account
for telephone services. The amount of damages stated in the petition was
$1,389,000 plus interest and attorney's fees. Trial is set for October 14, 2002.
3dfx disputes Worldcom's claims and intends to vigorously defend itself in this
matter.

     3dfx is also involved in litigation filed against it in the 192nd District
Court on February 11, 2002 by Fortran Trust, 3dfx's lessor for its former
headquarters in San Jose, California. The landlord filed for breach of lease in
a tenant in possession action based on 3dfx's failure to pay rental amounts that
are delinquent. 3dfx is seeking to negotiate a settlement of its lease
obligations owed to Fortran Trust. The lessor also filed for and received from
the court a Writ of Attachment on March, 8, 2002. The lessor is presently
attempting to schedule a summary judgment hearing. Finally, a Default Judgment
was entered in favor of CarrAmerica, 3dfx's lessor for its offices in Austin,
Texas, on May 20, 2002 resulting from a lawsuit filed April 18, 2002 in the
261st Judicial District Court of Travis County, Texas. In order to set aside the
default judgment, 3dfx would need to move for a new trial on or before June 19,
2002. If 3dfx does not seek a new trial by that time, the judgment becomes
final. At that time, CarrAmerica may take steps to enforce that judgment against
3dfx. 3dfx is seeking to negotiate a settlement of its lease obligations owed to
CarrAmerica.

     3dfx may also be a party to various other lawsuits. Although the amount of
any liability that could arise with respect to these other proceedings cannot be
predicted accurately, 3dfx believes that any liability that might result from
these other claims will not have a material adverse effect on its financial
position.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not applicable.




                                       4
<PAGE>


                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

     3dfx common stock is currently traded on the over-the-counter bulletin
board under the symbol "TDFX." Prior to May 16, 2001, 3dfx common stock was
traded on the Nasdaq National Market under the symbol "TDFX." The following
table sets forth for the periods from February 1, 2000 through May 15, 2001 the
high and low per share sales price for 3dfx common stock as reported on the
Nasdaq National Market and, for the period from May 16, 2001 through May 31,
2002, the range of high and low bid prices for 3dfx common stock as reported on
the over-the-counter bulletin board. The quotations from the over-the-counter
bulletin board reflect interdealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.

<Table>
<Caption>
                                                                 NASDAQ
                                                         -----------------------
                                                            HIGH          LOW
                                                         ----------   ----------
<S>                                                      <C>           <C>
FISCAL YEAR ENDED JANUARY 31, 2001
First quarter ........................................        13.44         8.13
Second quarter .......................................        10.38         6.69
Third quarter ........................................         7.75         2.97
Fourth quarter .......................................         4.52         0.09

FISCAL YEAR ENDED JANUARY 31, 2002
First quarter ........................................          .38          .22
Second quarter (through May 15, 2001) ................          .35          .30
</Table>

<Table>
<Caption>
                                                               OVER-THE-COUNTER
                                                                BULLETIN BOARD
                                                           -----------------------
                                                              HIGH          LOW
                                                           ----------   ----------
<S>                                                        <C>          <C>
Second quarter (from May 16, 2001) .....................          .38          .26
Third quarter ..........................................          .40          .16
Fourth quarter .........................................          .71          .26

FISCAL YEAR ENDED JANUARY 31, 2003
First quarter ..........................................          .54          .26
Second quarter (through May 31, 2002) ..................          .34          .22
</Table>

     On May 31, 2002, the last reported sale price of 3dfx's common stock on the
OTC Bulletin Board was $.24 per share. As of May 31, 2002, there were
approximately 505 holders of record of 3dfx's common stock.

DIVIDEND POLICY

     3dfx has never declared or paid cash dividends on its capital stock.
However, assuming the closing of the Series B Financing, 3dfx will be obligated
to make a distribution of the Liquidation Preference to the holders of the
Series B Preferred Stock. In addition, under the terms of 3dfx's plan of
dissolution, the 3dfx board of directors is authorized to make a distribution to
common shareholders after paying or otherwise providing for all of 3dfx's
expenses of liquidation and its debts and liabilities. Such a distribution may
include cash and/or the distribution of shares of Nvidia common stock that may
be received by 3dfx under the terms of the Nvidia asset purchase agreement.
Because of the uncertainties as to the settlement amount of 3dfx's and its
subsidiaries' debts and liabilities and due to the volatility of the market
price of Nvidia stock, 3dfx cannot at this time determine the timing and amount
of cash or stock distributions that may be made to its common shareholders, if
any. Only if there are assets remaining after the payment of all debts and
liabilities and the distribution of the Liquidation Preference will 3dfx common
shareholders receive a distribution of those assets.




                                       5
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

     The following selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Discontinued Operations" and the Condensed Consolidated Financial Statements and
the Notes thereto included elsewhere in this Report.

     On March 27, 2001 3dfx's shareholders approved a proposal to liquidate,
wind up and dissolve 3dfx pursuant to a plan of dissolution. 3dfx is proceeding
to liquidate and wind up its affairs and dissolve. Accordingly, all activities
of 3dfx as of and subsequent to March 27, 2001 are presented under the
liquidation basis of accounting. Under the liquidation basis of accounting,
assets are stated at their estimated net realizable values and liabilities are
stated at their anticipated settlement amount, if reasonably estimable. 3dfx's
consolidated statement of changes in net liabilities in liquidation for the
period from March 27, 2001 to January 31, 2002 is set forth below.





<Table>
<Caption>
                                                                              FOR THE PERIOD
                                                                             MARCH 27, 2001 TO
                                                                             JANUARY 31, 2002
                                                                             -----------------
STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION DATA:                   (in thousands)

<S>                                                                           <C>
Net assets in liquidation at March 27, 2001                                   $        20,457

Changes in net assets in liquidation                                                  (54,859)
                                                                              ---------------

Net liabilities in liquidation at January 31, 2002                            $       (34,402)
                                                                              ===============
</Table>


     As a result of the vote by 3dfx's shareholders on March 27, 2001 to approve
the proposal to liquidate, wind up and dissolve 3dfx pursuant to a plan of
dissolution, all activities of 3dfx prior to that date are presented as
discontinued operations in the selected financial data below.

     Effective as of February 1, 1999, 3dfx changed its fiscal year from a
fiscal year beginning January 1 and ending December 31, to a fiscal year
beginning February 1 and ending January 31. References in this document to
"fiscal 2001" means the year ended January 31, 2001, to "fiscal 2000" means the
year ended January 31, 2000. The statement of discontinued operations data below
reflects the following:

          o    3dfx took a $117.1 million charge for the impairment of goodwill
               and other intangible assets. 3dfx's results of discontinued
               operations for the year ended January 31, 2001 and financial
               position at January 31, 2001 reflect the impact of this charge.
               See Note 1 to Notes to Financial Statements for further
               discussion of the impairment charge.

          o    3dfx's merger with GigaPixel Corporation was consummated on July
               21, 2000 and was treated as a purchase for financial reporting
               and accounting purposes. 3dfx's results of discontinued
               operations for the year ended January 31, 2001 and financial
               position at January 31, 2001 reflect the impact of the GigaPixel
               merger. See Note 3 to Notes to Financial Statements for further
               discussion of the GigaPixel merger.

          o    3dfx's merger with STB Systems, Inc., which was consummated on
               May 13, 1999 and was treated as a purchase for financial
               reporting and accounting purposes. 3dfx's results of discontinued
               operations for the year ended January 31, 2000 and financial
               position at January 31, 2000 reflect the impact of the STB
               merger. See Note 2 to Notes to Financial Statements for further
               discussion of the STB merger.

          o    In July 1998, 3dfx reached a settlement with Sega in conjunction
               with a lawsuit which 3dfx filed against Sega in August 1997.
               Fiscal 1998 includes a one-time recognition of income based in
               the thousands on the settlement.

      During the fiscal year ended January 31, 2001, 3dfx recorded a charge of
$7.9 million for the write-down of inventory and a charge of $5.5 million for
the write-down of property and equipment. 3dfx also recorded a charge of $117.1
million for the impairment of goodwill and other intangibles during the fiscal
year ended January 31, 2001. In accordance with 3dfx's accounting policy, 3dfx
assessed impairment of its long-lived assets and determined that the carrying
amount of goodwill and other intangibles would not be recoverable due to the
deteriorating condition of its operations. The impairment loss was measured as
the amount by which the carrying amount of the assets exceeded the estimated
fair value of the assets, as determined using the present value of expected
future cash flows.




                                       6
<PAGE>





<Table>
<Caption>
                                                   PERIOD FROM
                                                   FEBRUARY 1,      FISCAL YEAR ENDED                            FISCAL YEAR
                                                       2001            JANUARY 31,            MONTH ENDED      ENDED DECEMBER 31,
                                                   TO MARCH 26,   ------------------------    JANUARY 31,   -----------------------
                                                       2001          2001          2000          1999          1998         1997
                                                   ------------   ----------    ----------    -----------   ----------   ----------
<S>                                                <C>            <C>           <C>           <C>           <C>          <C>
STATEMENT OF DISCONTINUED OPERATIONS DATA:
Revenues ........................................           --    $  233,067    $  360,523    $   17,048    $  202,601   $   44,069
Cost of revenues ................................           --       242,989       287,872        14,527       119,618       22,611
                                                    ----------    ----------    ----------    ----------    ----------   ----------
Gross profit (loss) .............................           --        (9,922)       72,651         2,521        82,983       21,458
                                                    ----------    ----------    ----------    ----------    ----------   ----------
Operating expenses:
    Research and development ....................           --        65,394        66,062         3,340        34,045       12,412
    Selling, general and
      administrative ............................        7,801        89,106        63,468         4,614        35,441       11,390
    In process research and
    development .................................           --        66,250         4,302            --            --           --
    Amortization of goodwill and
        Other intangibles .......................           --        24,449        10,228            --            --           --
    Impairment of goodwill and other
       Intangibles ..............................           --       117,065            --            --            --           --
    Restructuring expense .......................           --            --         4,382            --            --           --
                                                    ----------    ----------    ----------    ----------    ----------   ----------
       Total operating expenses .................        7,801       362,264       148,442         7,954        69,486       23,802
                                                    ----------    ----------    ----------    ----------    ----------   ----------
Income (loss) from discontinued operations ......       (7,801)     (372,186)      (75,791)       (5,433)       13,497       (2,344)
Interests and other income
    (expense), net ..............................          182        (4,812)        2,180           322        15,869          630
                                                    ----------    ----------    ----------    ----------    ----------   ----------
Income (loss) from discontinued
operations before income taxes ..................       (7,619)     (376,998)      (73,611)       (5,111)       29,366       (1,714)
Provision (benefit) for income taxes ............       (4,992)      (36,472)      (10,324)       (1,636)        7,663           --
Net income (loss) from discontinued
operations ......................................   $   (2,627)   $ (340,526)   $  (63,287)   $   (3,475)   $   21,703   $   (1,714)
                                                    ==========    ==========    ==========    ==========    ==========   ==========
Basic net income (loss) per share from
discontinued operations .........................   $    (0.07)   $   (10.63)   $    (2.81)   $    (0.22)   $     1.45   $    (0.16)
                                                    ==========    ==========    ==========    ==========    ==========   ==========
Diluted net income (loss) per share
from discontinued operations ....................   $    (0.07)   $   (10.63)   $    (2.81)   $    (0.22)   $     1.33   $    (0.16)
                                                    ==========    ==========    ==========    ==========    ==========   ==========
Shares used in basic net income (loss)
from discontinued operations calculation ........       39,788        32,041        22,536        15,641        14,917       10,767
                                                    ==========    ==========    ==========    ==========    ==========   ==========
Shares used in diluted net income loss) from
discontinued operations calculation .............       39,788        32,041        22,536        15,641        16,353       10,767
                                                    ==========    ==========    ==========    ==========    ==========   ==========
</Table>


<Table>
<Caption>
                                                                AS OF JANUARY 31,                      AS OF DECEMBER 31,
                                             ---------------------------------------------------    -----------------------
                                                2002         2001          2000          1999          1998         1997
                                             ----------   ----------    ----------    ----------    ----------   ----------
<S>                                          <C>          <C>           <C>           <C>           <C>          <C>
BALANCE SHEET OF DISCONTINUED
OPERATIONS DATA:
Cash, cash equivalents and short-term
investments ..............................   $    1,090   $    9,391    $   65,830    $   94,957    $   95,980   $   34,921
Working capital ..........................           --       22,353        98,466       106,924       110,871       37,456
Total assets .............................        1,494      119,606       296,111       168,870       184,121       61,917
Other long-term liabilities ..............           --           --         1,881           416           284          546
Retained earnings (accumulated deficit) ..           --     (407,089)      (66,563)       (3,276)          199      (21,504)
Net liabilities in liquidation ...........       34,402           --            --            --            --           --
Total shareholders' equity ...............           --       22,353       187,234       123,018       126,313       44,274
</Table>





                                       7
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF DISCONTINUED OPERATIONS

     The following discussion contains forward-looking statements that involve
risks and uncertainties. 3dfx's actual results could differ materially from
those discussed in the forward-looking statements as a result of some factors
including those set forth under "-- Risk Factors" and elsewhere in this Report.
The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" and the Consolidated Financial Statements
and Notes thereto appearing elsewhere in this Report.

     OVERVIEW

     3dfx developed high performance, cost-effective graphics chips, graphics
boards, software and related technology that enabled an interactive and
realistic 3D experience across multiple hardware platforms, but is now in the
process of winding up its business. As discussed below, on March 27, 2001,
3dfx's shareholders approved proposals to liquidate, wind up and dissolve 3dfx
pursuant to a plan of dissolution and to sell certain of its assets to Nvidia US
Investment Company ("Nvidia Sub"), a wholly owned subsidiary of Nvidia
Corporation ("Nvidia"). 3dfx is continuing to wind up its affairs and dissolve.
Accordingly, all activities of 3dfx subsequent to March 27, 2001 are presented
on a liquidation basis in the accompanying consolidated financial statements.
Additionally, 3dfx's common stock was delisted from the NASDAQ National Market
effective May 16, 2001.

SERIES B PREFERRED STOCK FINANCING

         On June 13, 2002, 3dfx entered into a Series B Preferred Stock Purchase
Agreement with SF Capital Partners Ltd. whereby SF Capital agreed to invest
between $25 and $35 million in 3dfx in exchange for shares of 3dfx's Series B
Preferred Stock (the "Series B Financing"). The amount of the investment will be
based on the sum at closing of 3dfx's fixed and determinable liabilities,
maximum reasonably known undeterminable liabilities and anticipated expenses
reasonably necessary to complete the liquidation, winding-up and dissolution of
3dfx. The agreement with SF Capital provides that once the amount of all of
3dfx's liabilities is determined, or if some liabilities are not determinable
then the maximum amount of all undetermined liabilities shall be reasonably
known to 3dfx and SF Capital, and subject to the satisfaction of certain other
specified conditions, then SF Capital will place the purchase price for the
shares of Series B Preferred Stock into escrow pending closing. The purchase
price will be released to 3dfx from escrow, and the closing of the Series B
Financing will occur, upon the satisfaction of conditions that 3dfx and SF
Capital specify in the escrow agreement. The number of shares of Series B
Preferred Stock of 3dfx issuable to SF Capital at closing will be equal to the
quotient derived by dividing (x) the sum of the investment amount and a
specified percent of the investment amount by (y) the average closing price of
Nvidia common stock for the five trading days preceding the closing. The
"specified percentage of the investment amount" referred to in the preceding
formula ranges from 25% to 40%, and varies based on the price of Nvidia common
stock preceding the closing (the higher the price of Nvidia common stock, the
higher the "specified percentage of the investment amount").

     The Series B Preferred Stock will not be entitled to dividends, subject to
redemption or conversion, and will have no voting rights, but it will have
priority for payment upon the liquidation, winding-up or dissolution of 3dfx. If
3dfx is in the process of liquidating, dissolving or winding up, immediately
upon its receipt of 500,000 or more shares of Nvidia common stock, 3dfx shall
distribute to the holders of the Series B Preferred Stock, at 3dfx's election,
either (i) $90 cash per share of Series B Preferred Stock or (ii) one share of
Nvidia stock per share of Series B Preferred Stock (the "Liquidation
Preference"). In the meantime, the prior written consent of the holders of not
less than a majority of the outstanding shares of Series B Preferred Stock is
required for 3dfx to make any dividends, distributions or redemptions on any
other securities, or for 3dfx to issue any debt or equity securities, or for
3dfx to enter into any merger, sale of shares of capital stock having voting
power with respect to 35% or more of its outstanding capital stock, or any
transaction in which all or substantially all of the assets of 3dfx are sold.
The holders of Series B Preferred Stock will have certain other rights designed
to protect their investment in 3dfx. The stock purchase agreement with SF
Capital is terminable if the funding amount exceeds the $35 million level or
falls under the $25 million level, if the Nvidia closing price is equal to or
less than $26, if the transaction fails to close within one year, if 3dfx is in
material default of the agreement or if the Nvidia common stock is delisted from
the Nasdaq National Market.

NVIDIA ASSET SALE TERMS

      In the fall of 2000, 3dfx began experiencing financial difficulties due in
part to substantially reduced demand in the retail channel for its products.
This reduced demand is attributable to a number of factors, including, in part,
its failure to introduce products in a timely manner and from disappointing
customer response to its existing products, as well as reduced demand in the
retail channel in general and the add-in graphics segment in particular. In
addition, 3dfx's high research and development costs and substantial debt
burden, together with the loss of several large customers due to 3dfx's May 1999
acquisition of STB Systems, Inc. and its inability to refinance its debt on
commercially reasonable terms, aggravated its financial difficulties. After
extensive exploration and evaluation of various strategic alternatives, the 3dfx
board of directors concluded that the liquidation, winding up and dissolution of
3dfx provided the best protection to 3dfx's creditors and was in the best
interests of its shareholders.

     On December 15, 2000, 3dfx entered into an asset purchase agreement with
Nvidia and Nvidia Sub under which Nvidia Sub would acquire certain of 3dfx's
assets, including its core graphics processor assets. Under the terms of the
asset purchase agreement, Nvidia Sub agreed to pay 3dfx $70.0 million in cash
and 2,000,000 shares of registered Nvidia common stock (after giving effect to a
recent Nvidia stock split), subject to the satisfaction of certain conditions
specified in the asset purchase agreement as described below. Upon signing the
asset purchase agreement, Nvidia Sub loaned to 3dfx $15.0 million in cash for
working capital.

     The asset sale to Nvidia Sub was approved by 3dfx shareholders on March 27,
2001, and on April 18, 2001 substantially all of 3dfx's assets were sold to
Nvidia Sub. Upon closing, 3dfx received $55.0 million in cash, which amount was
net of repayment of the $15.0 million cash loan 3dfx received upon signing the
asset purchase agreement. In addition, under the terms of the asset purchase
agreement, 3dfx and Nvidia Sub caused the pending patent litigation between the
parties to be dismissed with prejudice. Under the terms of the asset purchase
agreement, 3dfx may receive part or all of a one-time post-closing cash payment
of up to $25.0 million upon its request if it is not in breach of the asset
purchase agreement, it has expended all or substantially all of the $70.0
million cash consideration in payment of its liabilities and determines in good
faith that (i) the remaining portion of the cash consideration previously
received by it is not sufficient to pay its remaining liabilities, and (ii) such
remaining liabilities could and would be satisfied if 3dfx received the
post-closing cash payment and applied it to the payment of such liabilities, and
if Nvidia Sub does not determine in good faith that the requested amount would
not permit 3dfx to pay in full its remaining liabilities. In the event that 3dfx
were to receive the post-closing cash payment, the 2,000,000 shares of Nvidia
common stock comprising the remaining consideration otherwise payable to 3dfx
under the asset purchase agreement will be reduced by the number of shares equal
to the quotient






                                       8
<PAGE>

determined by dividing the amount of the post-closing cash payment by $25. Based
on 3dfx's net liabilities balance of $34.4 million at January 31, 2002, 3dfx
made arrangements to obtain the Series B Financing because it does not currently
believe that it will satisfy all of the conditions to receipt of the
post-closing cash payment from Nvidia Sub.

     The 2,000,000 shares of Nvidia common stock will only become deliverable to
3dfx upon satisfaction of certain conditions specified in the asset purchase
agreement, including the completion of the winding up of the business of 3dfx
pursuant to 3dfx's plan of dissolution, and 3dfx's certification that (i) all
liabilities of 3dfx and its subsidiaries have been paid in full or otherwise
provided for and (ii) 3dfx has or will be validly dissolved. In the event the
remaining consideration from Nvidia is not paid, 3dfx will have to explore other
options, including filing for bankruptcy. The ultimate total value of the Nvidia
stock received by 3dfx, if any, is dependent on the number and market value of
shares received given the conditions described above.

     LIQUIDATION, WINDING UP AND DISSOLUTION

     On December 15, 2000, the board of directors of 3dfx also approved a plan
of dissolution and on March 27, 2001 this plan of dissolution was approved by
3dfx's shareholders. On March 30, 2001, 3dfx filed a certificate of election to
liquidate, wind up and dissolve with the California Secretary of State's office.
3dfx is proceeding to wind up its affairs and is no longer operating or
generating revenues in the normal course of business.

     At this time, 3dfx cannot determine if there will be any assets remaining
after paying for, or providing for the payment of, 3dfx's liquidation expenses
and all of its and its subsidiaries' debts and liabilities, as well as the
distribution of the Liquidation Preference to the holders of the Series B
Preferred Stock. 3dfx believes that it will shortly be in a position to
voluntarily petition a California court to take jurisdiction over the final
steps of its winding up. In connection with this judicial process, 3dfx expects
that it will be able to finally determine the total amount of its liabilities,
including the maximum amount of its undeterminable liabilities, and also expects
that it will be able to close the Series B Financing and satisfy the conditions
to its receipt of the shares of Nvidia stock. However, there can be no assurance
as to the total amount of 3dfx's liabilities or whether it will be able to close
the Series B Financing or satisfy the conditions to receiving the shares of
Nvidia stock. If any of these or other matters cannot be satisfactorily
resolved, 3dfx will have to explore other options, including filing for
bankruptcy.

     3dfx expects to continue to incur certain administrative and other costs
associated with winding up its affairs. The amount of unknown or contingent
liabilities cannot be quantified and could decrease or eliminate any remaining
assets available for distribution to 3dfx's common shareholders. Further, if
3dfx or its subsidiaries are subject to any contingent liabilities, this could
require that it establish reserves that could delay any distribution to 3dfx
common shareholders. Because of the uncertainties as to the settlement amount of
3dfx's and its subsidiaries' debts and liabilities (including tax liabilities),
as well as the volatility in the market price of Nvidia's stock, 3dfx cannot at
this time determine the timing or amount of distributions that may be made to
its common shareholders, if any. Only if there are assets remaining after the
payment of all debts and liabilities, and the distribution of the Liquidation
Preference, will 3dfx common shareholders receive a distribution of those
assets.

      3dfx has substantially reduced its costs in order to conserve its
resources. These cost-cutting measures included the termination of virtually all
employees, reduction in leased space and other efforts to reduce non-essential
expenses. During fiscal 2002, 3dfx also continued to liquidate its remaining
assets, negotiate with third parties for resolutions of various litigation
matters that would be agreeable to all parties involved, and to reach
settlements with its vendors in reduction of its accounts payable, as well as to
reach mutually satisfactory settlements with the lessors of its facilities and
equipment leases. 3dfx provided manufacturing services to third parties to help
cover the overhead associated with its Juarez, Mexico manufacturing facility
until its lease of that facility was terminated in April 2002. The sales and
costs of sales related to these operations are recorded as other income and
expense on the condensed consolidated statement of discontinued operations for
the period from February 1, 2001 to March 26, 2001, and as selling, general, and
administrative expense from March 27, 2001 to January 31, 2002.

     ACTIVITIES WHILE IN LIQUIDATION

     During the year ended January 31, 2002 3dfx disposed of most of its
inventory and other assets held for sale through the asset purchase agreement
with Nvidia Sub as well as through sales to other parties. Any remaining
inventory and other assets held for sale have been written down to their net
realizable value, most of which equals zero. As 3dfx is in liquidation, these
remaining assets may be sold. 3dfx believes that any gains on such sales that
may be realized will be immaterial.

     During the year ended January 31, 2002, 3dfx terminated all but one of its
employees and continued to liquidate its remaining assets, negotiate with third
parties for resolutions of various litigation matters that would be agreeable to
all parties involved, and to reach settlements with its vendors in reduction of
its accounts payable, as well as to reach mutually satisfactory settlements with
the lessors to its facilities and equipment leases. At January 31, 2002 3dfx was
still in negotiations to settle certain remaining leases under which it has
contractual obligations. At January 31, 2002, 3dfx had total future lease
obligations of $6.6 million and lease termination costs of $4.0 million in the
current fiscal year. On April 19, 2002, 3dfx reached a settlement with the
lessor of its Mexican facility, which effectively reduced its contingent
contractual obligations at that date from $5.0 million to $1.2 million. After
establishing a reserve for the winding up of its affairs, 3dfx used the
remaining proceeds received from the asset sale to Nvidia Sub to pay a
significant portion of its and its subsidiaries' known and determinable debts
and liabilities.




                                       9
<PAGE>

     Changes in net liabilities for the period from March 27, 2001 to January
31, 2002 were a result of selling, general and administrative expenses of $21.4
million, which is comprised of operating expense, accrued expenses and lease
termination expense, partially offset by the forgiveness of liabilities, a
decrease in the deferred tax asset of $35.0 million and the net gain on sale of
assets to Nvidia Sub of $1.6 million, which was comprised of the following: (a)
a gain on the sale of inventory and other assets held for sale to Nvidia Sub of
$14.3 million, which was comprised of the purchase by Nvidia Sub of certain
inventory, fixed assets and intangible assets with net book values of $55.5
million offset by proceeds of $70.0 million and (b) losses of $12.7 million on
sale and impairment of inventory and other assets held for sale.

     At January 31, 2002 3dfx had net liabilities in liquidation of $34.4
million. In light of the amount of 3dfx's liabilities, as well as contingencies
relating to unknown or contingent liabilities, the closing the Series B
Financing and Nvidia's delivery of the shares of Nvidia common stock provided
for in the Nvidia asset purchase agreement, there can be no assurance that 3dfx
will have any assets available for distribution to its common shareholders.

     STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION

     During the period from March 27, 2001 to January 31, 2002, 3dfx incurred
selling, general and administrative costs of $21.4 million, which were comprised
of equipment expense, including current period lease payments and the accrual of
future lease payments, personnel expense and the accrual of future anticipated
salary, severance and associated benefit expenses, current period facilities
expenses, lease termination expense, payment of unaccrued income taxes in the
United Kingdom, and legal, banking and other professional service expenses,
offset by discounts received from vendors. During this period 3dfx also recorded
a decrease in deferred tax asset of $35.0 million and incurred a net gain on
sale of assets held for sale of $1.6 million, which was comprised of the
following: (a) a gain on the sale of inventory and other assets held for sale to
Nvidia Sub of $14.3 million, which was comprised of the purchase by Nvidia Sub
of certain inventory, fixed assets and intangible assets with net book values of
$55.5 million offset by proceeds of $70.0 million and (b) losses of $12.7
million on sale and impairment of inventory and other assets held for sale.

     The Series B Financing has not been recorded in the accompanying
consolidated statement of net liabilities in liquidation as of January 31, 2002
because the closing thereof is subject to the satisfaction of several closing
conditions. 3dfx's receipt of the shares of Nvidia common stock provided for in
the Nvidia asset purchase agreement has not been recorded in the accompanying
consolidated statement of net liabilities in liquidation either, because
obtaining the cash necessary to pay 3dfx's liabilities, which 3dfx intends to
accomplish through the Series B Financing, is a condition to 3dfx being entitled
to receive the shares of Nvidia stock.

     RESULTS OF DISCONTINUED OPERATIONS

     Years Ended January 31, 2001 (Fiscal 2001) And January 31, 2000 (Fiscal
2000)

     Revenues. Revenues are recognized upon product shipment. 3dfx's total
revenues were $233.1 million for the fiscal year ended January 31, 2001 and
$360.5 million for the fiscal year ended January 31, 2000. The decrease was
primarily attributable to a decline in demand for 3dfx's products due to a
number of factors, including, in part, its failure to introduce products in a
timely manner and from disappointing customer response to its existing products,
as well as reduced demand in the retail channel in general and the add-in
graphics segment in particular. Also, the impact arising from 3dfx's
announcement of its plan of dissolution caused revenues to significantly
decrease beginning in December 2000. Revenues for fiscal 2000 include board
level sales from May 13, 1999 (the date of the STB merger) through the end of
the fiscal year, which contributed a substantial amount of revenues for the
period; however, prior to the STB merger, substantially all 3dfx's revenues were
comprised of chip level sales. Revenues in fiscal 2001 were principally
attributable to sales of Voodoo5 and Voodoo3 products. Revenues in fiscal 2000
were derived in part from the sale of 3dfx's Voodoo Banshee, Voodoo2, and
Voodoo3 products.

     Gross Profit. Gross profit consists of total revenues less cost of
revenues. Cost of revenues consists primarily of costs associated with the
purchase of components and the procurement of semiconductors from 3dfx's
contract manufacturers, labor and overhead associated with procurement,
assembly, testing, packaging, warehousing and shipping, and warranty costs.
3dfx's gross profit decreased by $82.6 million from a gross profit of $72.7
million in the year ended January 31, 2000 to a gross loss of ($9.9 million) in
year ended January 31, 2001. Gross profit (loss) as a percentage of revenues was
(4.3%) and 20.2% for the fiscal years ended January 31, 2001 and January 31,
2000, respectively. The decrease is attributable in part to the gross profit
generated from sales of board-level products, which have lower margins as
compared with the margins on chip-only products. In addition, the decrease in
gross profit as a percentage of revenues resulted from lower margins associated
with pricing pressure in the retail and commercial channel on the Voodoo3 and
Voodoo5 products sold during the year and the significant drop in market price
for 3dfx's remaining inventory in the fourth quarter of fiscal 2001. 3dfx also
took significant additional charges totaling $10.3 million related to the
write-down of inventory due to excess inventories resulting from lower than
anticipated sales volumes. Increased production costs as a result of decreased
production volumes during fiscal 2001 also had a negative impact on gross
margins.

     Research and Development. Research and development expenses consist
primarily of compensation and other expenses related to research and development
personnel, occupancy costs of research and development facilities, depreciation
of capital equipment used in product development and engineering costs paid to
3dfx's foundries in connection with manufacturing start-up of new products.
Research and development expenses decreased 1.2% from $66.1 million in the
fiscal year ended January 31, 2000 to $65.4 million in





                                       10
<PAGE>

the fiscal year ended January 31, 2001. This decrease reflects a decrease in
personnel costs and engineering costs resulting from the termination of
substantially all employees in December 2000, mainly offset by an increase in
personnel costs related to the GigaPixel merger and general engineering costs
resulting from the development of Voodoo5 and other anticipated products during
the first part of fiscal 2001.

     Selling, General and Administrative. Selling, general and administrative
expenses include compensation and benefits for sales, marketing, finance and
administration personnel, commissions paid to independent sales representatives,
tradeshow, advertising and other promotional expenses and facilities expenses.
Selling, general and administrative expenses increased 40.3% from $63.5 million
in fiscal year ended January 31, 2000 to $89.1 million in the fiscal year ended
January 31, 2001. The selling, general and administrative expenses relating to
the operations of STB are included in the year ended January 2001, and from the
effective date of the STB merger, May 13, 1999, through January 31, 2000. The
selling, general and administrative expenses relating to the operations of
GigaPixel are included in the fiscal year ended January 31, 2001, from the
effective date of the GigaPixel merger, July 21, 2000. In addition, marketing
costs associated with the Voodoo5 product family launch in fiscal 2001 and
increased legal costs contributed to the increase in selling, general and
administrative expenses in fiscal 2001.

     In-Process Research and Development. 3dfx recorded a one-time write-off for
IPR&D in connection with the GigaPixel merger of $66.3 million in the fiscal
year ended January 31, 2001, and a one-time write-off for IPR&D in connection
with the STB merger of $4.3 million in the fiscal year ended January 31, 2000.

     Amortization of Goodwill and Other Intangibles. In connection with the STB
merger in fiscal 2000, 3dfx recorded assets representing goodwill of
approximately $37.9 million and intangibles of approximately $19.1 million.
Also, in connection with the GigaPixel merger in fiscal 2001, 3dfx recorded
assets representing goodwill of approximately $103.5 million and intangibles of
approximately $13.2 million. These amounts are being amortized ratably over the
amortization periods of the applicable assets. 3dfx recorded amortization
expense in the amount of $24.5 million and $10.2 for the fiscal years ended
January 31, 2001 and January 31, 2000, respectively.

     Impairment of Goodwill and Other Intangibles. During the fiscal year ended
January 31, 2001, 3dfx recorded a charge of $117.1 million for the impairment of
goodwill and other intangibles as previously discussed.

     Restructuring Expense. During the fiscal year ended January 31, 2000, 3dfx
incurred restructuring expenses totaling approximately $4.4 million.
Approximately $2.6 million of this amount related to downsizing the expense
levels of 3dfx given 3dfx's fiscal 2000 financial losses.

     Interest and Other Income (Expense), Net. Interest and other income
(expense), net, decreased from $2.2 million in the fiscal year ended January 31,
2000 to ($4.8 million) in the fiscal year ended January 31, 2001. During fiscal
2001 3dfx took a charge of $3.1 million, which is included in other income
(expense), for the write-off of a minority investment in a private company.
Also, 3dfx earned less interest income during fiscal 2001 due to significantly
lower invested cash balances. In fiscal 2000 and fiscal 2001, 3dfx incurred
interest expense on its revolving credit facility and its outstanding equipment
line of credit and capital lease balances.

     Provision (Benefit) for Income Taxes. 3dfx recorded an income tax benefit
of $36.5 million for the fiscal year ended January 31, 2001, an effective tax
rate of 10%. 3dfx recorded a benefit for income taxes of $10.3 million for the
fiscal year ended January 31, 2000, an effective tax rate of 14%. Management has
assessed the realizability of deferred tax assets recorded at January 31, 2001
based upon the weight of available evidence, including such factors as expected
future taxable income primarily related to the expected gain on the sale of
assets to NVIDIA Sub. Management believes that it is more likely than not that
3dfx will not realize a portion of its deferred tax assets and, accordingly, a
valuation allowance of $46.8 million has been established for such amounts at
January 31, 2001.

     CRITICAL ACCOUNTING POLICIES

     Liquidation Accounting Basis. As of March 27, 2001, all activities of 3dfx
are presented under the liquidation basis of accounting. Inherent in the
liquidation basis of accounting are significant management estimates and
judgment. Under the liquidation basis of accounting, assets are stated at their
estimated net realizable values and liabilities are stated at their anticipated
settlement amount, if reasonably estimable. The estimated net realizable values
of assets and settlement amounts of liabilities represent our best estimate of
the recoverable value of the assets and settlement amounts of liabilities. There
can be no assurance, however, that we will be successful in selling the assets
at their estimated net realizable value or in negotiating the estimated
settlement amounts. In addition, the liquidation basis of accounting requires
that we accrue an estimate for all liabilities related to expenses to be
incurred during the wind down period. While we believe our estimates are
reasonable under the circumstances, if the length of our wind down period were
to change or other conditions were to arise, actual results may differ from
these estimates.

     LIQUIDITY AND CAPITAL RESOURCES

     As of January 31, 2002, 3dfx had cash, and cash equivalents of $1.1
million.




                                       11
<PAGE>

     On April 18, 2001, 3dfx completed the sale of substantially all of its
assets to Nvidia Sub and at the closing received cash in the net amount of $55.0
million pursuant to an asset purchase agreement. After establishing a reserve
for the winding up of its affairs, 3dfx used the remaining proceeds received
from the asset sale to Nvidia Sub to pay a significant portion of its and its
subsidiaries' known and determinable debts and liabilities. 3dfx is seeking to
liquidate its remaining assets.

     3dfx's principal anticipated liquidity requirements involve reaching
settlements with its vendors in reduction of its accounts payable, as well as
reaching mutually satisfactory settlements of its contractual dispute with
Worldcom, Inc. and with the lessors to its remaining facilities and equipment
leases. 3dfx is also seeking to assign or sublease its leased properties. In
addition, unknown or contingent liabilities could require substantial cash
resources. Management cannot reasonably estimate the amount of future
obligations at this time. 3dfx is seeking to address each of the foregoing
liquidity requirements, as well as the continuing expenses associated with the
winding up of its business, with its remaining cash and other resources.

     On June 13, 2002, 3dfx entered into a Series B Preferred Stock Purchase
Agreement with SF Capital Partners Ltd. whereby SF Capital has agreed to invest
between $25 and $35 million in 3dfx in exchange for shares of 3dfx's Series B
Preferred Stock (the Series B Financing). The closing of the Series B Financing
is subject to a number of conditions, some of which are beyond the control of
3dfx. 3dfx made arrangements to obtain the Series B Financing in order to
provide the cash funding necessary to pay its liabilities and otherwise satisfy
the requirements to the delivery of the Nvidia stock to 3dfx under the Nvidia
asset purchase agreement. In addition, 3dfx sought the Series B Financing
because it does not currently believe that it will satisfy all of the conditions
to receipt of the post-closing cash payment provided for under the Nvidia asset
purchase agreement. There can be no assurance that the Series B Financing will
be successfully closed.

     At January 31, 2002 3dfx had net liabilities in liquidation of $34.4
million. In light of the amount of 3dfx's liabilities, as well as contingencies
relating to unknown or contingent liabilities, the closing the Series B
Financing and Nvidia's delivery of the shares of Nvidia common stock provided
for in the Nvidia asset purchase agreement, there can be no assurance that 3dfx
will have any assets available for distribution to its common shareholders.

     RISK FACTORS

     This report contains certain forward-looking statements within the meaning
of the deferral securities laws. 3dfx's actual results and the timing of certain
events could differ greatly from those anticipated in these forward-looking
statements as a result of known and unknown factors, including the risks faced
by 3dfx described below. The risks and uncertainties described below are not the
only ones facing 3dfx. Additional risks and uncertainties not presently known by
3dfx or that 3dfx does not currently believe are important may also harm 3dfx's
business operations. If any of the following risks actually occur, 3dfx's
business, financial conditions or results of operations could be seriously
harmed. The following factors and other information in this Report should be
considered carefully in evaluating 3dfx and an investment in 3dfx's common
stock.

3dfx CANNOT DETERMINE AT THIS TIME THE AMOUNT OF DISTRIBUTIONS TO ITS COMMON
SHAREHOLDERS, OR WHETHER ANY DISTRIBUTIONS WILL BE MADE, BECAUSE THERE ARE A
VARIETY OF FACTORS, SOME OF WHICH ARE OUTSIDE OF 3dfx'S CONTROL, THAT COULD
AFFECT THE ABILITY OF 3dfx TO MAKE DISTRIBUTIONS TO ITS COMMON SHAREHOLDERS.

     3dfx cannot determine at this time the amount of or whether there will be
any distributions to its common shareholders because that determination depends
on a variety of factors, including, but not limited to, whether and when the
Series B Financing will close, whether and when Nvidia will deliver the shares
of Nvidia common stock provided for under the Nvidia asset purchase agreement,
whether the value of 3dfx's remaining assets, the amount of 3dfx's and its
subsidiaries' known and unknown debts and liabilities (including those relating
to leases) to be paid in the future, the resolution of pending litigation and
other contingent liabilities, general business and economic conditions and other
matters. Examples of uncertainties that could reduce the value or eliminate
distributions to 3dfx common shareholders include the following:

     o    Whether and when the Series B Financing will close, which is subject
          to a number of conditions, including (i) the period of time required
          to calculate the amount of 3dfx's fixed and determinable liabilities
          and the maximum amount of any undetermined 3dfx liabilities (ii) the
          satisfaction of certain of conditions necessary for SF Capital to fund
          the escrow contemplated by the stock purchase agreements and (iii)
          the satisfaction of any further conditions that 3dfx and SF Capital
          may specify in the related escrow agreement.

     o    Whether and when 3dfx will satisfy the conditions to the delivery of
          shares of Nvidia common stock set forth in the Nvidia asset purchase
          agreement, which shares are only deliverable to 3dfx upon the
          completion of the winding up of the business of 3dfx pursuant to
          3dfx's plan of dissolution, and 3dfx's certification that (i) all
          liabilities of 3dfx and its subsidiaries have been paid in full or
          otherwise provided for and (ii) 3dfx has or will be validly dissolved.

     o    The procedures and uncertainties relating to the contemplated
          judicially administered winding up proceedings for 3dfx.

     o    The volatility in the market price of Nvidia stock.




                                       12
<PAGE>

     o    Delays in completing the dissolution of 3dfx could result in
          additional expenses and result in no distributions to 3dfx common
          shareholders.

     o    The amount of 3dfx's and its subsidiaries' debts and liabilities and
          the estimate of the costs and expenses of 3dfx's dissolution,
          including any tax liabilities. If actual debts, liabilities, costs and
          expenses exceed 3dfx's expectations, actual net proceeds will be
          reduced and may result in no distribution to common shareholders at
          all.

     o    If liabilities of 3dfx or its subsidiaries that are unknown or
          contingent later arise or become fixed in amounts that are greater
          than anticipated.

     o    If the resolution of pending or future litigation results in greater
          than anticipated liabilities or expenses.

     o    A decline in the value of Nvidia's common stock.

      For the foregoing reasons, there can be no assurance that there will be
any distribution to common shareholders, even if the asset sale is completed.

3dfx MAY NOT BE ABLE TO SATISFY ITS DEBT OBLIGATIONS AND MAY FILE OR BE FORCED
INTO BANKRUPTCY BY ITS CREDITORS.

     3dfx may not be able to successfully close the Series B Financing, in which
event it would not have funds adequate to satisfy all of its known and unknown
debts and liabilities. In the event 3dfx is unable to pay its outstanding debts
and liabilities in the near future, 3dfx's creditors may be able to attach 3dfx
assets and may force 3dfx into involuntary bankruptcy. Further, in the event
that 3dfx is unable to pay or otherwise provide for its debts and obligations,
there will be no assets available for distribution to 3dfx's common
shareholders.

THE TIMING OF THE DISSOLUTION OF 3dfx IS NOT KNOWN AND THEREFORE 3dfx CANNOT
DETERMINE THE TIMING OF ANY DISTRIBUTIONS TO ITS COMMON SHAREHOLDERS.

     Several factors affect the timing of 3dfx's ability to dissolve, including
3dfx's ability to determine the amount of its and its subsidiaries' known and
unknown debts and liabilities and 3dfx's ability to resolve litigation and other
contingent liabilities, 3dfx's ability to close the Series B Financing and
3dfx's ability to satisfy the conditions to Nvidia's delivery of the shares of
Nvidia common stock provided for under the Nvidia asset purchase agreement. In
addition, 3dfx believes that it will shortly be in a position to voluntarily
petition a court to take jurisdiction over the final steps of its winding up.
There are a number of procedures and uncertainties relating to judicially
administered winding up proceedings that could have the effect of lengthening
the time before which 3dfx is able to dissolve. Any delay in the dissolution of
3dfx will result in a delay in making distributions, if any, to 3dfx common
shareholders.

3dfx IS UNABLE TO SPECIFY THE TYPE OF ASSETS THAT MAY BE DISTRIBUTED TO 3dfx'S
COMMON SHAREHOLDERS, IF ANY DISTRIBUTION IS MADE.

     3dfx may distribute the shares of Nvidia common stock received by it upon
its dissolution directly to its common shareholders, or it may sell these shares
in the open market or contribute the shares to a liquidating trust for the
benefit of 3dfx's common shareholders. Further, 3dfx may elect to directly
distribute shares of Nvidia common stock to some of its common shareholders,
while distributing an equivalent per share value in cash to others who would
otherwise be entitled to receive a fractional amount or small number of shares
of Nvidia common stock. At this time, 3dfx is unable to provide specifics about
the type of assets that 3dfx's common shareholders may receive or what the value
of those assets might be at the time of distribution.

3dfx's SHAREHOLDERS COULD BE REQUIRED TO RETURN DISTRIBUTIONS IF CONTINGENT
RESERVES ARE INSUFFICIENT TO SATISFY 3dfx'S LIABILITIES.

     If 3dfx (or a liquidating trust to which 3dfx's assets are transferred)
makes a distribution to its shareholders but maintains inadequate reserves for
the payment of its and its subsidiaries debts and liabilities, each shareholder
could be required to return any additional amounts owed, up to the amount of the
total distribution that the shareholder received. A distribution to 3dfx's
shareholders could be delayed or diminished due to the need to make adequate
provisions for 3dfx's and its subsidiaries' debt and liabilities, including
contingent liabilities associated with lawsuits and threatened claims against
3dfx and its subsidiaries.

     The determination of whether a distribution is made and the amount of the
distribution depends on 3dfx's ability to pay, or provide for the payment of,
its and its subsidiaries' debts and liabilities, including contingent
liabilities related to lawsuits and threatened claims. If these contingent
liabilities later arise or become fixed in amount, 3dfx will be required to pay,
or provide for the payment of, such liabilities from any remaining assets. This
could result in the delay of distributions to 3dfx shareholders and the
substantial reduction or elimination of any distributions.

     If 3dfx's or its subsidiaries' creditors believe that 3dfx has not
adequately reserved assets for the payment of its or its subsidiaries' debts and
liabilities, these creditors may be able to obtain from a court and injunction
that prohibits 3dfx from making distributions to its shareholders. This action
could delay or substantially diminish the distributions to be made to 3dfx's
shareholders or holders of beneficial interests of the liquidating trust, as the
case may be.




                                       13
<PAGE>

3dfx MAY NOT BE ABLE TO DISPOSE OF ITS REMAINING ASSETS FOR VALUES EQUALING OR
EXCEEDING THOSE CURRENTLY DESIRED BY 3dfx.

     Many factors affect the prices that 3dfx may receive for 3dfx's remaining
assets, including availability of buyers for these assets and perceived quality
of these assets. Many of these factors are beyond 3dfx's control. As a result of
the foregoing, 3dfx may not be able to sell or otherwise dispose of its assets
for prices equaling or exceeding those desired by 3dfx or currently offered in
the asset sale.

3dfx'S BOARD OF DIRECTORS MAY AMEND THE PLAN OF DISSOLUTION.

     3dfx's board of directors and shareholders have adopted a plan of
dissolution for the liquidation, winding up and dissolution of 3dfx. 3dfx's
board of directors has reserved the right, in its sole discretion, to amend the
plan of dissolution unless it determines that the amendment would materially and
adversely affect 3dfx's shareholders' interests.

3dfx'S COMMON STOCK WAS DELISTED FROM THE NASDAQ NATIONAL MARKET EFFECTIVE MAY
16, 2001.

     As a result of the decline in the trading price of 3dfx's common stock,
3dfx's common was delisted from the Nasdaq National Market effective as of the
opening of business on May 16, 2001. 3dfx's common stock is currently traded in
over-the-counter bulletin board (OTCBB) of the National Association of
Securities Dealers, Inc. The delisting of 3dfx's common stock means that, among
other things, fewer investors have access to trade 3dfx's common stock, which
may have resulted in reduced demand for the stock. In addition, 3dfx's common
stock is currently subject to penny stock regulations. The penny stock
regulations require that broker-dealers who recommend penny stocks to persons
other than institutional accredited investors must make a special suitability
determination for the purchaser, receive the purchaser's written agreement to
the transaction prior to the sale and provide the purchaser with risk disclosure
documents which identify risks associated with investing in penny stocks.
Furthermore, the broker-dealer must obtain a signed and dated acknowledgement
from the purchaser demonstrating that the purchaser has actually received the
required risk disclosure document before effecting a transaction in penny stock.
These requirements have historically resulted in reducing the level of trading
activity in securities that become subject to the penny stock rules. Holders of
3dfx's common stock may find it difficult to sell their shares of common stock,
which can adversely affect the market price of 3dfx's common stock.

IF 3dfx IS UNABLE TO FILE ITS SEC REPORTS IN A TIMELY MANNER, ITS COMMON STOCK
WILL BE REMOVED FROM THE OTCBB.

     While 3dfx will continue to endeavor to make all required filings with the
Securities and Exchange Commission (SEC) in a timely manner in accordance with
OTCBB rules, 3dfx may not be able to do so. If that occurs, 3dfx's common stock
will be removed from the OTCBB and quoted on the National Quotation Bureau's
pink sheets. This would be likely to further reduce demand for 3dfx's common
stock, which could result in inadequate trading volumes to provide liquidity and
could cause 3dfx's stock price to further decrease.

ONCE 3dfx IS DISSOLVED OR ALL OF ITS ASSETS ARE TRANSFERRED TO A LIQUIDATING
TRUST, IT WILL CLOSE ITS STOCK TRANSFER BOOKS AND NO TRANSFER OF 3dfx'S COMMON
STOCK WILL BE RECORDED.

     Once 3dfx is dissolved or all of its assets are transferred to a
liquidating trust, it will close its stock transfer books and no transfer of
3dfx's common stock will be recorded. Thereafter, certificates representing 3dfx
common stock will not be assignable or transferable on 3dfx's books except by
will, intestate succession or operation of law. The equity interests of all of
3dfx's shareholders will be fixed on the basis of their respective stock
holdings at the close of business on the final record date for the distribution
of all remaining assets of 3dfx, and after the final record date, any
distributions made by 3dfx will be made solely to the common shareholders of
record on such date, except as may be necessary to reflect subsequent transfers
recorded on 3dfx's books as may be necessary to reflect subsequent transfers of
3dfx's common stock as a result of any assignments by will, intestate succession
or operation of law. For any other trades after the final record date, the
seller and purchaser of 3dfx's stock will need to negotiate and rely on
contractual obligations between themselves with respect to the right to a
liquidating distribution arising from ownership of 3dfx's common stock.

3dfx IS AT RISK OF SECURITIES CLASS ACTION LITIGATION DUE TO ITS STOCK PRICE
VOLATILITY.

     Historically, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. 3dfx may be the target of litigation like this. Securities
litigation would result in substantial costs and divert management's attention
and resources, which would seriously harm 3dfx's ability to complete its
dissolution and may reduce or eliminate the assets available for distribution to
3dfx common shareholders.

3dfx MAY BE SUBJECT TO CLAIMS OF FRAUDULENT CONVEYANCE BY 3dfx'S CREDITORS.

     3dfx has incurred substantial indebtedness. Under federal and state
fraudulent conveyance statutes in a bankruptcy, reorganization or rehabilitation
case or similar proceeding or a lawsuit by unpaid creditors of 3dfx, under
certain circumstances, such a court could void the asset sale to Nvidia Sub or
the sale of its remaining assets and/or take other action detrimental to 3dfx
and its shareholders.





                                       14
<PAGE>

These circumstances include the findings that, at the time 3dfx consummated the
asset sale, (i) the assets were sold to hinder, delay or defraud current or
future creditors or (ii) (A) 3dfx received less than reasonably equivalent value
or fair consideration for its assets and (B) 3dfx, (1) was insolvent or was
rendered insolvent by reason of an asset sale, (2) was engaged, or about to
engage, in a business or transaction for which its assets constituted
unreasonably small capital, (3) intended to incur, or believed that it would
incur, debts beyond its ability to pay as such debts matured (as all of the
foregoing terms are defined in or interpreted under such fraudulent conveyance
statutes) or (4) was a defendant in an action for money damages, or had a
judgment for money damages docketed against it (if, in either case, after final
judgment, the judgment is unsatisfied).

     The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the federal or local law that is being applied in any such
proceeding. Generally, however, 3dfx would be considered insolvent if, at the
time it consummated an asset sale, either (i) the fair market value (or fair
saleable value) of its assets is less than the amount required to pay its total
existing debts and liabilities (including the probable liability on contingent
liabilities) as they become absolute and mature or (ii) it is incurring debts
beyond its ability to pay as such debts mature.

3dfx MAY BE UNABLE TO NEGOTIATE SETTLEMENTS WITH RESPECT TO ITS REMAINING
LIABILITIES.

     3dfx is currently in the process of negotiating settlements with respect to
its and its subsidiaries' remaining debts and liabilities which include property
and equipment leases, a contractual dispute with Worldcom and certain trade
payables. If 3dfx is unable to successfully negotiate satisfactory resolutions
of these matters, it will have less or no cash proceeds to distribute to its
common shareholders.

3dfx WILL CONTINUE TO INCUR THE EXPENSE OF COMPLYING WITH REPORTING REQUIREMENTS
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT").

     3dfx is obligated to comply with applicable reporting requirements of the
Exchange Act, even though compliance with such reporting requirements is
economically burdensome. The Exchange Act provides for an exemption which allows
an issuer to terminate its reporting obligations under the Exchange Act if it
has less than 300 record holders or less than 500 record holders and its total
assets have not exceeded $10.0 million on the last day of each of the issuer's
most recent three fiscal years. At this time, 3dfx has approximately 500 record
holders and has had in excess of $10.0 million in total assets for each of the
last three fiscal years, except the fiscal year ended January 31, 2002. As such,
3dfx is unable to terminate its reporting obligations at this time. 3dfx cannot
predict if, or when, it will meet the requirements for the exemption. The
expenses for the preparation and filing of periodic reports will reduce the cash
available for distribution to 3dfx common shareholders.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      Interest rate risk. 3dfx's cash equivalents are exposed to financial
market risk due to fluctuation in interest rates, which may affect interest
income. Due to the short term nature of the investment portfolio, 3dfx would not
expect operating results or cash flows to be affected to any significant degree
by the effect of a sudden change in market interest rates. 3dfx does not use its
investment portfolio for trading or other speculative purposes.

      Foreign currency exchange risk. Substantially all of 3dfx's expenses are
denominated in U.S. dollars, and, as a result, 3dfx has relatively little
exposure to foreign currency exchange risk. 3dfx does not currently enter into
forward exchange contracts to hedge exposures denominated in foreign currencies
or any other derivative financial instruments for trading or speculative
purposes. However, in the event exposure to foreign currency risk increases,
3dfx may choose to hedge those exposures.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Reference is made to the financial statements and supplemental data
required by this item and set forth at the pages indicated in Item 14(a) of this
Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     Not applicable.






                                       15
<PAGE>

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The current executive officers and directors of 3dfx are as follows:

<Table>
<Caption>
NAME                                    AGE                                      POSITION
--------------------------------       -----    ----------------------------------------------------------------------
<S>                                    <C>      <C>
Richard A. Heddleson............        51      President, Chief Executive Officer, Chief Financial Officer, Treasurer
                                                and Secretary
Gordon  A. Campbell(1)(2).......        57      Chairman of the Board of Directors
Alex Leupp .....................        62      Director
Scott D. Sellers................        33      Director
James L. Hopkins................        57      Director
James Whims (1)(2)..............        47      Director
</Table>

----------
(1)  Member of Compensation Committee.

(2)  Member of Audit Committee.

     RICHARD A. HEDDLESON has served as Chief Financial Officer since October
2000 and as President, Chief Executive Officer, Treasurer and Secretary since
May 2002. Prior to joining 3dfx, Mr. Heddleson served as Chief Financial Officer
of Evoke Software Corporation from February 1997 to February 2000, and as Chief
Financial Officer at Resumix, Inc. from April 1993 to June 1996.

     GORDON A. CAMPBELL has served as the Chairman of the Board of Directors of
3dfx since August 1994 when he co-founded 3dfx. Mr. Campbell also served as
President and Chief Executive Officer of 3dfx from January 1995 to December
1996. Prior to joining 3dfx, Mr. Campbell founded Techfarm, Inc., a venture
capital investment firm, and has served as President since September 1993. In
1985, Mr. Campbell founded Chips and Technologies, Inc. or CHIPS, a
semiconductor and related device company, and served as Chairman, Chief
Executive Officer and President of CHIPS until July 1993. Mr. Campbell founded
SEEQ Technology, Inc. or SEEQ, a semiconductor and related device company, in
1981. He served as President and Chief Executive Officer of SEEQ from 1981 to
1985. Mr. Campbell currently serves as a director of Palm, Inc. and Bell
Microproducts, Inc., is the Chairman of the board of Cobalt Networks, Inc. and
is the managing partner of TechFund Capital, a venture capital fund, since
August 1997.

     ALEX LEUPP served as President and Chief Executive Officer of 3dfx from
December 1999 through February 2002 and has served as a director of 3dfx since
October 1998. He is presently involved in organizing and financing a startup
company. From December 1998 until November 1999, Mr. Leupp was President and
Chief Executive Officer of Chip Express Corporation, a semiconductor company.
Mr. Leupp spent 12 years with Siemens Microelectronics, Inc, a semiconductor
company, where his most recent position was President and Chief Executive
Officer.

     SCOTT D. SELLERS served as Chief Technical Officer of 3dfx from May 1999
through February 2002 and has served as a director of 3dfx since March 1995. He
is presently involved in organizing and financing a startup company. Between
August 1998 and May 1999, Mr. Sellers served as Senior Vice President, Product
Development for 3dfx. Mr. Sellers co-founded 3dfx in August 1994 and served as
Vice President, Research and Development from January 1995 to August 1998. Mr.
Sellers was Principal Engineer at MediaVision Technology, Inc., a multimedia
computer products company, from June 1993 to June 1994.

     JAMES L. HOPKINS has served as a director of 3dfx since 3dfx's merger with
STB in May 1999. He is also currently serving as a director of Palomar Mountain
Spring Water, Inc., a spring water retailer, Healthaxis Inc., a technology
services firm that provides solutions for health benefit distribution and
administration, Corel Corporation, a developer of creative and business
applications software products, LNNi, Inc., an online legislative service, and
Enseo, Inc., a developer of PC-based add in boards for video on demand, and
Wavefly Corporation, a digital information hardware and software company. Mr.
Hopkins served as Chairman of the Board and Chief Executive Officer of
Micrografx, Inc. from October 2000 until October 2001. Prior to that position,
Mr. Hopkins served as managing director of Hoak, Breedlove, Wesneski & Co., a
Texas based "technology boutique" investment banking and financial services
firm, from October 1999 until October 2000. Mr. Hopkins served as an officer of
3dfx from May 1999 (upon completion of the 3dfx/STB merger) to September 1999.
Prior to the 3dfx/STB merger, Mr. Hopkins was the Chief Financial Officer and
Vice President of Strategic Marketing for STB and served in these capacities
since December 1994. Mr. Hopkins' responsibilities in these positions included
directing European sales and marketing, managing specialized technology products
and planning financial strategy.

     JAMES WHIMS has served as a director of 3dfx since November 1996. Mr. Whims
has been a Partner at Techfarm since November 1996. From November 1994 until
July 1996, Mr. Whims was the Executive Vice President of Sony Computer
Entertainment, a video game hardware and software company. From 1990 until July
1994, Mr. Whims was Executive Vice President of the Consumer Division of The
Software Toolworks, Inc., a diversified software company. From 1985 to 1988, Mr.
Whims served as Vice President of Sales of Worlds of Wonder, Inc., a toy
products company, which he co-founded.

SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16 (a) of the Exchange Act requires 3dfx's officers and directors,
and persons who own more than 10% of a registered class of 3dfx's equity
securities, to file reports of ownership on Form 3 and changes in ownership on
Form 4 or Form 5 with the Securities and Exchange Commission or SEC and the
National Association of Securities Dealers, Inc. Such officers, directors and
10% shareholders are also required by SEC rules to furnish 3dfx with copies of
all such forms that they file. Based solely on its review of the copies of such
forms received by 3dfx, or written representations from some reporting persons
that no Forms 5 were required for such persons, 3dfx believes that its officers,
directors and ten percent shareholders have complied with all Section 16(a)
filing requirements applicable to them in fiscal 2002, except that Richard A.
Heddleson and Alex Leupp will be filing a Form 4 or 5 late.





                                       16
<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     The current members of the Compensation Committee are Gordon Campbell and
James Whims. No executive officer of 3dfx serves as a member of the board of
directors or compensation committee of any entity which has one or more
executive officers serving as a member of 3dfx's board of directors or
Compensation Committee.

COMPENSATION OF DIRECTORS

     The 3dfx Interactive, Inc. 1997 Director Option Plan (the "Director Plan")
provides that options shall be granted to non-employee directors of 3dfx
pursuant to an automatic nondiscretionary grant mechanism following each annual
meeting of shareholders. As 3dfx did not hold an annual meeting of shareholders
in fiscal 2002, no options were granted to directors in fiscal 2002.

ITEM 11. EXECUTIVE COMPENSATION

     The following table sets forth for the years ended January 31, 2000,
January 31, 2001 and January 31, 2002 the compensation earned by (a) 3dfx's
Chief Executive Officer during the fiscal year ended January 31, 2002, (b) each
of the other top four executive officers whose salary and bonus for the fiscal
year ended January 31, 2002 was in excess of $100,000 for services rendered in
all capacities to 3dfx for that year and (c) an individual for whom disclosure
would have been provided pursuant to clause (b) but for the fact that the
individual was not serving as an executive officer of 3dfx throughout the entire
fiscal year ended January 31, 2002 (collectively, the "Named Executive
Officers"):

                           SUMMARY COMPENSATION TABLE

<Table>
<Caption>
                                                                                                   LONG-TERM
                                                     ANNUAL COMPENSATION                         COMPENSATION
                                         ------------------------------------------      ------------------------------
                                                                       OTHER ANNUAL       SECURITIES        ALL OTHER
                                 FISCAL     SALARY                     COMPENSATION       UNDERLYING       COMPENSATION
NAME AND PRINCIPAL POSITION       YEAR      ($)(10)       BONUS($)         (1)           OPTIONS(#)(2)         ($)
-------------------------------  -----   ------------   ------------   ------------      ------------      ------------
<S>                              <C>     <C>            <C>            <C>               <C>               <C>
Alex Leupp (3)(9)...............  2002   $    353,874             --             --                --                --
President, Chief Executive        2001        375,000   $     50,000   $      8,250                --                --
Officer and Director              2000         44,771         50,000          1,500           806,000(4)             --

Richard A. Heddleson (5)........  2002   $    258,813             --             --           800,000                --
Chief Financial Officer,          2001         63,462             --             --           325,000                --
Treasurer and Secretary           2000             --             --             --                --                --

Scott D. Sellers (9)............  2002   $    250,205             --             --                --                --
Executive Vice President, Chief   2001        260,000             --             --           186,000                --
Technical Officer and Director    2000        209,230         26,667             --           270,000                --

Richard Burns (6)...............  2002   $    289,128             --             --                --                --
Senior Vice President of World    2001        205,961         50,000        118,245(7)        230,000                --
Wide Sales                        2000        148,077         25,000         56,630            70,000                --

Stephen A. Lapinski (8).........  2002   $    239,588         96,000             --                --                --
Senior Vice President, World      2001        175,303        196,000             --           400,000                --
Wide Marketing                    2000             --             --             --                --                --

Alfred R. Woodhull (8)..........  2002   $     48,413             --             --                --                --
Senior Vice President of          2001        123,269        203,140             --           160,000                --
Engineering                       2000             --             --             --                --                --
</Table>

----------

     (1)  Represents car allowances, except where otherwise indicated.

     (2)  Except as otherwise indicated, these shares are subject to exercise
          under stock options granted under 3dfx's 1995 Employee Stock Plan.





                                       17
<PAGE>

     (3)  Mr. Leupp became the President and Chief Executive Officer of 3dfx in
          December 1999 and resigned effective February 2002. Prior to that time
          he served as an independent director of 3dfx.

     (4)  Included within the number of options granted to Mr. Leupp as
          indicated in the table above in fiscal 2000 are 6,000 options granted
          to him in his capacity as a director of 3dfx under the Director Plan.

     (5)  Mr. Heddleson joined 3dfx on October 24, 2000.

     (6)  Mr. Burns resigned from 3dfx in March 2001.

     (7)  Represents commission paid to Mr. Burns in fiscal year 2000.

     (8)  Mr. Lapinski's and Mr. Woodhull's employment with 3dfx terminated
          without cause in March 2001.

     (9)  Mr. Leupp's and Mr. Seller's employment with 3dfx terminated without
          cause in February 2002.

     (10) The salary figures for 2002 include, in each case other than Mr.
          Heddleson and Mr. Burns, severance payments ultimately deductible from
          the amount owed to each such executive upon payment by 3dfx of its
          fixed and ascertainable debts, as described in "--Employment
          Agreements, Severance Arrangements and Change in Control
          Arrangements."

                        OPTION GRANTS IN LAST FISCAL YEAR

     The following table provides information relating to stock options awarded
to each of the Named Executive Officers during the year ended January 31, 2002.
Except as otherwise noted, all such options were awarded under 3dfx's 1995
Employee Stock Plan.

<Table>
<Caption>
                                                INDIVIDUAL GRANTS
                       ----------------------------------------------------------------------    POTENTIAL REALIZABLE VALUE AT
                          NUMBER OF                                                                  ASSUMED ANNUAL RATES OF
                         SECURITIES         PERCENT OF                                                    STOCK PRICE
                         UNDERLYING       TOTAL OPTIONS        EXERCISE                                 APPRECIATION FOR
                           OPTIONS         GRANTED TO            PRICE                                   OPTION TERM (1)
                           GRANTED        EMPLOYEES IN            PER           EXPIRATION      ---------------------------------
NAME                      (2)(3)(4)       FISCAL 2002(5)         SHARE             DATE                5%                10%
--------------------   ---------------   ---------------    ---------------   ---------------   ---------------   ---------------

<S>                    <C>               <C>                <C>               <C>               <C>               <C>
Richard A. Heddleson           800,000               100%   $          0.38            6/7/11   $       191,184   $       484,497
</Table>

----------
     (1)  Potential gains are net of the exercise price but before taxes
          associated with the exercise. The 5% and 10% assumed annual rates of
          compounded stock appreciation based upon the exercise price per share
          are mandated by the rules of the SEC and do not represent 3dfx's
          estimate or projection of the future common stock price. Actual gains,
          if any, on stock option exercises are dependent on the future
          financial gains, if any, on stock option exercises are dependent on
          the future financial performance of 3dfx, overall market conditions
          and the option holders' continued employment through the vesting
          period. This table does not take into account any appreciation in the
          fair market value of 3dfx common stock from the date of grant to the
          date of this, other than the columns reflecting assumed rates of
          appreciation of 5% and 10%.

     (2)  The option becomes fully vested and exercisable on the second business
          day immediately preceding the earlier of the record date for the
          initial distribution to 3dfx's common shareholders of shares of Nvidia
          common stock, or any proceeds derived from 3dfx's sale of such shares,
          or the contribution of all or a portion of 3dfx's assets to a
          liquidating trust, provided that Heddleson remains an employee of 3dfx
          on that date; provided, that (i) the option will fully vest in the
          event Mr. Heddleson's employment is terminated "without cause," as
          defined in Mr. Heddleson's employment agreement, and (ii) the option
          shall vest 50% in the event Mr. Heddleson's employment is terminated
          by reason of his death or total and permanent disability.

     (3)  Options were granted at an exercise price equal to the fair market
          value of 3dfx's common stock on the date of grant. The exercise price
          may be paid by delivery of a promissory note payable to 3dfx on such
          terms as are acceptable to 3dfx in its discretion. In addition, the
          options may be exercised on a cashless basis through either (i)
          delivery of an irrevocable notice of exercise to a broker, with
          authorization for the broker to sell that number of shares necessary
          to cover the exercise price and any required federal income tax
          withholding; or (ii) "netting" the number of shares issued upon
          exercise of the option by that number of shares necessary to cover the
          exercise price and any required federal income tax withholding, based
          on the fair market value of such shares on the date of exercise.

     (4)  These shares are subject to exercise under stock options granted under
          3dfx's 1995 Employee Stock Plan.

     (5)  The calculation is based on the aggregate number of options granted to
          employees in fiscal 2002.




                                       18
<PAGE>


                 AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES

     The following table sets forth some information regarding exercises of
stock options by the Named Executive Officers during the year ended January 31,
2002 and the stock options held as of January 31, 2002 by the Named Executive
Officers.



<Table>
<Caption>
                                                                    NUMBER OF SECURITIES
                                                                   UNDERLYING UNEXERCISED
                                SHARES                                  OPTIONS AT                       VALUE OF UNEXERCISED
                               ACQUIRED                              JANUARY 31, 2002                   IN-THE-MONEY OPTIONS AT
                                  ON                                       (#)(1)                       JANUARY 31, 2002 ($)(2)
                               EXERCISE           VALUE        ---------------------------------------------------------------------
NAMES                             (#)          REALIZED($)       EXERCISABLE     UNEXERCISABLE       EXERCISABLE      UNEXERCISABLE
-------------------------   --------------   ---------------   ---------------   ---------------   ---------------   ---------------
<S>                         <C>              <C>               <C>               <C>               <C>               <C>
Alex Leupp ..............               --                --                --                --                --                --
Richard A. Heddleson ....               --                --                --           800,000                --   $        96,000
Scott D. Sellers ........               --                --                --                --                --                --
Richard Burns ...........               --                --                --                --                --                --
Stephen A. Lapinski .....               --                --                --                --                --                --
Alfred R. Woodhull ......               --                --                --                --                --                --
</Table>

     (1)  Options granted under 3dfx's 1995 Employee Stock Plan may be exercised
          by the holder thereof prior to vesting with the shares purchased
          thereby subject to repurchase by 3dfx until fully vested. The table
          presents options as exercisable according to the vesting schedule of
          the option.

     (2)  Based upon the last sale price of 3dfx's common stock on January 31,
          2002, $0.50 per share, minus the exercise price.

EMPLOYMENT AGREEMENTS, SEVERANCE ARRANGEMENTS AND CHANGE IN CONTROL ARRANGEMENTS

     3dfx is a party to employment agreements with its former senior executive
officers, including Alex Leupp, Scott Sellers, Stephen Lapinski, Richard Burns
and Al Woodhull, and its remaining senior executive officer, Richard Heddleson.
Other than Mr. Heddleson's employment agreement, which was effective as of April
19, 2001, these employment agreements were amended effective February 1, 2001.
As amended, the employment agreements of Scott Sellers, Stephen Lapinski and Al
Woodhull provide that each one of them is entitled to receive a lump sum payment
equal to the sum of their base salary and 50% of their target bonus, less
applicable deductions and withholdings, on the date that 3dfx shall have fully
paid or caused to be paid or otherwise provided for (in a manner satisfactory to
Nvidia) all fixed and ascertainable debts, obligations and liabilities of any
nature. This payout will be reduced, however, by certain base salary and
severance payments previously made. Alex Leupp's employment agreement features
similar terms, but the lump sum payment equals 1.25 times the sum of his base
salary and 50% of his target bonus. The foregoing employment agreements also
provide COBRA premium reimbursement benefits.

     Mr. Burns was entitled to receive a lump sum severance benefit immediately
upon termination of his employment under his employment agreement, as well as
payment or reimbursement of COBRA premiums for 12 months following his
termination.

     On March 9, 2001, Messrs. Woodhull and Lapinski were terminated by 3dfx
without cause, and on March 2, 2001, Mr. Burns' employment with 3dfx expired
pursuant to the terms of his employment agreement with 3dfx. In April 2001 Mr.
Leupp's and Mr. Seller's employment with 3dfx were terminated without cause.
Effective February 15, 2002, Mr. Leupp and Mr. Sellers resigned as officers of
3dfx, but both remain on the board of directors.

     The following table summarizes the salary and severance payments made to
each of the indicated individuals from February 1, 2001 to the current date, as
well as the remaining lump sum payment amount due to these individuals as of the
date that 3dfx shall have fully paid its fixed and ascertainable debts:

<Table>
<Caption>
                                                                                      AMOUNT OWED UPON PAYMENT OF FIXED AND
NAMES                                      SALARY AND SEVERANCE PAYMENTS MADE                  ASCERTAINABLE DEBTS
-----                                      ----------------------------------         -------------------------------------
<S>                                        <C>                                        <C>
Alex Leupp......................                    $ 400,749                                    $ 68,001
Scott D. Sellers................                      313,033                                      (1,100)
Stephen A. Lapinski.............                      255,728                                      32,372
Alfred R. Woodhull..............                       48,413                                     170,087
</Table>

     Mr. Heddleson's employment agreement provided for a salary of $275,000
payable during the one-year period ending April 19, 2002, which salary is
intended to compensate Mr. Heddleson through the date that his employment with
3dfx terminates. Mr. Heddleson's employment will terminate upon the complete
liquidation and dissolution of 3dfx, if not terminated earlier with or






                                       19
<PAGE>

without cause. If 3dfx terminates Mr. Heddleson without cause, he will receive
immediate vesting of the 800,000 share stock option granted to him
contemporaneous with the employment agreement. If Mr. Heddleson is terminated
for cause or if he resigns, all stock option vesting and benefits will cease as
of such date. If 3dfx's assets are transferred to a liquidating trust, Mr.
Heddleson has agreed pursuant to the employment agreement to serve as trustee of
such trust on such terms as are mutually acceptable to Mr. Heddleson and 3dfx.

LIMITATIONS ON LIABILITY AND INDEMNIFICATION MATTERS

     3dfx has adopted provisions in its articles of incorporation that eliminate
to the fullest extent permissible under California law the liability of its
directors to 3dfx for monetary damages. Such limitation of liability does not
affect the availability of equitable remedies such as injunctive relief or
rescission. 3dfx's bylaws provide that 3dfx shall indemnify its directors and
officers to the fullest extent permitted by California law, including in
circumstances in which indemnification is otherwise discretionary under
California law. 3dfx has entered into indemnification agreements with its
officers and directors containing provisions which may require 3dfx, among other
things, to indemnify the officers and directors against some liabilities that
may arise by reason of their status or service as directors or officers (other
than liabilities arising from willful misconduct of a culpable nature), and to
advance their expenses incurred as a result of any proceeding against them as to
which they could be indemnified.

     At the present time, there is no pending litigation or proceeding involving
a director, officer, employee or other agent of 3dfx in which indemnification
would be required or permitted. 3dfx is not aware of any threatened litigation
or proceeding which may result in a claim for such indemnification.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth as of May 31, 2002 information regarding the
beneficial ownership of 3dfx's outstanding common stock by:

     o    Each person known by 3dfx to own beneficially more than 5% of the
          outstanding common stock

     o    Each director and each Named Executive Officer

     o    All directors and executive officers of 3dfx as a group

     The following calculations of the percentage of outstanding shares are
based on 39,799,364 shares of 3dfx's common stock outstanding as of May 31,
2002.

     Beneficial ownership is determined in accordance with the rules of the
Securities Exchange Commission and generally includes voting or investment power
with respect to securities, subject to community property laws, where
applicable. Information for each five percent shareholder is derived solely from
filings with the SEC on or before May 31, 2002.




                                       20
<PAGE>


     Shares of the common stock subject to options that are presently
exercisable or exercisable within 60 days of May 31, 2002 are deemed outstanding
and beneficially owned by the person holding such options for the purpose of
computing the percentage of ownership of such person but are not treated as
outstanding for the purpose of computing the percentage of any other person.
These options are separately set forth below in the column titled "Options."

<Table>
<Caption>
NAME AND ADDRESS(1)                                     SHARES            OPTIONS        TOTAL        PERCENTAGE
--------------------------------------------------   ------------      ------------   ------------   ------------

<S>                                                  <C>               <C>            <C>            <C>
FIVE PERCENT SHAREHOLDERS:

David T. Lu ......................................      3,223,339                --      3,223,339            8.1%
   1117 E. Putnam Ave. #320
   Riverside, CT 06878

David A. Rocker (2) ..............................      3,587,590                --    . 3,587,590            9.0%
   c/o Rocker Partners, L.P.
   45 Rockefeller Plaza, Suite 1759
   New York, New York 10111

John C.O. Bryant .................................      3,139,120                --    . 3,139,120            7.9%
   101 N. Jay Street
   Middleberg, Virginia 20118

DIRECTORS AND OFFICERS:

Alex Leupp .......................................             --                --             --             --
Gordon A. Campbell ...............................        381,632(3)         88,417        470,049            1.2%
James Whims ......................................          2,400            71,500         73,900              *
James L. Hopkins .................................          2,498           100,485        102,983              *
Scott D. Sellers .................................        202,200                --        202,200              *
Richard A. Heddleson .............................             --                --             --             --
All executive officers and directors as a
group (6) persons) ...............................        588,730           260,402        849,132            2.1%
</Table>

----------

     *    Less than 1%.

     (1)  Except as otherwise noted, address is c/o 3dfx Interactive, Inc.,
          P. O. Box 60486, Palo Alto, CA 94306.

     (2)  Information with respect to David A. Rocker was obtained from a
          Schedule 13G filed with the SEC, which indicates that Mr. Rocker has
          sole dispositive power over all of the shares indicated by virtue of
          his position as the sole managing partner of Rocker Partners, L.P.,
          and through Rocker Offshore Management Company, Inc., an investment
          advisor to Compass Holdings, Ltd.

     (3)  Includes 77,084 shares held by Techfarm, L.P., 3,854 held by Techfarm
          Management Inc. (dba Techfarm, Inc.), and 300,694 shares held by
          Gordon A. Campbell. Mr. Campbell is President of Techfarm, Inc., the
          general partner of Techfarm, L.P. ("Techfarm"), and Mr. Campbell
          disclaims beneficial ownership of the shares held by Techfarm, L.P.
          and Techfarm Management Inc.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In March 2000, 3dfx sold the Specialized Technology Group (STG), a business
unit that provides digital video products, multi-output MPEG decoder cards and
multi-monitor display adapters to a company of which Vanessa Ogle is President,
Enseo, Inc. ("Enseo"). Ms. Ogle is a former employee of 3dfx and is the daughter
of William E. Ogle. Mr. Ogle served as the Executive Vice President and Vice
Chairman of the board of directors of 3dfx until he resigned these positions in
January 2000. Mr. Hopkins is currently a director of Enseo, but did not serve
Enseo in any capacity at the time of the sale transaction. The transaction was
accounted for as an asset sale, comprised primarily of inventory and accounts
receivable, in a leveraged buyout by the STG management group. 3dfx maintained a
minority equity interest in Enseo following the sale. The amount of the
transaction was $5.1 million, and as a result, 3dfx recorded a note receivable
in the amount of $3.0 million ($1.5 of which has been assigned to Mr. Ogle, as
described below). The note is payable in accordance with a payment schedule,
beginning February 1, 2001 and concluding November 1, 2004. The note is
currently in default and 3dfx is in discussions with Enseo with respect to this
matter.

     3dfx and William Ogle, a former Executive Vice President and Vice Chairman
of the Board of Directors until his resignation in January 2000, brought claims
against each other before the American Arbitration Association relating to the
employment agreement,






                                       21
<PAGE>

as amended, between the parties and other matters relating to Mr. Ogle's
relationship with 3dfx. On November 29, 2000, 3dfx and Mr. Ogle executed a
Settlement Agreement and Mutual Release, which was approved by the arbitrator on
December 4, 2000. Pursuant to the terms of the settlement agreement, 3dfx paid
Mr. Ogle $300,000 as a parachute payment pursuant to his employment agreement
with 3dfx, and released Mr. Ogle from all obligations under his employment
agreement. In lieu of making the $300,000 parachute payment to Mr. Ogle, 3dfx
transferred a condominium owned by 3dfx and all personal property therein to Mr.
Ogle, as well as paid to Mr. Ogle an amount equal to all unpaid taxes and
assessments accrued or accruing for the fiscal year 2000, pro-rated to November
29, 2000. Additionally, beginning in February 2001, 3dfx assigned 50% of all
future principal and interest payments payable by Enseo under that certain
promissory note dated March 1, 2000, executed by Enseo in favor of 3dfx in the
principal amount of $3.0 million. 3dfx also agreed that any indemnification
agreements executed between 3dfx or STB and Mr. Ogle will remain in full force
and effect as it relates to claims asserted against Mr. Ogle in his capacity as
an officer or director of 3dfx or STB for acts taking place prior to Mr. Ogle's
resignation.

     3dfx believes that the transactions set forth above were made on terms no
less favorable to 3dfx than could have been obtained from unaffiliated third
parties. All future transactions between 3dfx and its officers, directors,
principal shareholders and their affiliates will be approved by a majority of
the board of directors, including a majority of the independent and
disinterested outside directors, and will continue to be on terms no less
favorable to 3dfx than could be obtained from unaffiliated third parties.


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

         (a)(1)   Financial Statements.

The following financial statements are filed as part of this Report.

<Table>
<Caption>
                                                                                                                PAGE
                                                                                                                ----
<S>                                                                                                             <C>
Report of Independent Accountants.............................................................................   F-1
Consolidated Statement of Net Liabilities in Liquidation......................................................   F-2
Consolidated Balance Sheet of Discontinued Operations as of January 31, 2001 .................................   F-3
Consolidated Statement of Changes in Net Liabilities in Liquidation...........................................   F-4
Consolidated Statements of Discontinued Operations for the years ended January 31, 2000, January 31, 2001
and for the period from February 1, 2001 to March 26, 2001....................................................   F-5
Consolidated Statements of Shareholders' Equity of Discontinued Operations for the years ended
January 31, 2000, January 31, 2001 and for the period from February 1, 2001 to March 26, 2001.................   F-6
Consolidated Statements of Cash Flows of Discontinued Operations for the years ended January 31, 2000,
January 31, 2001 and for the period from February 1, 2001 to March 26, 2001...................................   F-7
Notes to Consolidated Financial Statements....................................................................   F-8

         (a)(2)   Financial Statement Schedules.

Report of Independent Accountants on Financial Statement Schedule.............................................   S-1
Schedule II Valuation and Qualifying Accounts for the years ended January 31, 2000, January 31, 2001 and
for the period from February 1, 2001 to March 26, 2001........................................................   S-2
</Table>

         (b)      Reports on Form 8-K.

                  No Current Reports on Form 8-K were filed during the last
                  quarter of the period covered by this Report.

         (c)      Exhibits.

<Table>
<Caption>
            EXHIBIT
            NUMBER                         DESCRIPTION
            -------                        -----------

<S>                     <C>
            2.1(11)     Asset Purchase Agreement, dated December 15, 2000, by
                        and among the Registrant, Nvidia Corporation and Titan
                        Acquisition Corp. No. 2

            2.2(17)     Registrant's Plan of Dissolution, as approved by
                        Registrant's shareholders on March 27, 2001

            3.1(9)      The Registrant's Restated Articles of Incorporation

            3.2(5)      Certificate of Designation of Rights Preferences and
                        Privileges of Series A Participating Preferred Stock of
                        Registrant

            3.3(18)     The Registrant's Amended and Restated Bylaws

            4.1(2)      Specimen Common Stock Certificate

            4.2(5)      Preferred Shares Rights Agreement dated October 30,
                        1998, between Registrant and BankBoston, N.A., Rights
                        Agent
</Table>




                                       22
<PAGE>

<Table>
<S>                     <C>
            10.1(2)     Form of Indemnification Agreement between the Registrant
                        and each of its directors and officers

            10.2(13)    1995 Employee Stock Plan, as amended

            10.3(2)     1997 Director Option Plan and form of Director Stock
                        Option Agreement thereunder

            10.4(2)     Lease Agreement dated August 7, 1996 between Registrant
                        and South Bay/Fortan, and Tenant Estoppel Certificate
                        dated March 25, 1997 between Registrant and CarrAmerica
                        Realty Corporation for San Jose, California office

            10.5(2)     Investors' Rights Agreement dated September 12, 1996,
                        Amendment No. 1 to Investors' Rights Agreement dated
                        November 25, 1996, Amendment No. 2 to Investors' Rights
                        Agreement dated December 18, 1996 and Amendment No. 3 to
                        Investors' Rights Agreement dated March 27, 1997 by and
                        among the Registrant and holders of the Registrant's
                        Series A, Series B and Series Preferred Stock

            10.6(3)     Warrant to purchase shares of Common Stock issued to
                        Creative Labs, Inc.

            10.7(4)     [Reserved.]

            10.8(3)     [Reserved.]

            10.9(3)     1997 Supplementary Stock Option Plan and form of Stock
                        Option Agreement thereunder

            10.10(8)    1999 Supplementary Stock Option Plan and form of Stock
                        Option Agreement thereunder

            10.11(12)   Indemnity Escrow Agreement dated as of July 20, 2000, by
                        and among the Registrant, GigaPixel Corporation,
                        Galapagos Acquisition Corp. and U.S. Trust Company, N.A.

            10.12(12)   Consulting Agreement dated as of July 20, 2000, by and
                        between the Registrant and George T. Haber

            10.13(12)   Noncompetition Agreement dated as of July 20, 2000, by
                        and between the Registrant and George T. Haber

            10.14(12)   Contingent Recourse Non-Negotiable Promissory Note dated
                        as of July 20, 2000, made by George T. Haber for the
                        benefit of GigaPixel Corporation

            10.15(12)   Lock Up Agreement dated as of July 20, 2000, by and
                        between the Registrant and George T. Haber

            10.16(10)   Employment Agreement by and between the Registrant and
                        Alex M. Leupp, as amended effective February 1, 2001

            10.17(10)   Employment Agreement by and between the Registrant and
                        Scott D. Sellers, as amended effective February 1, 2001

            10.18(10)   Employment Agreement by and between the Registrant and
                        Richard Burns, as amended effective February 1, 2001

            10.19(10)   Employment Agreement by and between the Registrant and
                        Stephen A. Lapinski, as amended effective February 1,
                        2001

            10.20(10)   Employment Agreement by and between the Registrant and
                        Alfred R. Woodhull, as amended effective February 1,
                        2001

            10.21(11)   Credit Agreement, dated December 15, 2000 by and between
                        the Registrant and Titan Acquisition Corp. No. 2

            10.22(11)   Security Agreement, dated December 15, 2000, by and
                        between the Registrant and Titan Acquisition Corp. No. 2

            10.23(11)   Trademark Assignment Agreement, by and between 3dfx
                        Interactive Inc. and Titan Acquisition Corp. No. 2

            10.24(11)   Patent License Agreement, dated December 15, 2000, by
                        and between the Registrant, Nvidia Corporation and Titan
                        Acquisition Corp. No. 2

            10.25(11)   Patent Standstill Agreement, dated as of December 15,
                        2000, by and between Nvidia Corporation and the
                        Registrant

            10.26(15)   Lease Agreement dated December 6, 1988 by and between
                        STB de Mexico S.A. C.V. (formerly known as Industrias
                        Fronterizas de Chihuahua, S.A. de C.V.) (a subsidiary of
                        STB Systems, Inc., as lessee) and Complejo Industrial
                        Fuentes, S.A. de C.V. lessor), including an Agreement
                        for Modification dated February 25, 1994 by and between
                        the same parties

            10.27(16)   Modification Agreement dated October 4, 1996 by and
                        between STB de Mexico, S.A. de C.V. and Complejo
                        Industrial Fuentes, S.A. de C.V.

            10.28(16)   Lease Contract dated October 4, 1996 by and between STB
                        de Mexico, S.A. de C.V. (as lessee) and Complejo
                        Industrial Fuentes, S.A. de C.V. (as lessor)

            10.29(7)    Amendment to Lease Agreement dated January 30, 1997 by
                        and between STB de Mexico, S.A. de C.V. (as lessee) and
                        Complejo Industrial Fuentes, S.A. de C.V.

            10.30(17)   Settlement Agreement and Mutual Release dated November
                        29, 2000 by and between the Registrant and William E.
                        Ogle
</Table>



                                       23
<PAGE>


<Table>
<S>                     <C>
            10.31(17)   Lease Agreement dated July 23, 1998 by and between
                        CarrAmerica Realty L.P. and the Registrant, and an
                        amendment thereto

            10.32(17)   [Reserved.]

            10.33(17)   Lease Schedule No. 1000063905 dated December 15, 1997 by
                        and between Banc One Leasing Corporation and STB
                        Systems, Inc.

            10.34(17)   Lease Schedule No. 1000064617 dated April 17, 1998 by
                        and between Banc One Leasing Corporation and STB
                        Systems, Inc.

            10.35(17)   Lease Schedule No. 1000063259 dated October 31, 1997 by
                        and between Banc One Leasing Corporation and STB
                        Systems, Inc.

            10.36(18)   Employment Agreement by and between the Registrant and
                        Richard A. Heddleson, dated June 8, 2001

            10.37*      Lease Termination and Settlement Agreement dated April
                        19, 2002 by and among Complejo Industrial Fuentes, S.A.
                        de C.V., STB de Mexico, S.A. de C.V. and STB Systems,
                        Inc.

            10.38*      Series B Preferred Stock Purchase Agreement dated as of
                        June 13, 2002, by and among the Registrant and SF
                        Capital Partners Ltd.

            10.39*      Form of Full and Final Release and Settlement by and
                        between the Registrant and numerous creditors of the
                        Registrant


            10.40*      Form of Release and Settlement by and among Registrant
                        and creditors of Registrant

            21.1        Subsidiaries of the Registrant

                        (a)   STB Systems, Inc.
                        (b)   3dfx Europe, Ltd.
                        (c)   GigaPixel Corporation
                        (d)   STB Assembly, Inc.
                        (e)   STB de Mexico, S.A. de C.V.
                        (f)   Symmetric Simulation Systems, Inc.

            23.1*       Consent of PricewaterhouseCoopers LLP, Independent
                        Accountants

            24.1*       Power of Attorney (included on signature page)
</Table>

*    Filed herewith.

(1)  [Reserved].

(2)  Incorporated by reference to the exhibits filed with the Registrant's
     Registration Statement on Form S-1 (File No. 333-25365) which was declared
     effective on June 25, 1997.

(3)  Incorporated by reference to the exhibits filed with the Registrant's
     Registration Statement on Form S-1 (File No. 333-46119) filed with the
     Commission on February 11, 1998.

(4)  Incorporated by reference to the exhibits filed with the Registrant's
     Quarterly Report on Form 10-Q for the period ended June 30, 1997.

(5)  Incorporated by reference to the exhibits filed with the Registrant's
     Registration Statement on Form 8-A which was filed with the Commission on
     November 9, 1998 and amended by the filing of Registrant's Registration
     Statement on Form 8-A/A which was filed with the Commission on January 26,
     2001

(6)  Incorporated by reference to the exhibits filed with the Registrant's
     Quarterly Report on Form 10-Q for the period ended June 30, 1998.

(7)  Incorporated by reference to exhibits filed with STB Systems, Inc.'s Annual
     Report on Form 10-K for the fiscal year ended October 31, 1997.

(8)  Incorporated by reference to Exhibit 4.1 filed with the Registrant's
     Registration Statement on Form S-8 (File No. 333-86661) which was filed
     with the Commission on September 7, 1999.

(9)  Incorporated by reference to exhibits filed with the Registrant's
     Registration Statement on Form S-4 (File No. 333-38678) which was filed
     with the Commission on June 6, 2000.

(10) Incorporated by reference to exhibits filed with the Registrant's Current
     Report on Form 8-K filed on January 26, 2001.

(11) Incorporated by reference to exhibits filed with Nvidia Corporation's
     Registration Statement on Form S-4 (File No. 333-54406) which was filed
     with the Commission on January 26, 2001.

(12) Incorporated by reference to exhibits filed with the Registrant's Quarterly
     Report on Form 10-Q filed on September 14, 2000.




                                       24
<PAGE>

(13) Incorporated by reference to Exhibit 4.1 of the Registrant's Registration
     Statement on Form S-8 (File No. 333-42156) which was filed with the
     Commission on July 25, 2000.

(14) Incorporated by reference to the Registrant's Registration Statement on
     Form S-8 (File No. 333-42152) which was filed with the Commission on July
     25, 2000.

(15) Incorporated by reference to Exhibit 10.1 of the STB Systems, Inc.'s
     Registration Statement on Form S-1 (File No. 333-87612) filed with the
     Commission on December 21, 1994.

(16) Incorporated by reference to Exhibit 10.1 of the STB Systems, Inc.'s
     Registration Statement (File No. 333-14313) filed with the Commission on
     October 17, 1996.

(17) Incorporated by reference to exhibits filed with the Registrant's Annual
     Report on Form 10-K for the fiscal year ended January 31, 2001.

(18) Incorporated by reference to exhibits filed with the Registrant's Quarterly
     Report on Form 10-Q filed on September 17, 2001.






                                       25
<PAGE>
                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders of 3dfx Interactive, Inc.


We have audited the consolidated statement of net liabilities in liquidation of
3dfx Interactive, Inc. and its subsidiaries as of January 31, 2002, and the
related consolidated statement of changes in net liabilities in liquidation for
the period from March 27, 2001 to January 31, 2002. In addition, we have audited
the accompanying consolidated balance sheet of discontinued operations as of
January 31, 2001, the related consolidated statements of discontinued
operations, of shareholders' equity of discontinued operations and of cash flows
of discontinued operations for the two years then ended, and the consolidated
statements of discontinued operations, of shareholders' equity of discontinued
operations and of cash flows of discontinued operations for the period from
February 1, 2001 to March 26, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.


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


As described in Note 1 to the consolidated financial statements, the
stockholders of 3dfx Interactive, Inc. approved a plan of dissolution on March
27, 2001, and the Company is proceeding to wind-up its affairs and dissolve. As
a result, the Company has changed its basis of accounting for periods subsequent
to March 27, 2001 from the going-concern basis to a liquidation basis.


In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of 3dfx
Interactive, Inc. as of January 31, 2001, the consolidated results of its
operations and its cash flows for the two years then ended and for the period
from February 1, 2001 to March 26, 2001, its consolidated net liabilities in
liquidation as of January 31, 2002, and the changes in its consolidated net
liabilities in liquidation for the period from March 27, 2001 to January 31,
2002, in conformity with accounting principles generally accepted in the United
States of America applied on the bases described in the preceding paragraph.


/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
San Jose, California
June 7, 2002, except for Note 13, as to which the date is June 13, 2002





                                      F-1
<PAGE>





                             3DFX INTERACTIVE, INC.
            CONSOLIDATED STATEMENT OF NET LIABILITIES IN LIQUIDATION
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                      JANUARY 31,
                                                                          2002
                                                                      ------------
<S>                                                                   <C>
ASSETS
        Cash and cash equivalents ...............................     $      1,090
        Other current assets ....................................              404
        Contingent Receivable (Note 1)
                                                                      ------------
                         Total assets ...........................            1,494
                                                                      ============
LIABILITIES
        Accounts payable ........................................           23,632
        Estimated costs during period of liquidation (Note 1) ...           12,264
        Commitments and Contingencies (Note 10)
                                                                      ------------
                         Total liabilities ......................           35,896
                                                                      ------------
                         Net liabilities in liquidation .........     $    (34,402)
                                                                      ============
</Table>


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





                                      F-2
<PAGE>





                             3DFX INTERACTIVE, INC.
              CONSOLIDATED BALANCE SHEET OF DISCONTINUED OPERATIONS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                                   JANUARY 31,
                                                                                       2001
                                                                                   ------------
<S>                                                                                <C>
ASSETS
Current Assets:
        Cash and cash equivalents ............................................     $      9,391
        Accounts receivable less allowance for doubtful accounts
               of $9,992 .....................................................            6,398
        Inventory, net .......................................................           22,358
        Deferred tax assets ..................................................           35,000
        Other current assets .................................................            1,214
        Other assets held for sale ...........................................           45,245
                                                                                   ------------
                         Total current assets ................................     $    119,606
                                                                                   ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
        Accounts payable .....................................................     $     64,245
        Accrued liabilities ..................................................           11,642
        Nvidia term loan .....................................................           15,000
        Other current liabilities ............................................            6,366
                                                                                   ------------
                     Total current liabilities ...............................           97,253
                                                                                   ------------
Commitments and Contingencies (Note 10)

Shareholders' Equity:
         Preferred stock, no par value, 5,000,000 shares authorized; none
                issued and outstanding .......................................               --
         Common stock, no par value, 50,000,000 shares authorized;
                39,787,740 and 24,442,370 shares issued and outstanding ......          430,922
         Warrants ............................................................              242
         Accumulated other comprehensive loss ................................           (1,722)
         Accumulated deficit .................................................         (407,089)
                                                                                   ------------
                     Total shareholders' equity ..............................           22,353
                                                                                   ------------
                     Total liabilities and shareholders' equity ..............     $    119,606
                                                                                   ============
</Table>


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




                                      F-3
<PAGE>






                             3DFX INTERACTIVE, INC.
       CONSOLIDATED STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION
                                 (IN THOUSANDS)


<Table>
<Caption>
                                                          For the period from
                                                           March 27, 2001 to
                                                           January 31, 2002
                                                          -------------------
<S>                                                       <C>
Net assets in liquidation at March 27, 2001 ...........     $        20,457
                                                            ---------------
Changes in net assets in liquidation:
   Selling, general and administrative expenses .......             (21,424)
   Net gain on sale of assets held for sale ...........               1,565
   Decrease in deferred tax asset .....................             (35,000)
                                                            ---------------
      Total changes in net assets in liquidation ......             (54,859)
                                                            ---------------
Net liabilities in liquidation at January 31, 2002 ....     $       (34,402)
                                                            ===============
</Table>



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




                                      F-4
<PAGE>




                             3DFX INTERACTIVE, INC.
               CONSOLIDATED STATEMENTS OF DISCONTINUED OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)


<Table>
<Caption>
                                                                                           FISCAL YEAR ENDED
                                                           For the period from    ------------------------------------
                                                           February 1, 2001 to      JANUARY 31,          JANUARY 31,
                                                             March 26, 2001            2001                 2000
                                                           -------------------    ---------------      ---------------

<S>                                                        <C>                    <C>                  <C>
Revenues ...............................................                  --      $       233,067      $       360,523
Cost of revenues .......................................                  --              242,989              287,872
                                                             ---------------      ---------------      ---------------
Gross profit (loss) ....................................                  --               (9,922)              72,651
                                                             ---------------      ---------------      ---------------
Operating expenses:
   Research and development ............................                  --               65,394               66,062
   Selling, general and administrative .................               7,801               89,106               63,468
   In-process research and development .................                  --               66,250                4,302
   Amortization of goodwill and other intangibles ......                  --               24,449               10,228
   Impairment of goodwill and other intangibles ........                  --              117,065                   --
   Restructuring expense ...............................                  --                   --                4,382
                                                             ---------------      ---------------      ---------------
           Total operating expenses ....................               7,801              362,264              148,442
                                                             ---------------      ---------------      ---------------
Loss from discontinued operations ......................              (7,801)            (372,186)             (75,791)
Interest and other income (expense), net ...............                 182               (4,812)               2,180
                                                             ---------------      ---------------      ---------------
Loss from discontinued operations before
   income taxes ........................................              (7,619)            (376,998)             (73,611)
Provision (benefit) for income taxes ...................              (4,992)             (36,472)             (10,324)
                                                             ---------------      ---------------      ---------------
Net Loss from discontinued operations ..................     $        (2,627)     $      (340,526)     $       (63,287)
                                                             ===============      ===============      ===============
Net Loss per share from discontinued operations:
   Basic ...............................................     $         (0.07)     $        (10.63)     $         (2.81)
                                                             ===============      ===============      ===============
   Diluted .............................................     $         (0.07)     $        (10.63)     $         (2.81)
                                                             ===============      ===============      ===============
Shares used in net loss per share from
discontinued operations calculations:
   Basic ...............................................              39,788               32,041               22,536
                                                             ---------------      ---------------      ---------------
   Diluted .............................................              39,788               32,041               22,536
                                                             ---------------      ---------------      ---------------
</Table>


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




                                      F-5
<PAGE>
                             3DFX INTERACTIVE, INC.
   CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY OF DISCONTINUED OPERATIONS
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)


<Table>
<Caption>

                                                       CONVERTIBLE
                                                     PREFERRED STOCK                 COMMON STOCK
                                                 --------------------------    --------------------------
                                                   SHARES         AMOUNT          SHARES        AMOUNT        WARRANTS
                                                 -----------    -----------    -----------    -----------    -----------

<S>                                              <C>            <C>            <C>           <C>            <C>
Balance at January 31, 1999 ..................            --             --     15,715,882    $   126,709    $       242
Issuance of common stock under stock
  option and purchase plans ..................                                     977,235          4,899
Common stock repurchased .....................                                    (517,501)        (6,775)
Amortization of deferred compensation ........
STB acquisition ..............................                                   8,266,754        127,050
Components of comprehensive loss from
  discontinued operations:
  Net loss from discontinued operations ......
  Unrealized gain on investment ..............
Total comprehensive loss from
  discontinued operations ....................
                                                 -----------    -----------    -----------    -----------    -----------
Balance at January 31, 2000 ..................                                  24,442,370        251,883            242
Issuance of common stock under stock
  option and purchase plans ..................                                     791,618          4,108
Common stock repurchased .....................                                      (1,224)            (3)
GigaPixel acquisition ........................                                  14,554,976        174,934
Amortization of deferred compensation ........
Cancellation of unvested GigaPixel options ...
Components of comprehensive loss from
  discontinued operations:
  Net loss from discontinued operations ......
  Unrealized loss on investment ..............
Total comprehensive loss from
  discontinued operations ....................
                                                 -----------    -----------    -----------    -----------    -----------
Balance at January 31, 2001 ..................            --             --     39,787,740        430,922            242

Issuance of common stock under stock
  option and purchase plans ..................                                      11,624              5
Components of comprehensive loss from
  discontinued operations:
  Net loss from discontinued operations ......
  Unrealized loss on investment ..............

Total comprehensive loss from
  discontinued operations ....................
                                                 -----------    -----------    -----------    -----------    -----------
Balance at March 26, 2001 ....................            --             --     39,799,364    $   430,927    $       242
                                                 ===========    ===========    ===========    ===========    ===========



<Caption>
                                                  ACCUMULATED
                                                    OTHER
                                                 COMPREHENSIVE
                                                    DEFERRED        INCOME       ACCUMULATED
                                                  COMPENSATION      (LOSS)         DEFICIT         TOTAL
                                                 --------------   -----------    -----------    -----------

<S>                                               <C>             <C>           <C>            <C>
Balance at January 31, 1999 ..................     $      (656)   $        --    $    (3,276)   $   123,019
Issuance of common stock under stock
  option and purchase plans ..................                                                        4,899
Common stock repurchased .....................                                                       (6,775)
Amortization of deferred compensation ........             484                                          484
STB acquisition ..............................                                                      127,050
Components of comprehensive loss from
  discontinued operations:
  Net loss from discontinued operations ......                                       (63,287)       (63,287)
  Unrealized gain on investment ..............                          1,844                         1,844
                                                                                                -----------
Total comprehensive loss from
  discontinued operations ....................                                                      (61,443)
                                                   -----------    -----------    -----------    -----------
Balance at January 31, 2000 ..................             (172)        1,844        (66,563)       187,234
Issuance of common stock under stock
  option and purchase plans ..................                                                        4,108
Common stock repurchased .....................                                                           (3)
GigaPixel acquisition ........................           (6,946)                                    167,988
Amortization of deferred compensation ........            1,741                                       1,741
Cancellation of unvested GigaPixel options ...            5,377                                       5,377
Components of comprehensive loss from
  discontinued operations:
  Net loss from discontinued operations ......                                      (340,526)      (340,526)
  Unrealized loss on investment ..............                         (3,566)                       (3,566)
                                                                                                -----------
Total comprehensive loss from
  discontinued operations ....................                                                     (344,092)
                                                   -----------    -----------    -----------    -----------
Balance at January 31, 2001 ..................              --         (1,722)      (407,089)        22,353

Issuance of common stock under stock
  option and purchase plans ..................                                                            5
Components of comprehensive loss from
  discontinued operations:
  Net loss from discontinued operations ......                                        (2,627)        (2,627)
  Unrealized gain on investment ..............                            726                           726
                                                                                                -----------
Total comprehensive loss from
  discontinued operations ....................                                                       (1,901)
                                                   -----------    -----------    -----------    -----------
Balance at March 26, 2001 ....................              --    $      (996)   $  (409,716)   $    20,457
                                                   ===========    ===========    ===========    ===========
</Table>



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



                                      F-6
<PAGE>





                             3DFX INTERACTIVE, INC.
        CONSOLIDATED STATEMENTS OF CASH FLOWS OF DISCONTINUED OPERATIONS
                                 (IN THOUSANDS)


<Table>
<Caption>
                                                                                              FISCAL YEAR ENDED
                                                                 For the period from   ----------------------------------
                                                                 February 1, 2001 to     JANUARY 31,        JANUARY 31,
                                                                    March 26, 2001          2001               2000
                                                                    ---------------    ---------------    ---------------

<S>                                                                 <C>                <C>                <C>
Cash flows from operating activities:
   Net loss from discontinued operations ........................   $        (2,627)   $      (340,526)   $       (63,287)
   Adjustments to reconcile net loss from
      discontinued operations to net cash used in
      discontinued operating activities:
        Depreciation ............................................                --             24,126             14,930
        Amortization of goodwill and other intangibles ..........                --             24,449             10,228
        Amortization of deferred stock compensation .............                --              1,741                484
        Write-off of acquired in-process research and
          development ...........................................                --             66,250              4,302
        Write-down of fixed assets ..............................                --              5,521                 --
        Impairment of goodwill and other intangibles ............                --            117,065                 --
        Increase (decrease) in allowance for doubtful
          accounts ..............................................            (5,573)             3,311               (646)
        Gain on disposal of property and equipment, net .........                --               (711)                --
        Deferred income taxes ...................................                --            (27,989)               398
        Changes in assets and liabilities:
           Accounts receivable ..................................            10,725             58,823              7,087
           Inventory ............................................               183             22,707              5,339
           Other assets .........................................               544              8,971             (5,318)
           Accounts payable .....................................                --              3,155              1,765
           Accrued and other liabilities ........................           (11,394)           (16,619)            (8,738)
                                                                    ---------------    ---------------    ---------------
        Net cash used in discontinued operating activities ......            (8,142)           (49,726)           (33,456)
                                                                    ---------------    ---------------    ---------------
Cash flows from investing activities:
        Sales (purchases) of short-term investments, net ........               188             24,012               (893)
        Purchases of property and equipment .....................                --            (17,683)           (25,733)
        Proceeds from disposal of property and equipment ........                --              9,117                 --
        Acquisitions of GigaPixel and STB Systems ...............                --              5,319             21,243
                                                                    ---------------    ---------------    ---------------
        Net cash provided by/(used in) investing
          activities ............................................               188             20,765             (5,383)
                                                                    ---------------    ---------------    ---------------
Cash flows from financing activities:
        Proceeds from issuance (repurchase) of common
          stock, net ............................................                --              4,105             (1,876)
        Principal payments of capitalized lease
          obligations, net ......................................                --             (2,081)              (358)
        Proceeds from Nvidia term loan ..........................                --             15,000                 --
        Proceeds (payments) on line of credit, net ..............                --            (20,490)             9,209
                                                                    ---------------    ---------------    ---------------
        Net cash provided by/(used in) financing
          activities ............................................                --             (3,466)             6,975
                                                                    ---------------    ---------------    ---------------
Net decrease in cash and cash equivalents .......................            (7,954)           (32,427)           (31,864)
Cash and cash equivalents at beginning of period ................             9,391             41,818             73,682
                                                                    ---------------    ---------------    ---------------
Cash and cash equivalents at end of period ......................   $         1,437    $         9,391    $        41,818
                                                                    ===============    ===============    ===============
SUPPLEMENTAL INFORMATION:
        Cash paid during the period for interest ................   $            --    $         1,804    $         1,289
        Cash paid during the period for income taxes ............                --                390              2,361
</Table>


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


                                      F-7
<PAGE>


                             3DFX INTERACTIVE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 -- 3DFX AND ITS SIGNIFICANT ACCOUNTING POLICIES:

3dfx

3dfx Interactive, Inc. ("3dfx" or "the Company") was incorporated in California
on August 24, 1994. 3dfx developed high performance, cost-effective graphics
chips, graphics boards, software and related technology that enable an
interactive and realistic 3D experience across multiple hardware platforms. 3dfx
has subsidiaries in the United States, Mexico, and other key markets in the
world. The consolidated financial statements include the financial statements of
3dfx and its wholly owned subsidiaries. All significant intercompany
transactions and accounts have been eliminated.

As described below, on March 27, 2001, 3dfx's shareholders approved proposals to
liquidate, wind-up and dissolve 3dfx pursuant to a plan of dissolution. 3dfx is
proceeding to wind-up its affairs and dissolve. Accordingly, all activities of
3dfx as of and since March 27, 2001 are presented under the liquidation basis of
accounting. Under the liquidation basis of accounting, assets are stated at
their estimated net realizable values and liabilities are stated at their
anticipated settlement amount, if reasonably estimable. See "Activities While in
Liquidation" below. Additionally, 3dfx's common stock has been delisted from the
NASDAQ National Market effective May 16, 2001.

Nvidia Asset Sale Terms

In the fall of 2000, 3dfx began experiencing financial difficulties due in part
to substantially reduced demand in the retail channel for its products. This
reduced demand is attributable to a number of factors, including, in part, its
failure to introduce products in a timely manner and from disappointing customer
response to its existing products, as well as reduced demand in the retail
channel in general and the add-in graphics segment in particular. In addition,
3dfx's high research and development costs and substantial debt burden, together
with the loss of several large customers due to 3dfx's May 1999 acquisition of
STB Systems, Inc. and its inability to refinance its debt on commercially
reasonable terms, aggravated its financial difficulties. After extensive
exploration and evaluation of various strategic alternatives, the 3dfx board of
directors concluded that the liquidation, winding up and dissolution of 3dfx
provided the best protection to 3dfx's creditors and was in the best interests
of its shareholders.

On December 15, 2000, 3dfx entered into an asset purchase agreement with Nvidia
Corporation ("Nvidia") and a subsidiary of Nvidia ("Nvidia Sub") under which
Nvidia Sub would acquire certain of 3dfx's assets, including its core graphics
processor assets. Under the terms of the asset purchase agreement, Nvidia agreed
to pay 3dfx $70.0 million in cash and 2,000,000 shares (on a post-split basis)
of registered Nvidia common stock, subject to the satisfaction of certain
conditions specified in the asset purchase agreement as described below. Upon
signing the asset purchase agreement, Nvidia loaned to 3dfx $15.0 million in
cash for working capital.

The asset sale to Nvidia Sub was approved by 3dfx shareholders on March 27,
2001, and on April 18, 2001 substantially all of 3dfx's assets were sold to
Nvidia Sub. Upon closing, 3dfx received $55.0 million in cash, which amount was
net of repayment of the $15.0 million cash loan 3dfx received upon signing the
asset purchase agreement. In addition, under the terms of the asset purchase
agreement, 3dfx and Nvidia Sub caused the pending patent litigation between the
parties to be dismissed with prejudice. Under the terms of the asset purchase
agreement, 3dfx may receive part or all of a one-time post-closing cash payment
of up to $25.0 million upon its request if it is not in breach of the asset
purchase agreement, it has expended all or substantially all of the $70.0
million cash consideration in payment of its liabilities and determines in good
faith that (i) the remaining portion of the cash consideration previously
received by it is not sufficient to pay its remaining liabilities, and (ii) such
remaining liabilities could and would be satisfied if 3dfx received the
post-closing cash payment and applied it to the payment of such liabilities, and
if Nvidia Sub does not determine in good faith that the requested amount would
not permit 3dfx to pay in full its remaining liabilities. In the event that 3dfx
were to receive the post-closing cash payment, the 2,000,000 shares of Nvidia
common stock comprising the remaining consideration otherwise payable to 3dfx
under the asset purchase agreement will be reduced by the number of shares equal
to the quotient determined by dividing the amount of the post-closing cash
payment by $25. At this time, the Company does not currently believe that it
will satisfy all of the conditions to receipt of the post-closing cash payment
from Nvidia Sub, therefore management is pursuing other arrangements (See
discussion in Note 13).

The 2,000,000 shares of Nvidia common stock will only become deliverable to 3dfx
upon satisfaction of certain conditions specified in the asset purchase
agreement, including the completion of the winding up of the business of 3dfx
pursuant to 3dfx's plan of dissolution, and 3dfx's certification that (i) all
liabilities of 3dfx and its subsidiaries have been paid in full or otherwise
provided for and (ii) 3dfx has or will be validly dissolved. In the event the
remaining consideration from Nvidia is not paid, 3dfx will have to explore other
options, including filing for bankruptcy. As a result of the contingencies
described above, the contingent receivable and related tax expense on the gain
have not been recorded in the accompanying consolidated statement of net
liabilities in liquidation as of January 31, 2002. The ultimate total of the
value of Nvidia stock received by 3dfx, if any, is dependent on the number and
market value of shares received given the conditions described above.




                                      F-8
<PAGE>


                             3DFX INTERACTIVE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


Liquidation, Winding Up and Dissolution

On December 15, 2000, the board of directors of 3dfx also approved a plan of
dissolution and on March 27, 2001 this plan of dissolution was approved by
3dfx's shareholders. On March 30, 2001, 3dfx filed a certificate of election to
liquidate, wind up and dissolve with the California Secretary of State's office.
3dfx is proceeding to wind up its affairs and is no longer operating or
generating revenues in the normal course of business. Accordingly, all of the
activities of 3dfx have been presented on a liquidation basis of accounting.

During the fiscal year ended January 31, 2001, 3dfx recorded a charge of $7.9
million for the write-down of inventory and a charge of $5.5 million for the
write-down of property and equipment. 3dfx also recorded a charge of $117.1
million for the impairment of goodwill and other intangibles during the fiscal
year ended January 31, 2001. In accordance with 3dfx's accounting policy, 3dfx
assessed impairment of its long-lived assets and determined that the carrying
amount of goodwill and other intangibles would not be recoverable due to the
deteriorating condition of its operations. The impairment loss was measured as
the amount by which the carrying amount of the assets exceeded the estimated
fair value of the assets, as determined using the present value of expected
future cash flows.

At this time, 3dfx cannot determine if there will be any assets remaining after
paying for, or providing for the payment of, 3dfx's liquidation expenses and all
of its and its subsidiaries' debts and liabilities. 3dfx believes that it will
shortly be in a position to voluntarily petition a court to take jurisdiction
over the final steps of its winding up. In connection with this judicial
process, 3dfx expects that it will be able to finally determine the total amount
of its liabilities, including the maximum amount of its undeterminable
liabilities, and satisfy the conditions to its receipt of the shares of Nvidia
stock. (See Note 13). However, there can be no assurance as to the total amount
of 3dfx's liabilities or whether it will be able to satisfy the conditions to
receiving the shares of Nvidia stock. If any of these or other matters cannot be
satisfactorily resolved, 3dfx will have to explore other options, including
filing for bankruptcy.

3dfx expects to continue to incur certain administrative and other costs
associated with winding up its affairs. The amount of unknown or contingent
liabilities cannot be quantified and could decrease or eliminate any remaining
assets available for distribution to 3dfx's common shareholders. Further, if
3dfx or its subsidiaries are subject to any contingent liabilities, this could
require that it establish reserves that could delay any distribution to 3dfx
common shareholders. Because of the uncertainties as to the settlement amount of
3dfx's and its subsidiaries' debts and liabilities (including tax liabilities),
as well as the volatility in the market price of Nvidia's stock, 3dfx cannot at
this time determine the timing or amount of distributions that may be made to
its common shareholders, if any. Only if there are assets remaining after the
payment of all debts and liabilities, and the distribution of the Liquidation
Preference, will 3dfx common shareholders receive a distribution of those
assets.

3dfx has substantially reduced its costs in order to conserve its resources.
These cost-cutting measures included the termination of virtually all employees,
reduction in leased space and other efforts to reduce non-essential expenses.
During the fiscal year 2002, 3dfx also continued to liquidate its remaining
assets, negotiate with third parties for resolutions of various litigation
matters that would be agreeable to all parties involved, and to reach
settlements with its vendors in reduction of its accounts payable, as well as to
reach mutually satisfactory settlements with the lessors of its facilities and
equipment leases. 3dfx provided manufacturing services to third parties to help
cover the overhead associated with its Juarez, Mexico manufacturing facility
pending the settlement of the lease on that facility. The sales and costs of
sales related to these operations are recorded as other income and expense on
the condensed consolidated statement of discontinued operations for the period
from February 1, 2001 to March 26, 2001 and as selling, general, and
administrative expense from March 27, 2001 to January 31, 2002.

Activities While in Liquidation

During the year ended January 31, 2002, 3dfx disposed of most of its inventory
and other assets held for sale through the asset purchase agreement with Nvidia
Sub as well as through sales to other parties. Any remaining inventory and other
assets held for sale have been written down to their net realizable value, most
of which equals zero. As 3dfx is in liquidation, these remaining assets may be
sold. 3dfx believes that any gains on such sales that may be realized will be
immaterial.

During the year ended January 31, 2002, 3dfx terminated substantially all but
one of its remaining employees and continued to liquidate its remaining assets,
negotiate with third parties for resolutions of various litigation matters that
would be agreeable to all parties involved, and to reach settlements with its
vendors in reduction of its accounts payable, as well as to reach mutually
satisfactory settlements with the lessors to its facilities and various
equipment leases. At January 31, 2002, 3dfx was still in negotiations to settle
certain remaining leases under which it has contractual obligations. However, at
January 31, 2002, 3dfx had total future lease obligations of $6.6 million and
lease termination costs of $4.0 million in the current year, all of which has
been





                                      F-9
<PAGE>


                             3DFX INTERACTIVE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


accrued. After establishing a reserve for the winding up of its affairs, 3dfx
used the remaining proceeds received from the asset sale to Nvidia Sub to pay a
significant portion of its and its subsidiaries' known and determinable debts
and liabilities.

Changes in net liabilities for the period from March 27, 2001 to January 31,
2002 were a result of selling, general and administrative expenses of $21.4
million, which is comprised of operating expenses, accrued expenses and lease
termination expense, partially offset by the forgiveness of liabilities, a
decrease in the deferred tax asset of $35.0 million and the net gain on sale of
assets to Nvidia Sub of $1.6 million, which was comprised of the following: (a)
a gain on the sale of inventory and other assets held for sale to Nvidia Sub of
$14.3 million, which was comprised of the purchase by Nvidia Sub of certain
inventory, fixed assets and intangible assets with net book values of $55.5
million offset by proceeds of $70.0 million and (b) losses of $12.7 million on
sale and impairment of inventory and other assets held for sale.

At January 31, 2002 3dfx had net liabilities in liquidation of $34.4 million. In
light of the amount of 3dfx's liabilities, as well as contingencies relating to
unknown or contingent liabilities and Nvidia's delivery of the shares of Nvidia
common stock provided for in the Nvidia asset purchase agreement, there can be
no assurance that 3dfx will have any assets available for distribution to its
common shareholders.

Use of estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

Revenue recognition

Revenue from product sales is generally recognized upon product shipment.
Revenue resulting from development contracts has been recognized under the
percentage of completion method based upon costs incurred relative to total
contract costs or when the related contractual obligations have been fulfilled
and fees were billable. Costs associated with development contracts are included
in research and development.

Cash equivalents and investments

3dfx considers all highly liquid debt instruments purchased with a maturity of
three months or less to be cash equivalents. At January 31, 2002 and 2001,
approximately $.4 million and $5.0 million respectively, of money market funds
and commercial paper instruments, the fair value of which approximate cost, are
included in cash and cash equivalents.

Investments in debt and equity securities which have maturities greater than
three months from the date of acquisition are classified as "available for
sale". Investments classified as "available for sale" are reported at fair value
with unrealized gains and losses, net of related tax, if any, reported as a
separate component of shareholders' equity. The unrealized loss of $1.7 million
at January 31, 2001 related to an investment in common stock of a public
company. This investment, which was $1.2 million at January 31, 2001, is
included in other current assets. This investment was sold during the year ended
January 31, 2002 for a total realized loss of $.3 million, included in the net
gain on sale of assets held for sale on the statement of changes in net
liabilities.

Concentration of credit risk

Financial instruments that potentially subject 3dfx to significant
concentrations of credit risk consist principally of cash equivalents and
accounts receivable.

3dfx invests primarily in money market accounts, commercial paper instruments
and term notes. Cash equivalents and short-term investments are maintained with
high quality institutions and their composition and maturities are regularly
monitored by management.

3dfx performs ongoing credit evaluations of its customers' financial condition
and maintains an allowance for uncollectible accounts receivable based upon the
expected collectibility of all accounts receivable. There were no accounts
receivable at January 31, 2002, and there were no revenues for the period from
February 1, 2001, to March 26, 2002.

The following table summarizes the revenues from customers in excess of 10% of
the total revenues:

<Table>
<Caption>
                                   FISCAL YEAR ENDED
                            ----------------------------
                             JANUARY 31,     JANUARY 31,
                                2001            2000
                            ------------    ------------

<S>                         <C>             <C>
A .......................             16%             13%
B .......................             10%             --
</Table>




                                      F-10
<PAGE>


                             3DFX INTERACTIVE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


Inventory

Through March 26, 2001, inventory was stated at the lower of cost or market,
cost being determined under the first-in, first-out method. Beginning March 27,
2001, inventory is stated at its estimated net realizable value. As inventory
was sold or otherwise disposed of, the carrying value was removed from the
accounts and the resulting gain or loss is included in the selling, general and
administrative expenses in the statement of changes in net liabilities in
liquidation for the period.

Other assets held for sale

Other assets held for sale are stated at the lower of cost or estimated net
realizable value.

Property and equipment

Through March 26, 2001, property and equipment was stated at cost less
accumulated depreciation. Depreciation was computed using the straight-line
method over the estimated useful lives of the assets, generally three years or
less. Beginning March 27, 2001, property and equipment are stated at their
estimated net realizable value. When property and equipment are retired or
otherwise disposed of, the carrying value is removed from the accounts and the
resulting gain or loss is included in the changes in net assets in liquidation
for the period.

Long-lived assets held and used by 3dfx are reviewed for impairment whenever
events or changes in circumstances indicate that their net book value may not be
recoverable. An impairment loss is recognized if the sum of the expected future
cash flows (undiscounted and before interest) from the use of the asset is less
than the net book value of the asset. The amount of the impairment loss will
generally be measured as the difference between net book values of the assets
and their estimated fair values.

During the fiscal year ended January 31, 2001, the Company was obligated under a
five-year agreement to lease a facility in Richardson, Texas, which was
previously the corporate headquarters of STB Systems. Construction of the
210,000 square foot facility was completed in December 1998. The total cost of
the land and building was approximately $22.8 million. The Company previously
entered into an interest rate swap agreement that fixed the interest rate on a
majority of the lease obligation at 7.55%. During the fourth quarter of fiscal
2001, the swap agreement was canceled in exchange for a cash payment of
approximately $300,000. During January 2001, the Company exercised its option to
cause the building to be sold and entered into an operating lease for
approximately 50% of the space for the next six months. The proceeds of the sale
were used to retire the underlying debt. A net loss of $2.1 million was recorded
on the sale of the building, which is reflected in other income (expense) for
fiscal 2001.

The Company held an option to purchase real estate adjoining its Texas
headquarters. The option entitled the Company to purchase the real estate for
$3.9 million, but the option would increase to the current market value of the
real estate if the option was not exercised before December 31, 2000. The
Company exercised the option in December 2000, and has sold the real estate to a
third party for $6.7 million, resulting in a gain of $2.8 million, which is
reflected in other income (expense) for fiscal 2001.

Research and software development costs

Through March 26, 2001, research and development costs were charged to
operations as incurred. Software development and prototype costs incurred prior
to the establishment of technological feasibility were included in research and
development and were expensed as incurred. Software development costs incurred
subsequent to the establishment of technological feasibility through the period
of general market availability of the product were capitalized, if material. To
date, all software development costs incurred subsequent to the establishment of
technological feasibility have been expensed as incurred due to their
immateriality.

Stock-based compensation

The Company accounts for its stock option plans and employee stock purchase plan
in accordance with provisions of the Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25") and complies with the
disclosure provisions of Statement of Financial Accounting Standards ("SFAS")
No. 123, "Accounting for Stock-Based Compensation". If there is any compensation
cost under the rules of APB 25, the expense is amortized using a straight-line
method over the vesting period. In accordance with SFAS No. 123, the Company
provides additional pro forma disclosures in Note 8.





                                      F-11
<PAGE>


                             3DFX INTERACTIVE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)



Comprehensive income (loss) from discontinued operations

For the period from February 1, 2001 to March 26, 2001, comprehensive loss from
discontinued operations, including net loss from discontinued operations and an
unrealized loss on an available for sale investment was $1.9 million. For the
fiscal year ended January 31, 2001, comprehensive loss from discontinued
operations, including net loss from discontinued operations and an unrealized
loss on an available for sale investment was $344.1 million.

Earnings (loss) per share from discontinued operations

Basic earnings (loss) per share is computed using the weighted average number of
common shares outstanding during the periods. Diluted earnings (loss) per share
is computed using the weighted average number of common and potentially dilutive
common shares outstanding during the periods, except those that are
antidilutive.

During the fiscal years ended January 31, 2001 and 2000, options to purchase
approximately 5,664,000 and 6,484,389 shares and warrants to purchase
approximately 36,960 and 36,960 shares, respectively, were outstanding but are
not included in the computation because they were antidilutive. During the
period from February 1, 2001 to March 26, 2001, options to purchase
approximately 3,276,380 shares of common stock were outstanding but not included
in the calculation because they were anti-dilutive.

Recent accounting pronouncements

In July 2001, the FASB issued SFAS No.142, "Goodwill and Other Intangible
Assets", which is effective for fiscal years beginning after December 15, 2001.
SFAS No. 142 requires, among other things, the discontinuance of goodwill
amortization. In addition, the standard includes provisions upon adoption for
the reclassification of certain existing recognized intangibles as goodwill,
reassessment of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported goodwill and
the testing for impairment of existing goodwill and other intangibles. The
Company believes that the adoption of SFAS No. 142 will not have a significant
impact on its financial statements.

In August 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 143, "Accounting for Asset Retirement Obligations," which is effective for
fiscal years beginning after June 15, 2002. This Statement addresses financial
accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. SFAS No.
143 requires, among other things, that the retirement obligations be recognized
when they are incurred and displayed as liabilities on the balance sheet. In
addition, the asset's retirement costs are to be capitalized as part of the
asset's carrying amount and subsequently allocated to expense over the asset's
useful life. The Company believes that the adoption of SFAS No. 143 will not
have a significant impact on its consolidated financial statements.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," which is effective for fiscal years beginning
after December 15, 2001 and interim periods within those fiscal years. The
Statement develops one accounting model for long-lived assets that are to be
disposed of by sale, as well as addressing the principal implementation issues.
The Company believes that the adoption of SFAS No. 144 will not have a
significant impact on its consolidated financial statements.


NOTE 2 -- ACQUISITION OF STB SYSTEMS, INC.:

In May 1999, 3dfx completed a merger with STB Systems, Inc. ("STB"). As a result
of the merger, STB became a wholly-owned subsidiary of 3dfx. The STB merger was
accounted for under the purchase method of accounting. The purchase price of
$139.3 million included $116.1 million of stock issued at fair value (fair value
being determined as the average price of 3dfx stock for a period of a few days
before and after the announcement of the merger), $9.9 million in STB stock
option costs (being determined under the Black-Scholes formula) and $13.3
million in estimated expenses of the transaction. The purchase price was
allocated as follows: $85.6 million to the estimated fair value of STB net
tangible assets purchased (as of May 13, 1999), ($7.6) million to establish
deferred tax liabilities associated with certain intangibles acquired, $4.3
million to purchased in-process research and development ("IPR&D"), $11.4
million to purchased existing technology, $4.4 million to trademarks, $2.3
million to workforce-in-place, $1.0 million to executive covenants and $37.9
million to goodwill. The allocation of the purchase price to intangibles was
based upon an independent, third party appraisal and management's estimates.

The value assigned to purchased IPR&D was determined by identifying research
projects in areas for which technological feasibility had not been established.
These include projects for Voodoo3 as well as other specialized technologies
totaling $4.3 million. The value was determined by estimating the expected cash
flows from the projects once commercially viable, discounting the net cash flows
back to their present value and then applying a percentage of completion to the
calculated value.




                                      F-12
<PAGE>


                             3DFX INTERACTIVE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)



As described in Note 1, the Company recorded a charge of $117.1 million for the
impairment of goodwill and other intangibles. A portion of the impaired goodwill
and other intangibles originally arose as a result of the STB acquisition.

Pro forma results of discontinued operations for the combined company as if the
transaction had been consummated at the beginning of the periods presented are
as follows (in thousands):

<Table>
<Caption>
                                                    FISCAL YEAR ENDED
                                                        JANUARY 31,
                                                           2000
                                                    -----------------
                                                       (unaudited)

<S>                                                <C>
Revenues .........................................   $       441,312
Net income (loss) from discontinued operations ...   $       (81,061)
Basic net income (loss) per share from
   discontinued operations .......................   $         (3.39)
Diluted net income (loss) per share
   from discontinued operations ..................   $         (3.39)
</Table>


On a combined basis, there were no material transactions between the Company and
STB during the periods presented except for sales of product by the Company to
STB which have been eliminated.

NOTE 3 -- ACQUISITION OF GIGAPIXEL CORPORATION:

In July 2000, 3dfx completed a merger with GigaPixel Corporation, a Delaware
corporation ("GigaPixel"). As a result of the merger, GigaPixel became a
wholly-owned subsidiary of 3dfx. The merger was accounted for under the purchase
method of accounting. The purchase price of GigaPixel was approximately $181.3
million and included $173.9 million of stock issued at fair value (fair value
being determined as the average price of 3dfx stock for a period of a few days
before and after the announcement of the merger), $2.7 million in vested
GigaPixel stock option costs (being determined under the Black Scholes formula)
and $4.7 million in estimated expenses of the transaction. The purchase price
was allocated as follows: $3.6 million to the estimated fair value of GigaPixel
net tangible assets purchased (as of July 21, 2000), $66.3 million to purchased
in-process research and development, $10.8 million to purchased existing
technology, $2.4 million to workforce-in-place, ($5.3) million to deferred tax
liabilities associated with certain intangibles acquired, and $103.5 million to
goodwill. The allocation of the purchase price to intangibles was based upon an
independent, third party appraisal and management's estimates.

The intangible assets and goodwill acquired had estimated useful lives and
estimated first year amortization, as follows:

<Table>
<Caption>
                                                              ESTIMATED             ANNUAL
                                          AMOUNT             USEFUL LIFE         AMORTIZATION
                                       ------------          -----------         ------------

<S>                                    <C>                   <C>                <C>
Purchased existing technology .....    $ 10,830,000            5 years            $ 2,166,000
Workforce-in-place ................       2,400,000            5 years                480,000
Goodwill ..........................     103,510,900            5 years             20,702,180
</Table>


The value assigned to purchased IPR&D was determined by identifying research
projects in areas for which technological feasibility had not been established.
The value was determined by estimating the expected cash flows from the projects
once commercially viable, discounting the net cash flows back to their present
value and then applying a percentage of completion to the calculated value as
defined below.

As described in Note 1, the Company recorded a charge of $117.1 million for the
impairment of goodwill and other intangibles. A portion of the impaired goodwill
and other intangibles originally arose as a result of the GigPixel acquisition.
In addition, the deferred tax liability related to these intangibles acquired
was also written off.

Net Cash Flows. The net cash flows from the identified projects were based on
management estimates of revenues, research and development costs, selling,
general and administrative costs, royalty costs and income taxes from those
projects. These estimates were based on the assumptions mentioned below. The
research and development costs included in the model reflect costs to sustain
projects, but exclude costs to bring in-process projects to technological
feasibility.

Revenues. The estimated revenues were based on management projections of each
in-process project and these business projections were compared and found to be
in line with industry analysts' forecasts of growth in substantially all of the
relevant





                                      F-13
<PAGE>



                             3DFX INTERACTIVE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


markets. Estimated total revenues from the IPR&D product areas were expected to
peak in the year ending January 31, 2005 and decline in 2006 as other new
products were expected to become available. These projections were based on our
estimates of market size and growth, expected trends in technology and the
nature and expected timing of new product introductions by GigaPixel and their
competitors.

Gross Margins. Projected gross margins associated with the identified projects
were in line with comparable industry margins. Research and development, as well
as sales, general and administrative costs were consistent with the industry
averages of companies of comparable size and age.

Discount Rate. Discounting the net cash flows back to their present value was
based on the industry WACC. The industry WACC was approximately 28%. The
discount rate used in discounting the net cash flows from IPR&D was 30%, a 200
basis point increase from the industry WACC. This discount rate is higher than
the industry WACC due to inherent uncertainties surrounding the successful
development of the IPR&D, market acceptance of the technology, the useful life
of such technology and the uncertainty of technological advances which could
potentially impact the estimates described above.

Percentage of Completion. The percentage of completion for GigaPixel technology
was determined using costs incurred to date on each project as compared to the
remaining research and development to be completed to bring each project to
technological feasibility. The Company anticipates beginning to ship product
incorporating this technology in the calendar year 2001. The percentage of
completion related to GigaPixel technology was 72.

Pro forma results of discontinued operations for the combined company as if the
transaction had been consummated at the beginning of the period presented are as
follows (in thousands):

<Table>
<Caption>
                                                                             FISCAL YEAR ENDED
                                                                             JANUARY 31, 2001
                                                                             -----------------
                                                                                 (UNAUDITED)

<S>                                                                          <C>
Revenues .............................................................            $ 239,011
Net loss from discontinued operations ................................             (281,649)
Basic and diluted net loss per share from discontinued operations ....                (7.16)
</Table>


On a combined basis, there were no material transactions between the Company and
GigaPixel during the periods presented.

In connection with the acquisition of GigaPixel, the Company recorded deferred
compensation for the unvested portion of GigaPixel options assumed by 3dfx in
the amount of approximately $6.9 million. This deferred compensation was to be
expensed over the remaining life of unvested the GigaPixel options assumed by
3dfx. For the fiscal year ended January 31, 2001, the Company recorded
amortization of deferred compensation related to the GigaPixel acquisition of
$1.5 million which has been included in research and development expense. On
December 15, 2000, all of these employees were terminated and their unvested
options were canceled. Accordingly, the remaining unamortized deferred
compensation, all of which related to the unvested options, was reversed.

NOTE 4 -- BALANCE SHEET COMPONENTS (IN THOUSANDS):

<Table>
<Caption>
                              JANUARY 31,
                                 2001
                             ------------

<S>                          <C>
Inventory, net:
   Raw material ..........   $      1,972
   Work-in-progress ......             70
   Finished goods ........         20,316
                             ------------
                             $     22,358
                             ============
</Table>


<Table>
<Caption>
                                            JANUARY 31,
                                               2001
                                           ------------

<S>                                        <C>
Other assets held for sale:
    Computer equipment .................   $      8,268
    Purchased computer software ........          7,653
    Furniture and equipment ............          4,428
    Goodwill and other intangibles .....         20,765
    Other assets .......................          4,131
                                           ------------
                                           $     45,245
                                           ============
</Table>



                                      F-14
<PAGE>

                             3DFX INTERACTIVE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)



As described in Note 1, during the fiscal year ended January 31, 2001, the
Company recorded a charge of $117.1 million for the impairment of goodwill and
other intangibles, as well as a charge of $5.5 million for the write-down of
computer equipment, purchased computer software, and furniture and equipment.

Estimated Costs During Period of Liquidation:

<Table>
<Caption>
                                                JANUARY 31,
                                                   2002
                                               ------------
<S>                                            <C>
Accrued salaries, wages and benefits .......   $        680
Accrued leases payable .....................         10,563
Other accrued liabilities ..................          1,021
                                               ------------
                                               $     12,264
                                               ============
</Table>

Accrued Liabilities:

<Table>
<Caption>
                                                January 31,
                                                   2001
                                               ------------

<S>                                            <C>
Income taxes payable .......................   $         96
Accrued salaries, wages and benefits .......          3,524
Deferred tax liability .....................          4,735
Accrued leases payable .....................             --
Other accrued liabilities ..................          3,287
                                               ------------
  Accrued Liabilities ......................   $     11,642
                                               ============
</Table>


NOTE 5 -- RESTRUCTURING CHARGES:

During the fiscal year ended January 31, 2000, 3dfx incurred restructuring
expenses totaling approximately $4,382,000. Approximately $2,552,000 of this
amount relates to downsizing the expense levels of 3dfx given 3dfx's fiscal 2000
financial losses, and $1,830,000 related to a one-time reduction in workforce
related to the merger with STB.


NOTE 6 -- DEBT:

As discussed in Note 1, upon signing the Asset Purchase Agreement on December
15, 2000, Nvidia loaned to 3dfx $15 million for working capital under a term
loan with interest payable at a rate of 6.1% per annum. At January 31, 2001, the
Company had accrued interest payable of approximately $114,000. The full amount
of this term loan was secured by the collateral identified to be acquired under
the Asset Purchase Agreement. Upon closing of the asset sale to Nvidia on April
18, 2001, 3dfx received $55 million in cash, which amount was net of repayment
of the $15 million loan.

During the fiscal year ended January 31, 2001, the Company recorded liabilities
of $5.9 million reflecting future payments due within twelve months under
software license agreements. At January 31, 2001, the full amount of this
liability remained outstanding and is presented as other current liabilities. At
January 31, 2002, none of this liability remained.

3dfx had a line of credit agreement with a bank, which provided for maximum
borrowings in an amount up to the lesser of 80% of eligible accounts receivable
or $25.0 million. Borrowings under the line were secured by $25.0 million of
cash and short-term investments and all of 3dfx's owned assets and bore interest
at Libor plus 100 basis points. The agreement required that 3dfx maintain
certain levels of tangible net worth and generally prohibited 3dfx from paying
cash dividends. In November 2000, the $25.0 million cash and short-term
investments previously pledged to secure the line of credit was used to payoff
the entire outstanding balance on the line of credit. The line of credit expired
on December 19, 2000. There were no remaining balances outstanding at January
31, 2002 and 2001.





                                      F-15
<PAGE>

                             3DFX INTERACTIVE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


3dfx had a $3.0 million term loan which was payable in 60 monthly installments
of principal and interest beginning on November 1, 1997. The term loan bore
interest at Libor plus 250 basis points. At January 31, 2000, $1,944,000, was
outstanding under the term loan. The term loan was repaid during fiscal 2001 and
at January 31, 2002 and 2001 there was no balance outstanding.

3dfx had a lease line of credit with a bank, which provided for the purchase of
up to $5 million of property and equipment. Borrowings under this line were
secured by all of 3dfx's owned assets and bore interest at the bank's prime rate
plus 0.75% per annum. The agreement required that 3dfx maintain certain
financial ratios and levels of tangible net worth, profitability and liquidity.
The equipment line of credit expired in December 2001. At January 31, 2002 and
2001, there were no borrowings outstanding under this equipment line of credit.

NOTE 7 -- SHAREHOLDERS' EQUITY:

Common stock

3dfx has issued 1,646,250 shares of its common stock to founders and investors.
The shares either vested immediately or vested on various dates through 1999.
3dfx can buy back unvested shares at the original price paid by the purchasers
in the event the purchasers' employment with 3dfx is terminated for any reason.
There were no such repurchases in fiscal 2002, 2001 or 2000.

For the period from February 1, 2001 to March 26, 2001 and during the year ended
January 31, 2001, no employees exercised any options to purchase shares of
common stock which are subject to a right of repurchase by 3dfx. However, during
the fiscal year ended January 31, 2000 certain employees exercised options to
purchase 22,041 shares of common stock which are subject to a right of
repurchase by 3dfx at the original share issuance price. The repurchase right
lapses over a period generally ranging from two to four years. For the period
from February 1, 2001 to March 26, 2001 there were no shares of common stock
repurchased. During the fiscal years ended January 31, 2001 and 2000, 1,224 and
12,501 shares of common stock, respectively, were repurchased. At January 31,
2002 and 2001, no shares of common stock were subject to repurchase. At January
31, 2000, approximately 8,917 shares were subject to repurchase.

On June 16, 1999, 3dfx announced a stock repurchase program, whereby 3dfx was
authorized by its board of directors to repurchase shares of its common stock in
the open market. In accordance with the program, 3dfx subsequently repurchased
505,000 shares of its common stock for approximately $6.8 million.

Listing and trading of the Company's common stock

        On May 16, 2001, the Company received a Nasdaq Staff Determination
letter indicating that it had failed to comply with the minimum bid price
requirement for continued listing on the Nasdaq National Market (Nasdaq
Marketplace Rule 4450 (a)(5)). On May 17, 2001, the common stock commenced
trading on the NASD's Over-the-Counter ("OTC") Bulletin Board.

Convertible preferred stock

For the period from February 1, 2001 to March 26, 2001 and for the fiscal years
ended January 31, 2001 and 2000, there were 5,000,000 shares of preferred stock
authorized, with none issued or outstanding.

Warrants

In January 1996, 3dfx entered into a line of credit. To secure the line, 3dfx
issued to the lessor a warrant to purchase 19,886 shares of Series B Convertible
Preferred Stock at an exercise price of $4.40. The warrant expires on January 1,
2003. The warrant was deemed by management to have a nominal value at the date
of grant. Upon completion of 3dfx' IPO, this warrant was exchanged for a warrant
to purchase common stock. A portion of this warrant has been executed and
exchanged for 12,926 shares of 3dfx common stock. 3dfx has reserved 6,960 shares
of common stock for the exercise of this warrant.

In 1996, 3dfx issued to a university a warrant to purchase 5,000 shares of
Series C Convertible Preferred Stock at an exercise price of $7.50 per share.
This warrant was deemed to have a value of approximately $40,000 at the date of
grant and the related cost was recognized as other expense and research and
development expense, respectively, during 1996. Upon completion of 3dfx's IPO,
the warrant for 5,000 shares was exchanged for a warrant to purchase common
stock. The warrant for 5,000 shares expired on December 31, 2001.

On December 3, 1997, 3dfx issued a warrant to purchase 25,000 shares of common
stock at an exercise price of $13.875 per share in conjunction with developing a
relationship with another company. The warrant is fully exercisable and expires
December 3, 2002. 3dfx valued the warrant under the Black-Scholes formula at
approximately $200,000. The warrant value was amortized over a one-year period
as a cost of revenue. 3dfx has reserved 25,000 shares of common stock for the
exercise of this warrant.




                                      F-16
<PAGE>


                             3DFX INTERACTIVE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)




As of January 31, 2002, 3dfx had reserved 31,960 shares of common stock for the
exercise of warrants.

NOTE 8 -- STOCK OPTION PLANS:

The 1995 Plan

In May 1995, 3dfx adopted a Stock Plan (the "1995 Plan") which provides for
granting of incentive and nonqualified stock options to employees, consultants
and directors of 3dfx. As of January 31, 2002, 8,875,000 shares of common stock
have been reserved for issuance under the 1995 Plan.

Options granted under the 1995 Plan are generally for periods not to exceed ten
years, and are granted at prices not less than 100% and 85%, for incentive and
nonqualified stock options, respectively, of the fair market value on the date
of grant. Incentive stock options granted to shareholders who own greater than
10% of the outstanding stock are for periods not to exceed five years, and must
be issued at prices not less than 110% of the fair market value of the stock on
the date of grant. Options granted under the 1995 Plan generally vest 25% on the
first anniversary of the grant date and 1/48th of the option shares each month
thereafter, with full vesting occurring on the fourth anniversary of the grant
date.

The 1997 Plan

In October 1997, 3dfx adopted the 1997 Supplementary Stock Plan (the "1997
Plan"), which provides for granting of nonqualified stock options to employees
(excluding officers, consultants and directors) of 3dfx. Under the 1997 Plan,
1,200,000 shares of common stock have been reserved for issuance at January 31,
2002.

Options granted under the 1997 Plan are generally for periods not to exceed ten
years and are granted at the fair market value of the stock on the date of
grant. Options granted under the 1997 Plan generally vest 25% on the first
anniversary of the grant date and 1/48th of the option shares each month
thereafter, with full vesting occurring on the fourth anniversary of the grant
date.

The 1999 Plan

In July 1999, 3dfx adopted the 1999 Supplementary Stock Plan (the "1999 Plan"),
which provides for granting of nonqualified stock options to employees
(excluding officers, consultants and directors) of 3dfx and reserved 1,000,000
shares of common stock for issuance under the 1999 Plan. At January 31, 2002,
1,000,000 shares of Common Stock have been reserved for issuance under the 1999
Plan.

Options granted under the 1999 Plan are generally for periods not to exceed ten
years and are granted at the fair market value of the stock on the date of
grant. Options granted under the 1999 Plan generally vest 25% on the first
anniversary of the grant date and 1/48th of the option shares each month
thereafter, with full vesting occurring on the fourth anniversary of the grant
date.

Directors' Option Plan

In March 1997, 3dfx adopted a 1997 Directors' Option Plan. Under this plan
options to purchase 150,000 shares of common stock may be granted. The plan
provides that options may be granted at a price not less than fair value of a
share at the date of grant. The Director's Option Plan provides for an initial
option grant to purchase 12,500 shares of common stock to each new non-employee
director of 3dfx at the date he or she becomes a director. Each non-employee
director and Chairman of the Board of Directors will annually be granted an
option to purchase 5,000 and 10,000 shares of common stock, respectively,
beginning with the 1998 annual meeting of shareholders. If a director serves on
either the Audit Committee or Compensation Committee, on an annual basis he or
she will be granted an option to purchase 1,000 shares of common stock,
beginning with the 1997 annual meeting of shareholders. Options granted under
the Directors' Plan are generally for ten years and are granted at the fair
market value of the stock on the date of grant. The initial 12,500 option grant
vests at a rate of 1/48 per month following the date of grant. The annual option
grant of 5,000, 10,000 or 1,000 vests at a rate of 1/12 per month following the
date of grant.






                                      F-17
<PAGE>


                             3DFX INTERACTIVE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)



The following is a summary of activity under the 1995 Plan, the 1997 Plan, the
1999 Plan and the Directors' Option Plan during the periods ended January 31,
2000, January 31, 2001 and January 31, 2002:


<Table>
<Caption>
                                                            OPTIONS                        WEIGHTED
                                                          AVAILABLE FOR     OPTIONS         AVERAGE
                                                             GRANT        OUTSTANDING    EXERCISE PRICE
                                                          ------------    ------------   --------------

<S>                                                       <C>             <C>            <C>
Balance at January 31, 1999 ...........................      1,252,269       3,499,000    $       9.21
Additional shares authorized ..........................      3,000,000              --              --
     Options related to acquisition of STB ............       (566,913)        566,913    $      10.72
     Grants ...........................................     (4,800,897)      4,800,897    $      11.68
     Exercised ........................................             --        (692,088)   $       3.60
     Canceled .........................................      1,677,832      (1,690,333)   $      12.46
     Repurchased ......................................         12,501              --    $       0.32
                                                          ------------    ------------
Balance at January 31, 2000 ...........................        574,792       6,484,389    $      10.92
Additional shares authorized ..........................      3,350,000              --              --
     Options related to acquisition of GigaPixel ......       (815,355)        815,355    $       0.16
     Grants ...........................................     (7,529,819)      7,529,819    $       3.69
     Exercised ........................................             --        (188,940)   $       5.48
     Canceled .........................................      9,745,922      (9,745,922)   $       7.38
     Repurchased ......................................          1,224              --    $       0.44
                                                          ------------    ------------
Balance at January 31, 2001 ...........................      5,326,764       4,894,701    $       5.64
     Grants ...........................................       (800,000)        800,000    $       0.38
     Exercised ........................................             --         (11,624)   $       0.43
     Canceled .........................................      4,883,077      (4,883,077)   $       5.65
                                                          ------------    ------------
Balance at January 31, 2002 ...........................      9,409,841         800,000    $       0.38
                                                          ============    ============
</Table>

In June 2001, 3dfx granted to Richard A. Heddleson, 3dfx's Chief Financial
Officer, 800,000 stock options at an exercise price of $.38 per share, which
vest 100% the second business day preceding the record date for the initial
distribution of shares of Nvidia common stock to the Company's stockholders or
any contribution of the Company's assets to a liquidating trust.

At January 31, 2002, there were no common stock options vested and exercisable.
At January 31, 2001 and 2000, 4,807,044,and 1,129,810, respectively, of common
stock options were vested and exercisable. On December 15, 2000, substantially
all of 3dfx's United States and European employees were terminated or given
notice of termination and their unvested options were correspondingly canceled.
Upon termination, employees have 90 days to exercise vested options. Therefore,
at January 31, 2001, all vested options related to these terminated employees
remained outstanding. During fiscal 2002, subsequent the 90 days from
termination, all options related to terminated employees were cancelled.

In connection with the grant of stock options to employees from inception
(August 1994) through the effective date of 3dfx's IPO, 3dfx recorded aggregate
deferred compensation of approximately $1.9 million, representing the difference
between the deemed fair value of the common stock for accounting purposes and
the option exercise price at the date of grant. This amount was presented as a
reduction of shareholders' equity and was amortized ratably over the vesting
period of the applicable options. The amortization of the deferred compensation
for the fiscal year ended January 31, 2000 totaled $484,000 (of which $194,000
and $290,000 were recorded as a charge to research and development expenses and
selling, general and administrative expenses, respectively). The remaining
deferred compensation at January 31, 2000 of $172,000 was fully amortized during
the fiscal year ended January 31, 2001 ($69,000 was recorded as a charge to
research and development expenses and $103,000 was recorded as a charge to
selling, general and administrative expenses). There was no deferred
compensation for the period from February 1, 2001 to March 26, 2001.

On October 20, 2000, the Company undertook a stock option exchange program,
allowing employees the opportunity to surrender their existing stock options in
exchange for a new grant of 50% of the original options with a new exercise
price of $2.00 per share. The options were to become fully vested on June 30,
2001, and expire on June 30, 2002. This program was offered to certain active
employees whose options were granted on September 5, 2000, or earlier. On
October 20, 2000, options for 4.70 million shares were canceled and options for
2.35 million shares were granted under this program. As the market value of 3dfx
stock at the date of grant exceeded the exercise price for these options the
Company recorded deferred compensation of $5.3 million to be amortized over the
vesting period. In accordance with Financial Accounting Standards Board
Interpretation No. 44 ("FIN 44") "Accounting for Certain transaction Involving
Stock Compensation" issued in March 2000, the repricing required the Company to
account for the options as variable from the date of modification to the date
the award was exercised, forfeited, or expired unexercised. On December 15,
2000, substantially all of 3dfx's United States and European employees were
terminated or given notice of termination and their unvested options were
correspondingly canceled. Amortization of deferred compensation taken for the
options, all of which were unvested, totaling $0.9 million for the fiscal year
ended January 31, 2001, was reversed, as was the remaining deferred
compensation.





                                      F-18
<PAGE>



                             3DFX INTERACTIVE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)



Information relating to stock options outstanding under the 1995 Plan, the 1997
Plan, the 1999 Plan and the Directors' Plan at January 31, 2002 is as follows:

<Table>
<Caption>
                                  OPTIONS OUTSTANDING
                  ---------------------------------------------------
                                                         WEIGHTED              OPTIONS EXERCISABLE
                                                          AVERAGE       ---------------------------------
                                                         REMAINING         WEIGHTED         WEIGHTED
   RANGE OF           NUMBER          CONTRACTUAL         AVERAGE           NUMBER           AVERAGE
EXERCISE PRICES     OUTSTANDING          LIFE          EXERCISE PRICE     EXERCISABLE     EXERCISE PRICE
---------------   ---------------   ---------------   ---------------   ---------------   ---------------

<S>               <C>               <C>               <C>               <C>               <C>
$          0.38           800,000                .5   $          0.38                 0   $          0.38
---------------   ---------------   ---------------   ---------------   ---------------   ---------------
                          800,000                .5   $          0.38                 0   $          0.38
                  ===============   ===============   ===============   ===============   ===============
</Table>


Employee Stock Purchase Plan


In March 1997, 3dfx's board of directors approved an Employee Stock Purchase
Plan. Under this plan, employees of 3dfx can purchase common stock through
payroll deductions. A total of 1,600,000 shares have been reserved for issuance
under this plan. In July 2000, 3dfx's shareholders approved an increase of
850,000 shares to be reserved for issuance under the Employee Stock Purchase
Plan and an annual increase to the number of shares reserved to took effect on
the date of the Annual Meeting of Shareholders commencing with the 2001 Annual
Meeting of Shareholders and ending with the 2006 Annual Meeting of Shareholders,
equal to the lesser of (i) 600,000 shares or (ii) 1.5% of the outstanding shares
of the Company on such date. As of January 31, 2001, 998,553 shares have been
purchased under the Employee Stock Purchase Plan. During the fiscal year ended
January 31, 2002, there were no shares purchased under the Employee Stock
Purchase Plan. As of January 31, 2002, there were no employees participating in
this plan.

Certain Pro Forma Disclosures


3dfx accounts for its stock option plans and the Employee Stock Purchase Plan in
accordance with the provisions of APB 25. Had 3dfx recorded compensation costs
based on the estimated grant date fair value, as defined by SFAS 123, for awards
granted under its stock option plans and the Employee Stock Purchase Plan,
3dfx's net income (loss) from discontinued operations and net income (loss) per
share from discontinued operations would have been (in thousands, except per
share data):


<Table>
<Caption>
                                                                                        YEARS ENDED
                                                        FOR THE PERIOD FROM             JANUARY 31,
                                                          FEBRUARY 1, 2001   ----------------------------------
                                                         TO MARCH 26, 2001        2001               2000
                                                        -------------------  ---------------    ---------------

<S>                                                     <C>                  <C>                <C>
Pro forma net income (loss) from discontinued
     operations .......................................   $        (2,755)   $      (359,208)   $       (75,915)
Pro forma basic net income (loss) per share from
     discontinued operations ..........................   $         (0.07)   $        (11.21)   $         (3.37)
Pro forma diluted net income (loss) per share from
     discontinued operations ..........................   $         (0.07)   $        (11.21)   $         (3.37)
</Table>

Had 3dfx recorded compensation costs based on the estimated grant date fair
value, as defined by SFAS 123, for awards granted under its stock option plans
and the Employee Stock Purchase Plan, the additional selling, general and
administrative expense, in the statement of changes in net liabilities, would
not have been material for the period from March 27, 2001 to January 31, 2002.

The pro forma effect on net income (loss) from discontinued operations and net
income (loss) per share from discontinued operations for the period from
February 1, 2001 to March 26, 2001 and for the years ended January 31, 2001 and
2000 is not representative of the pro forma effect on net income (loss) from
discontinued operations and net income (loss) per share from discontinued
operations in future years because it does not take into consideration pro forma
compensation expense related to grants made prior to 1995.

For the period from February 1, 2001 to March 26, 2001 and for the fiscal years
ended January 31, 2001 and 2000 the fair value of each option on the date of
grant was determined utilizing the Black-Scholes model.




                                      F-19
<PAGE>


                             3DFX INTERACTIVE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The following assumptions were used for the stock option plans and the Employee
Stock Purchase Plan for the period from February 1, 2001 to March 26, 2001 and
for the years ended January 31, 2001 and 2000:


<Table>
<Caption>
                                         FOR THE PERIOD FROM            JANUARY 31,
                                           FEBRUARY 1, 2001   ----------------------------------
                                          TO MARCH 26, 2001        2001               2000
                                         -------------------  ---------------    ---------------

<S>                                      <C>                  <C>                <C>
Stock option plans:
Expected dividend yield ................                --                 --                 --
Expected stock price volatility ........                70%                70%                70%
Risk free interest rate ................              4.31%               4.6%               5.7%
Expected life (years) ..................               0.5                0.5                6.5

Employee stock purchase plan:
Expected dividend yield ................                --                 --                 --
Expected stock price volatility ........                70%                70%                70%
Risk free interest rate ................              4.31%               4.6%               5.2%
Expected life (years) ..................               0.5                0.5                0.5
</Table>


The weighted average fair value of stock options granted in the period from
February 1, 2001 to March 26, 2001 and in the fiscal years ended January 31,
2001 and 2000 was $0.16, $4.82 and $8.04 per share, respectively.

Benefit Plan

As of January 31, 2001, 3dfx had two 401(k) Savings Plans which allow all United
States employees to participate by making salary deferral contributions to the
401(k) Savings Plans. 3dfx may make discretionary contributions to the 401(k)
Savings Plans upon approval by the board of directors. Through March 26, 2001,
the Company has contributed to one of the 401(k) Savings Plans but not the
other. In April 2001, the board of directors of the Company approved a
resolution to merge the two 401(k) Savings Plan into one 401(k) Savings Plan and
ceased employer contributions to the plan.

NOTE 9 -- INCOME TAXES:

The Company recorded an income tax benefit of $5.0 million for federal or state
income for the period from February 1, 2001 through March 26, 2001 to offset
future taxable gains expected to be received upon the receipt of Nvidia stock in
accordance with the asset purchase agreement (see Note 1). Upon the adoption of
the liquidation basis of accounting on March 27, 2001, the Company ceased to
record deferred tax assets and liabilities and reversed the $35.0 million
deferred tax asset previously recorded, as it was no longer deemed realizable.

Income before income taxes and the significant components of the provision for
income taxes comprise the following (in thousands):


<Table>
<Caption>
                                                          FISCAL YEARS ENDED
                                                     ----------------------------
                                                      JANUARY 31,     JANUARY 31,
                                                         2001            2000
                                                     ------------    ------------

<S>                                                  <C>             <C>
Income (loss) from discontinued operations
     before income taxes .........................   $   (376,998)   $    (73,611)
                                                     ============    ============

Provision for income taxes Current:
        Federal ..................................   $     (2,925)   $     (8,936)
        State ....................................             --          (1,558)
        Foreign ..................................            442              --
                                                     ------------    ------------
                                                           (2,483)        (10,494)
                                                     ------------    ------------
    Deferred:
        Federal ..................................        (29,740)            148
        State ....................................         (4,249)             22
                                                     ------------    ------------
                                                          (33,989)            170
                                                     ------------    ------------
Total provision for income taxes .................   $    (36,472)   $    (10,324)
                                                     ============    ============
</Table>





                                      F-20
<PAGE>


                             3DFX INTERACTIVE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)



The components of net deferred income tax assets are as follows (in thousands):



<Table>
<Caption>
                                                 JANUARY 31,        JANUARY 31,
                                                    2002               2001
                                                ------------       ------------
<S>                                             <C>                <C>
Deferred Tax Assets:
       Net operating losses .................   $     55,825       $     63,370
       Expenses not currently deductible ....             --             15,976
       Tax credit carryforwards .............          2,422              2,422
                                                ------------       ------------
       Deferred Tax Assets ..................         58,247             81,768

Deferred Tax Liability:
       Intangible Assets ....................             --             (4,735)
                                                ------------       ------------
Gross Deferred tax asset ....................         58,247             77,033
Less:  valuation allowance ..................        (58,247)           (46,768)
                                                ------------       ------------
Net deferred income tax assets ..............   $         --       $     30,265
                                                ============       ============
</Table>

3dfx's actual provision differs from the provision (benefit) computed by
applying the statutory federal income tax rate to income (loss) from
discontinued operations before income taxes as follows (in thousands):

<Table>
<Caption>
                                                                      YEARS ENDED
                                                               ----------------------------
                                                                JANUARY 31,     JANUARY 31,
                                                                   2001            2000
                                                               ------------    ------------

<S>                                                            <C>             <C>
Tax provision(benefit)at statutory federal tax rate ........   $   (128,179)   $    (25,028)
State taxes, net of federal tax benefit ....................        (20,175)         (3,959)
R&D credit .................................................             --              --
In process research and development ........................         22,525           1,723
Amortization of goodwill and other intangibles .............          8,313           4,097
Impairment of goodwill and other intangibles ...............         39,802              --
Change in valuation allowance ..............................         35,686          12,577
Other, net .................................................          5,556             266
                                                               ------------    ------------
Total provision (benefit) for taxes ........................   $    (36,472)   $    (10,324)
                                                               ============    ============
</Table>

At January 31, 2001, 3dfx had net operating loss carryforwards for federal and
state income tax purposes of approximately $164 million and $128 million,
respectively. If not utilized, the federal and state net operating losses will
begin to expire beginning in 2011 and 2019, respectively.

Management has assessed the realizability of deferred tax assets recorded at
January 31, 2001 based upon the weight of available evidence, including such
factors as expected future taxable income primarily related to the expected gain
on sale of assets to Nvidia. Management believes that it is more likely than not
that the Company will not realize a portion of its deferred tax assets and,
accordingly, a valuation allowance of $46.8 million has been established for
such amounts at January 31, 2001.

NOTE 10 -- COMMITMENTS AND CONTINGENCIES:

Leases

3dfx leases, under noncancelable operating leases, certain of its facilities and
equipment. There were no capital leases outstanding as of January 31, 2002.
During fiscal 2002, the Company terminated several of its operating leases. At
January 31, 2002, 3dfx was still in negotiations to settle certain remaining
leases under which it has contractual obligations. However, at January 31, 2002,
3dfx had total future lease obligations of $6.6 million and lease termination
costs of $4.0 million in the current year, all of which has been accrued. The
remaining operating lease agreements existing at January 31, 2002, expire at
various dates through 2007. Rent expense on the operating leases for the period
from February 1, 2001 to March 26, 2001 and the years ended January 31, 2001 and
2000, was approximately $1.0 million, $6.0 million, and $6.7 million
respectively.

Sublease rental income for the period from February 1, 2001 to March 26, 2001
and the year ended January 31, 2001 was approximately $.5 million and $.8
million, respectively, and is included in other income (expense). Sublease
rental income for the period from March 27, 2001 through January 31, 2002, was
approximately $2.6 million, and is included in selling, general and
administrative expenses in the statement of changes in net liabilities.



                                      F-21
<PAGE>

                             3DFX INTERACTIVE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)



Future minimum lease payments under operating leases are as follows:

<Table>
<Caption>
                                               OPERATING LEASES
                                               ----------------

<S>                                            <C>
2003 .......................................   $         1,394
2004 .......................................             1,491
2005 .......................................             1,562
2006 .......................................             1,597
2007 .......................................               532
                                               ---------------
   Total minimum lease payments ............   $         6,576
                                               ===============
</Table>

Purchase Commitments

3dfx's manufacturing relationship with Taiwan Semiconductor Manufacturing
Corporation ("TSMC") allows 3dfx to cancel all outstanding purchase orders, but
requires the repayment of all expenses incurred to date. As of January 31, 2001,
TSMC had incurred approximately $2.9 million of manufacturing expenses on 3dfx's
outstanding purchase orders, which has been reflected within accrued liabilities
at January 31, 2001. This balance has been negotiated, settled, and reflected in
accounts payable at January 31, 2002. As of January 31, 2002, the Company has no
remaining purchase commitments.

Contingencies

3dfx is a party to the following legal proceedings involving certain collection
matters against 3dfx. 3dfx does not dispute that certain amounts are owed to the
parties that are pursuing these collection matters, but is attempting to seek
resolution of payment terms that are mutually acceptable to the parties involved
in each of these matters. There can be no assurance that such resolutions will
be achieved.

<Table>
<Caption>
ADVERSE PARTY                                     COURT                DATE INSTITUTED          FACTUAL BASIS AND RELIEF SOUGHT
-------------                                     -----                ---------------          -------------------------------

<S>                                        <C>                        <C>                       <C>
Aavid Thermalloy                              44th Judicial           November 8, 2000          Collection suit on unpaid invoices.
                                            District of Texas

Micron Semiconductor Products, Inc.            Santa Clara            August 17, 2000           Collection suit on unpaid contract.
                                             County Superior
                                                  Court

Quickturn Design Systems, Inc.                 Santa Clara            January 25, 2001          Collection suit on unpaid contract.
                                             County Superior
                                                  Court

Cadence Design Systems, Inc.                   Santa Clara            January 25, 2001          Collection suit on unpaid contract.
                                             County Superior
                                                  Court

California Micro Devices, Inc.                 Santa Clara           September 24, 2001         Collection suit on unpaid contract.
                                             County Superior
                                                  Court

Siliconware USA, Inc.                          Santa Clara              May 21, 2001            Collection suit on unpaid contract.
                                             County Superior
                                                  Court

Synopsis, Inc.                                 Santa Clara             August 20, 2001          Collection suit on unpaid contract.
                                             County Superior
                                                  Court
</Table>

In addition to these collection disputes, 3dfx is a party to litigation filed
February 23, 2001 by Worldcom, Inc. in Dallas County on an open account for
telephone services. The amount of damages stated in the petition was





                                      F-22
<PAGE>


                             3DFX INTERACTIVE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


$1,389,000 plus interest and attorney's fees. Trial is set for October 14, 2002.
3dfx disputes Worldcom's claims and intends to vigorously defend itself in this
matter.

3dfx is also involved in litigation filed against it in the 192nd District Court
on February 11, 2002 by Fortran Trust, 3dfx's lessor for its former headquarters
in San Jose, California. The landlord filed for breach of lease in a tenant in
possession action based on 3dfx's failure to pay rental amounts that are
delinquent. 3dfx is seeking to negotiate a settlement of its lease obligations
owed to Fortran Trust. The lessor also filed for and received from the court a
Writ of Attachment on March, 8, 2002. The lessor is presently attempting to
schedule a summary judgment hearing. Finally, a Default Judgment was entered in
favor of CarrAmerica, 3dfx's lessor for its offices in Austin, Texas, on May 20,
2002 resulting from a lawsuit filed April 18, 2002 in the 261st Judicial
District Court of Travis County, Texas. In order to set aside the default
judgment, 3dfx would need to move for a new trial on or before June 19, 2002. If
3dfx does not seek a new trial by that time, the judgment becomes final. At that
time, CarrAmerica may take steps to enforce that judgment against 3dfx. 3dfx is
seeking to negotiate a settlement of its lease obligations owed to CarrAmerica.

3dfx may also be a party to various other lawsuits. Although the amount of any
liability that could arise with respect to these other proceedings cannot be
predicted accurately, 3dfx believes that any liability that might result from
these other claims will not have a material adverse effect on its financial
position.


NOTE 11 -- RELATED PARTY TRANSACTIONS:

Since April 1995, a consulting company has been providing management services to
3dfx for which 3dfx pays a monthly fee of $5,000. The Chairman and a director of
the board of directors of 3dfx are also officers of the consulting company.
Total payments or amounts accrued for such management services during the fiscal
year 2001 was $55,000. This service was ended in the fiscal year 2002, with no
payments made during the fiscal year 2002.

During fiscal year 2001 a member of the board of directors provided consulting
services to 3dfx. Total payments for such consulting services in fiscal year
2001 was and $45,000.

During fiscal year 2001, a significant shareholder and former member of the
Company's board of directors provided consulting services to 3dfx for $400,000.
At January 31, 2001, 3dfx had an outstanding receivable due from this
shareholder of $1.1 million. At January 31, 2002, this receivable has been fully
reserved for, as management has deemed collection to be unlikely.

In April 1997, an officer of 3dfx resigned and subsequently founded Quantum3D,
Inc., a supplier of advanced graphic subsystems based on 3dfx technology. Sales
to Quantum3D, Inc. during fiscal years 2001 and 2000 totaled $2.8 million and
$1.6 million respectively. There were no sales for the period from February 1,
2001 to March 26, 2001.

In April 1999, 3dfx invested an amount of $3.1 million in exchange for a
minority interest in Quantum 3D in the form of convertible preferred shares in
connection with Quantum 3D's private round of financing. These terms and pricing
of these shares was equivalent to other unaffiliated third participants in the
financing round. During the fiscal year ended January 31, 2001, 3dfx fully
reserved for this investment, as management does not expect to be able to
recover the value of this investment. The charge taken for this investment is
included in interest and other income (expense) for the year ended January 31,
2001.

In March 2000, 3dfx sold the Specialized Technology Group (STG), a business unit
that provides digital video products, multi-output MPEG decoder cards and
multi-monitor display adapters to a company of which a former 3dfx employee, and
daughter of a former Executive Vice President and Vice Chairman of the board of
directors of 3dfx, is President. 3dfx maintains a minority equity interest in
STG of $2.1 million at January 31, 2001 and had an outstanding notes receivable
from STG of $1.5 million at January 31, 2001. During the first quarter of fiscal
2002, the Company deemed this investment in STG and the related notes receivable
unlikely to be realized or collected and as such has written-off the remaining
balances.


NOTE 12 -- SEGMENT AND GEOGRAPHIC INFORMATION:

3dfx has adopted Statement of Financial Accounting Standards No. 131 "Disclosure
about Segments of an Enterprise and Related Information". Based on its operating
management and financial reporting structure, 3dfx has determined that it has
one reportable business segment: the design, development and sale of graphics
boards incorporating 3dfx's proprietary graphics chips. The following is a
summary of product revenue by geographic area based on the location of shipments
(in thousands):




                                      F-23
<PAGE>


                             3DFX INTERACTIVE, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


<Table>
<Caption>
                                                   FISCAL YEARS ENDED
                                               ---------------------------
                                                JANUARY 31,    JANUARY 31,
                                                   2001           2000
                                               ------------   ------------

<S>                                            <C>            <C>
United States ..............................   $    139,141   $    193,941
International ..............................         93,926        166,582
                                               ------------   ------------
Total ......................................   $    233,067   $    360,523
                                               ============   ============
</Table>


All sales are denominated in United States dollars. There were no sales during
the period from February 1, 2001 to March 26, 2001. For all periods presented,
substantially all of 3dfx's long-lived assets were located in the United States.


NOTE 13 - SUBSEQUENT EVENT

Series B Preferred Stock Financing

         On June 13, 2002, 3dfx entered into a Series B Preferred Stock Purchase
Agreement with SF Capital Partners Ltd. whereby SF Capital has agreed to invest
between $25 and $35 million in 3dfx in exchange for shares of 3dfx's Series B
Preferred Stock (the "Series B Financing"). The amount of the investment will be
based on the sum at closing of 3dfx's fixed and determinable liabilities,
maximum reasonably known undeterminable liabilities and anticipated expenses
reasonably necessary to complete the liquidation, winding-up and dissolution of
3dfx. The agreement with SF Capital provides that once the amount of all of
3dfx's liabilities is determined, or if some liabilities are not determinable
then the maximum amount of all undetermined liabilities shall be reasonably
known to 3dfx and SF Capital, and subject to the satisfaction of certain other
specified conditions, then SF Capital will place the purchase price for the
shares of Series B Preferred Stock into escrow pending closing. The purchase
price will be released to 3dfx from escrow, and the closing of the Series B
Financing will occur, upon the satisfaction of conditions that 3dfx and SF
Capital specify in the escrow agreement. The number of shares of Series B
Preferred Stock of 3dfx issuable to SF Capital at closing will be equal to the
quotient derived by dividing (x) the sum of the investment amount and a
specified percent of the investment amount by (y) the average closing price of
Nvidia common stock for the five trading days preceding the closing. The
"specified percentage of the investment amount" referred to in the preceding
formula ranges from 25% to 40%, and varies based on the price of Nvidia common
stock preceding the closing (the higher the price of Nvidia common stock, the
higher the "specified percentage of the investment amount").

     The Series B Preferred Stock will not be entitled to dividends, subject to
redemption or conversion, and will have no voting rights, but it will have
priority for payment upon the liquidation, winding-up or dissolution of 3dfx. If
3dfx is in the process of liquidating, dissolving or winding up, immediately
upon its receipt of 500,000 or more shares of Nvidia common stock, 3dfx shall
distribute to the holders of the Series B Preferred Stock, at 3dfx's election,
either (i) $90 cash per share of Series B Preferred Stock or (ii) one share of
Nvidia stock per share of Series B Preferred Stock (the "Liquidation
Preference"). In the meantime, the prior written consent of the holders of not
less than a majority of the outstanding shares of Series B Preferred Stock is
required for 3dfx to make any dividends, distributions or redemptions on any
other securities, or for 3dfx to issue any debt or equity securities, or for
3dfx to enter into any merger, sale of shares of capital stock having voting
power with respect to 35% or more of its outstanding capital stock, or any
transaction in which all or substantially all of the assets of 3dfx are sold.
The holders of Series B Preferred Stock will have certain other rights designed
to protect their investment in 3dfx. The stock purchase agreement with SF
Capital is terminable if the funding amount exceeds the $35 million level or
falls under the $25 million level, if the Nvidia closing price is equal to or
less than $26, if the transaction fails to close within one year, if 3dfx is in
material default of the agreement or if the Nvidia common stock is delisted from
the Nasdaq National Market.

Leases

3dfx leases a manufacturing facility in Juarez, Mexico, which was to expire in
November 2007. On April 19, 2002, 3dfx reached a settlement with the lessor of
its Mexican manufacturing facility that provided for the termination of the
related lease and lease guaranty agreements, in exchange for the payment of
approximately $1.2 million to cover all delinquent rent payments owed for the
period from January 1, 2002 through April 19, 2002 and the rent deficiency for
the remaining lease term (which is comprised of the initial lease payments less
the amount the lessor will receive from the new tenant). As of January 31, 2002,
$1.2 million was accrued for in estimated costs during period of liquidation
relating to this lease termination.




                                      F-24
<PAGE>




                    SUPPLEMENTARY FINANCIAL DATA (Unaudited)


<Table>
<Caption>
                                                         FOR THE PERIOD FROM
                                                          FEBRUARY 1, 2001
                                                          TO MARCH 26, 2001
                                                         -------------------

<S>                                                      <C>
Revenues ...............................................   $            --
Gross profit (loss) ....................................                --
Net loss from discontinued operations ..................            (2,627)
Basic net loss per share from discontinued
   operations ..........................................   $         (0.07)
Diluted net loss per share from
   discontinued operations .............................   $         (0.07)
</Table>

<Table>
<Caption>
                                                                                 THREE MONTHS ENDED
                                                           ------------------------------------------------------------
                                                           JANUARY 31,      OCTOBER 31,      JULY 31,       APRIL 30,
                                                               2001            2000            2000            2000
                                                           ------------    ------------    ------------    ------------

<S>                                                        <C>             <C>             <C>             <C>
Revenues ...............................................   $     18,310    $     39,189    $     66,989    $    108,578
Gross profit (loss) ....................................        (24,775)        (21,746)         10,189          26,411
Net loss from discontinued operations ..................        (49,020)       (178,573)       (100,496)        (12,431)
Basic net loss per share from discontinued
   operations ..........................................   $      (1.24)   $      (4.53)   $      (3.81)   $      (0.51)
Diluted net loss per share from
   discontinued operations .............................   $      (1.24)   $      (4.53)   $      (3.81)   $      (0.51)
</Table>


On March 27, 2001, 3dfx's shareholders approved proposals to liquidate, wind-up
and dissolve 3dfx pursuant to a plan of dissolution. 3dfx is proceeding to
wind-up its affairs and dissolve. Accordingly, all activities of 3dfx are
presented as discontinued operations. See Note 1 to Notes to Financial
Statements for further discussion.

The quarterly financial information above reflects the following:

- During the quarter ended October 31, 2000, 3dfx took a $117.1 million charge
for the impairment of goodwill and other intangible assets. 3dfx's results of
discontinued operations for the year ended January 31, 2001 and financial
position at January 31, 2001 reflect the impact of this change. See Note 1 to
Notes to Financial Statements for further discussion of the impairment charge.

- 3dfx's merger with GigaPixel Corporation was consummated on July 21, 2000 and
was treated as a purchase for financial reporting and accounting purposes.
3dfx's results of discontinued operations for the year ended January 31, 2001
and financial position at January 31, 2001 reflect the impact of the GigaPixel
merger. See Note 3 to Notes to Financial Statements for further discussion of
the GigaPixel merger.

- 3dfx's merger with STB Systems, Inc., which was consummated on May 13, 1999
and was treated as a purchase for financial reporting and accounting purposes.
3dfx's results of discontinued operations for the year ended January 31, 2000
and financial position at January 31, 2000 reflect the impact of the STB merger.
See Note 2 to Notes to Financial Statements for further discussion of the STB
merger.




                                      F-25
<PAGE>


REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE

To the Board of Directors and Shareholders of 3dfx Interactive, Inc.:

Our audits of the consolidated financial statements referred to in our report
(which contains an emphasis of matter paragraph relating to the plan of
dissolution, as described in Note 1 to the consolidated financial statements)
dated June 7, 2002, except for Note 13, as to which the date is June 13, 2002,
appearing in the 2002 Annual Report on Form 10-K of 3dfx Interactive, Inc. also
included an audit of the financial statement schedule listed in Item 14(a)(2) of
this Form 10-K. In our opinion, this financial statement schedule presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
San Jose, California
June 13, 2002



                                      S-1



<PAGE>





SCHEDULE II


            3DFX INTERACTIVE, INC. VALUATION AND QUALIFYING ACCOUNTS

           FOR THE PERIOD FROM FEBRUARY 1, 2001 TO MARCH 26, 2001 AND
                      FOR THE YEARS ENDED JANUARY 31, 2001
                                 (IN THOUSANDS)



<Table>
<Caption>
                                                                     Charged to   Assumed from
                                                       Beginning     costs and         STB                         Ending
                                                        balance       expenses     acquisition     Deductions      balance
                                                     ------------   ------------   ------------   ------------   ------------

<S>                                                  <C>            <C>            <C>            <C>            <C>
Allowance for Doubtful Accounts:
  For the period from February 1, 2001
    to March 26, 2001 ............................   $      9,992   $          0   $          0   $      9,992   $          0
  Year ended January 31, 2001 ....................   $      6,681   $     11,872   $          0   $      8,561   $      9,992
  Year ended January 31, 2000 ....................   $      6,792   $      2,392   $        598   $      3,038   $      6,681



Inventory Reserves:
  For the period from February 1, 2001
    to March 26, 2001 ............................   $     25,383   $          0   $          0   $     25,383   $          0
  Year ended January 31, 2001 ....................   $     18,496   $     10,302   $          0   $      3,415   $     25,383
  Year ended January 31, 2000 ....................   $      7,828   $        909   $     18,000   $      8,241   $     18,496



Valuation Allowance for Deferred Tax Assets:
  For the period from February 1, 2001
    to March 26, 2001 ............................   $     46,768   $          0   $          0   $          0   $     46,768
  Year ended January 31, 2001 ....................   $     17,164   $     29,604   $          0   $          0   $     46,768
  Year ended January 31, 2000 ....................   $      4,524   $     12,640   $          0   $          0   $     17,164
</Table>






                                      S-2
<PAGE>




                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this Annual
Report on Form 10-K to be signed on its behalf by the undersigned, thereunto
duly authorized.

Date: June 14, 2002

                                      3DFX INTERACTIVE, INC.


                                      By: /S/ RICHARD A. HEDDLESON
                                         ---------------------------------------
                                          Richard A. Heddleson
                                          President, Chief Executive Officer and
                                          Chief Financial Officer


                                POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Richard A. Heddleson his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
to sign any and all amendments to this Annual Report on Form 10-K and to file
the same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney-in-fact
and agent, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in connection therewith, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, or any of them, shall do or cause to be done by virtue hereof.

     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF
THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED:

<Table>
<Caption>
                   SIGNATURE                                             TITLE                               DATE
                   ---------                                             -----                               ----


<S>                                              <C>                                                    <C>
           /S/ RICHARD A. HEDDLESON              President, Chief Executive Officer,                    June 14, 2002
---------------------------------------------    Chief Financial Officer, Treasurer and Secretary
            (Richard A. Heddleson)               (Principal Executive Officer and Principal Financial
                                                 and Accounting Officer)


                /S/ ALEX LEUPP                   Director                                               June 14, 2002
---------------------------------------------
                 (Alex Leupp)



            /S/ GORDON A. CAMPBELL               Chairman of the Board                                  June 14, 2002
---------------------------------------------
             (Gordon A. Campbell)


               /S/ JAMES HOPKINS                 Director                                               June 14, 2002
---------------------------------------------
                (James Hopkins)


             /S/ SCOTT D. SELLERS                Director                                               June 14, 2002
---------------------------------------------
              (Scott D. Sellers)



                /S/ JAMES WHIMS                  Director                                               June 14, 2002
---------------------------------------------
                 (James Whims)
</Table>




<PAGE>
                             3DFX INTERACTIVE, INC.

                                INDEX TO EXHIBITS

<Table>
<Caption>
           EXHIBIT
           NUMBER                               DESCRIPTION
           -------                              -----------

<S>                     <C>
            2.1(11)     Asset Purchase Agreement, dated December 15, 2000, by
                        and among the Registrant, Nvidia Corporation and Titan
                        Acquisition Corp. No. 2

            2.2(17)     Registrant's Plan of Dissolution, as approved by
                        Registrant's shareholders on March 27, 2001

            3.1(9)      The Registrant's Restated Articles of Incorporation

            3.2(5)      Certificate of Designation of Rights Preferences and
                        Privileges of Series A Participating Preferred Stock of
                        Registrant

            3.3(18)     The Registrant's Amended and Restated Bylaws

            4.1(2)      Specimen Common Stock Certificate

            4.2(5)      Preferred Shares Rights Agreement dated October 30,
                        1998, between Registrant and BankBoston, N.A., Rights
                        Agent

            10.1(2)     Form of Indemnification Agreement between the Registrant
                        and each of its directors and officers

            10.2(13)    1995 Employee Stock Plan, as amended

            10.3(2)     1997 Director Option Plan and form of Director Stock
                        Option Agreement thereunder

            10.4(2)     Lease Agreement dated August 7, 1996 between Registrant
                        and South Bay/Fortan, and Tenant Estoppel Certificate
                        dated March 25, 1997 between Registrant and CarrAmerica
                        Realty Corporation for San Jose, California office

            10.5(2)     Investors' Rights Agreement dated September 12, 1996,
                        Amendment No. 1 to Investors' Rights Agreement dated
                        November 25, 1996, Amendment No. 2 to Investors' Rights
                        Agreement dated December 18, 1996 and Amendment No. 3 to
                        Investors' Rights Agreement dated March 27, 1997 by and
                        among the Registrant and holders of the Registrant's
                        Series A, Series B and Series Preferred Stock

            10.6(3)     Warrant to purchase shares of Common Stock issued to
                        Creative Labs, Inc.

            10.7(4)     [Reserved.]

            10.8(3)     [Reserved.]

            10.9(3)     1997 Supplementary Stock Option Plan and form of Stock
                        Option Agreement thereunder

            10.10(8)    1999 Supplementary Stock Option Plan and form of Stock
                        Option Agreement thereunder

            10.11(12)   Indemnity Escrow Agreement dated as of July 20, 2000, by
                        and among the Registrant, GigaPixel Corporation,
                        Galapagos Acquisition Corp. and U.S. Trust Company, N.A.

            10.12(12)   Consulting Agreement dated as of July 20, 2000, by and
                        between the Registrant and George T. Haber

            10.13(12)   Noncompetition Agreement dated as of July 20, 2000, by
                        and between the Registrant and George T. Haber

            10.14(12)   Contingent Recourse Non-Negotiable Promissory Note dated
                        as of July 20, 2000, made by George T. Haber for the
                        benefit of GigaPixel Corporation

            10.15(12)   Lock Up Agreement dated as of July 20, 2000, by and
                        between the Registrant and George T. Haber

            10.16(10)   Employment Agreement by and between the Registrant and
                        Alex M. Leupp, as amended effective February 1, 2001

            10.17(10)   Employment Agreement by and between the Registrant and
                        Scott D. Sellers, as amended effective February 1, 2001

            10.18(10)   Employment Agreement by and between the Registrant and
                        Richard Burns, as amended effective February 1, 2001

            10.19(10)   Employment Agreement by and between the Registrant and
                        Stephen A. Lapinski, as amended effective February 1,
                        2001

            10.20(10)   Employment Agreement by and between the Registrant and
                        Alfred R. Woodhull, as amended effective February 1,
                        2001

            10.21(11)   Credit Agreement, dated December 15, 2000 by and between
                        the Registrant and Titan Acquisition Corp. No. 2

            10.22(11)   Security Agreement, dated December 15, 2000, by and
                        between the Registrant and Titan Acquisition Corp. No. 2

            10.23(11)   Trademark Assignment Agreement, by and between 3dfx
                        Interactive Inc. and Titan Acquisition Corp. No. 2

            10.24(11)   Patent License Agreement, dated December 15, 2000, by
                        and between the Registrant, Nvidia Corporation and Titan
                        Acquisition Corp. No. 2
</Table>




<PAGE>

<Table>
<S>                     <C>
            10.25(11)   Patent Standstill Agreement, dated as of December 15,
                        2000, by and between Nvidia Corporation and the
                        Registrant

            10.26(15)   Lease Agreement dated December 6, 1988 by and between
                        STB de Mexico S.A. C.V. (formerly known as Industrias
                        Fronterizas de Chihuahua, S.A. de C.V.) (a subsidiary of
                        STB Systems, Inc., as lessee) and Complejo Industrial
                        Fuentes, S.A. de C.V. lessor), including an Agreement
                        for Modification dated February 25, 1994 by and between
                        the same parties

            10.27(16)   Modification Agreement dated October 4, 1996 by and
                        between STB de Mexico, S.A. de C.V. and Complejo
                        Industrial Fuentes, S.A. de C.V.

            10.28(16)   Lease Contract dated October 4, 1996 by and between STB
                        de Mexico, S.A. de C.V. (as lessee) and Complejo
                        Industrial Fuentes, S.A. de C.V. (as lessor)

            10.29(7)    Amendment to Lease Agreement dated January 30, 1997 by
                        and between STB de Mexico, S.A. de C.V. (as lessee) and
                        Complejo Industrial Fuentes, S.A. de C.V.

            10.30(17)   Settlement Agreement and Mutual Release dated November
                        29, 2000 by and between the Registrant and William E.
                        Ogle

            10.31(17)   Lease Agreement dated July 23, 1998 by and between
                        CarrAmerica Realty L.P. and the Registrant, and an
                        amendment thereto

            10.32(17)   [Reserved.]

            10.33(17)   Lease Schedule No. 1000063905 dated December 15, 1997 by
                        and between Banc One Leasing Corporation and STB
                        Systems, Inc.

            10.34(17)   Lease Schedule No. 1000064617 dated April 17, 1998 by
                        and between Banc One Leasing Corporation and STB
                        Systems, Inc.

            10.35(17)   Lease Schedule No. 1000063259 dated October 31, 1997 by
                        and between Banc One Leasing Corporation and STB
                        Systems, Inc.

            10.36(18)   Employment Agreement by and between the Registrant and
                        Richard A. Heddleson, dated June 8, 2001

            10.37*      Lease Termination and Settlement Agreement dated April
                        19, 2002 by and among Complejo Industrial Fuentes, S.A.
                        de C.V., STB de Mexico, S.A. de C.V. and STB Systems,
                        Inc.

            10.38*      Series B Preferred Stock Purchase Agreement dated as of
                        June 13, 2002, by and among the Registrant and SF
                        Capital Partners Ltd.

            10.39*      Form of Full and Final Release and Settlement by and
                        between the Registrant and numerous creditors of the
                        Registrant

            10.40*      Form of Release and Settlement by and among Registrant
                        and creditors of Registrant

            21.1        Subsidiaries of the Registrant

                        (a)   STB Systems, Inc.
                        (b)   3dfx Europe, Ltd.
                        (c)   GigaPixel Corporation
                        (d)   STB Assembly, Inc.
                        (e)   STB de Mexico, S.A. de C.V.
                        (f)   Symmetric Simulation Systems, Inc.

            23.1*       Consent of PricewaterhouseCoopers LLP, Independent
                        Accountants

            24.1*       Power of Attorney (included on signature page)
</Table>

*    Filed herewith.

(1)  [Reserved].

(2)  Incorporated by reference to the exhibits filed with the Registrant's
     Registration Statement on Form S-1 (File No. 333-25365) which was declared
     effective on June 25, 1997.

(3)  Incorporated by reference to the exhibits filed with the Registrant's
     Registration Statement on Form S-1 (File No. 333-46119) filed with the
     Commission on February 11, 1998.

(4)  Incorporated by reference to the exhibits filed with the Registrant's
     Quarterly Report on Form 10-Q for the period ended June 30, 1997.

(5)  Incorporated by reference to the exhibits filed with the Registrant's
     Registration Statement on Form 8-A which was filed with the Commission on
     November 9, 1998 and amended by the filing of Registrant's Registration
     Statement on Form 8-A/A which was filed with the Commission on January 26,
     2001

(6)  Incorporated by reference to the exhibits filed with the Registrant's
     Quarterly Report on Form 10-Q for the period ended June 30, 1998.



<PAGE>


(7)  Incorporated by reference to exhibits filed with STB Systems, Inc.'s Annual
     Report on Form 10-K for the fiscal year ended October 31, 1997.

(8)  Incorporated by reference to Exhibit 4.1 filed with the Registrant's
     Registration Statement on Form S-8 (File No. 333-86661) which was filed
     with the Commission on September 7, 1999.

(9)  Incorporated by reference to exhibits filed with the Registrant's
     Registration Statement on Form S-4 (File No. 333-38678) which was filed
     with the Commission on June 6, 2000.

(10) Incorporated by reference to exhibits filed with the Registrant's Current
     Report on Form 8-K filed on January 26, 2001.

(11) Incorporated by reference to exhibits filed with Nvidia Corporation's
     Registration Statement on Form S-4 (File No. 333-54406) which was filed
     with the Commission on January 26, 2001.

(12) Incorporated by reference to exhibits filed with the Registrant's Quarterly
     Report on Form 10-Q filed on September 14, 2000.

(13) Incorporated by reference to Exhibit 4.1 of the Registrant's Registration
     Statement on Form S-8 (File No. 333-42156) which was filed with the
     Commission on July 25, 2000.

(14) Incorporated by reference to the Registrant's Registration Statement on
     Form S-8 (File No. 333-42152) which was filed with the Commission on July
     25, 2000.

(15) Incorporated by reference to Exhibit 10.1 of the STB Systems, Inc.'s
     Registration Statement on Form S-1 (File No. 333-87612) filed with the
     Commission on December 21, 1994.

(16) Incorporated by reference to Exhibit 10.1 of the STB Systems, Inc.'s
     Registration Statement (File No. 333-14313) filed with the Commission on
     October 17, 1996.

(17) Incorporated by reference to exhibits filed with the Registrant's Annual
     Report on Form 10-K for the fiscal year ended January 31, 2001.

(18) Incorporated by reference to exhibits filed with the Registrant's Quarterly
     Report on Form 10-Q filed on September 17, 2001.









</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.37
<SEQUENCE>3
<FILENAME>d97663exv10w37.txt
<DESCRIPTION>LEASE TERMINATION AND SETTLEMENT AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.37


                   LEASE TERMINATION AND SETTLEMENT AGREEMENT

         THIS LEASE TERMINATION AND SETTLEMENT AGREEMENT (the "Termination
Agreement") is entered into on April 19, 2002, by and among COMPLEJO INDUSTRIAL
FUENTES, S.A. DE C.V., a Mexican corporation ("Landlord"), S.T.B. DE MEXICO,
S.A. DE C.V., a Mexican corporation ("Tenant"), and STB Systems, Inc., a Texas
corporation ("Guarantor"). Landlord, Tenant and Guarantor may be referred to
herein individually as a "Party" or collectively as the "Parties."


                                    RECITALS

         A. Landlord and Tenant entered into that certain Lease Agreement dated
October 4, 1996 (the "Lease"), regarding the premises located on Fuentes Sur
Avenue, Ciudad Juarez, Chihuahua, Mexico (the "Premises"), with an area of
approximately 316,152.86 square feet, legally described as:

                  Lot 7 and Lot 8, Block E, Complejo Industrial Fuentes, Ciudad
                  Juarez, Chihuahua, Mexico

         B. STB. Systems, Inc., a Texas corporation ("Guarantor") signed a Lease
Guaranty Agreement dated October 4, 1996 (the "Guaranty") pursuant to which it
guaranteed the prompt payment of all rents and the performance of all of
Tenant's other duties and obligations under the Lease.

         C. Tenant has ceased operations at the Premises and wishes to terminate
the Lease and STB's obligations under the Guaranty.

         D. Landlord has agreed to terminate the Lease and STB's obligations
under the Guaranty on the terms and conditions set forth in this Termination
Agreement.

         E. All capitalized terms not otherwise defined in this Termination
Agreement will have the meaning for such terms as set forth in the Lease.


                                    AGREEMENT

         In consideration of the mutual covenants and agreements hereinafter set
forth, the parties hereto agree and covenant as follows:

1. Termination of Lease and Guaranty. Effective as of the date hereof (the
"Termination Date"), the Lease and the leasehold estate and rights created
thereby shall be terminated and canceled in all respects, and except as set
forth in this Termination Agreement, Landlord and Tenant and their respective
successors and assigns shall have no further rights, privileges, duties,
obligations or liabilities to each other relating to the Lease. By the execution
of this Termination Agreement, Tenant waives and quitclaims to Landlord any
right, title or interest it may have in the Premises by virtue of the Lease.
Further, except as set forth in this Termination Agreement, the Guaranty shall
likewise be terminated and canceled in all respects, and Guarantor, its
successors and assigns shall have no further duties, obligations or liabilities
to Landlord under





<PAGE>
the Guaranty or the Lease. Each Party warrants and represents to the other that
it has full power, authority and authorization to enter in to this Termination
Agreement. Furthermore, Landlord agrees to indemnify and hold Tenant, Guarantor
and their respective affiliates, successors and assigns harmless from and
against any direct or indirect claim, damage, action, judgment, controversy,
cost, expense and liability incurred by Tenant or Guarantor, including
reasonable attorneys fees, as a result of claims asserted by Landlord's lender
or any third party as a result of the termination of the Lease or the Guaranty
pursuant to the terms of this Termination Agreement.

         2. Waiver and Release of the Parties. Except as set forth in this
Termination Agreement, each Party, for itself and its subsidiaries, affiliates,
employees, officers and directors, hereby forever discharges and releases the
other Party and its employees, officers and directors, successors and assigns
from any and all known and unknown, direct or indirect, claims, damages, action,
judgments, controversies, and liabilities of every nature, at law or in equity,
including all such items enumerated in Section 1 above (but specifically
excluding the last sentence of Section 1); provided, that the foregoing shall
not affect any rights and obligations between Tenant and Guarantor.
Notwithstanding the foregoing, Landlord's agreement to terminate the Lease and
subsequently release Tenant and Guarantor from their remaining duties,
liabilities and obligations under the Lease and Guaranty, respectively, is
expressly conditioned upon Landlord's ability to successfully enter into a new
lease agreement for the Premises with a new tenant (the "New Tenant") at an
annual rental of $5.00 per square foot annually, which Landlord expects to do on
April 19, 2002. If this condition is not met, Landlord shall be entitled to
enforce all of its rights, privileges and remedies against Tenant and Guarantor
under the Lease and Guaranty.

         3. Surrender of Premises. On or before April 19, 2002 (the "Surrender
Date"), Tenant agrees to surrender and deliver the Premises to Landlord in good
condition and repair, reasonable wear and tear excepted, and Tenant shall remove
all of its inventory, personal property, trade fixtures and tenant improvements,
including without limitation, any leasehold improvements made by Tenant or made
by Landlord on Tenant's behalf which Landlord directs Tenant to remove. Tenant
shall repair any damage caused by such removal or shall reimburse Landlord for
the cost of repairing any such damage. Notwithstanding the foregoing, Tenant and
Landlord acknowledge and agree that Tenant shall be responsible to repair those
items described on Exhibit A attached hereto to bring the Premises into good
condition and repair. In the event Tenant fails to make any such repairs, Tenant
agrees to reimburse the Landlord the cost of such repairs immediately upon
demand by Landlord.

         4. Rent Payments.

                  (a) Delinquent Rent. Tenant shall pay to Landlord all
         delinquent rent owed on the Premises for the months of January,
         February and March, 2002, totaling $208,888.89, in addition to
         $20,888.89 for Value Added Taxes (totaling 10% of the rental amount for
         such rental period). In addition, Tenant shall pay to Landlord the sum
         of $44,098.75, representing rent from April 1, 2002 to April 19, 2002,
         in addition to $4,409.87 for Value Added Taxes (totaling 10% of the
         rental amount for such rental period). Accordingly, Tenant shall pay to
         Landlord a total of $278,286.31 for delinquent rent on the Premises for
         the period covering January 1, 2002 through April 19, 2002.

                  (b) Rent Deficiency for Remaining Term. Tenant acknowledges
         that Landlord shall enter into a lease agreement with the New Tenant
         for the Premises at an


                                       2

<PAGE>

         initial rent rate of $0.41667 per square foot per month ($5.00 per
         annum), which is $0.0925 per square foot per month ($1.11 per annum)
         less than the rent currently payable by Tenant. In consideration of
         Landlord's agreement to terminate the Lease as of the Effective Date
         and discharge Tenant and Guarantor from their duties, obligations and
         liabilities under the Lease and Guaranty, Tenant agrees to pay Landlord
         the sum of $866,490.11, in addition to $86,649.01 Value Added Tax
         relating thereto, which represents the difference between the minimum
         rent that Landlord would have earned from Tenant and the rent that
         Landlord will earn from the New Tenant during the remaining Initial
         Term of the Lease, calculated as follows: 136,751.25 square feet,
         multiplied by $0.0925 per square foot deficiency per month, multiplied
         by the 68.5 months remaining in the Initial Term (136,751.25 x $.0925 x
         68.5 + VAT = $953,139.12.) Accordingly, Tenant shall pay to Landlord a
         total of $953,139.12 for the rent deficiency on the Premises for the
         period covering April 19, 2002 through December 31, 2007.

         5. Payment of Utilities, Taxes and Insurance. Tenant shall pay in full
for the cost of all utilities, including but not limited to charges for
electricity, water, sewer, gas, and telephone lines, up through and including
the Surrender Date. Tenant shall pay such costs directly to the utility provider
and shall provide Landlord with written evidence that such utilities have been
paid through such date. In addition, Tenant shall pay to Landlord the sum of
$2,276.44, representing the estimated prorated Property Taxes for 2002 and the
sum of $1,938.15, representing the estimated pro-rated insurance costs incurred
by Landlord based on the number of days that Tenant occupied the Premises in
2002.

         6. Payment of Legal Fees. Tenant shall reimburse Landlord for the legal
fees incurred by Landlord in enforcing the Lease (including without limitation
pursuing the payment of delinquent rent) and negotiating the terms of and
preparing this Termination Agreement. Landlord shall deliver to Tenant a written
account of such legal fees within thirty (30) days of the date of the execution
of this Termination Agreement, and such sum will be immediately due and payable
by Tenant. An approximate summary and breakdown of the legal fees are attached
hereto as Exhibit B.

         7. Schedule of Payment. Upon the execution of this Termination
Agreement, Tenant or Guarantor shall deliver to Landlord certified funds in the
amount of $100,000.00 to be applied against the amounts due to Landlord under
Sections 3, 4, 5 and 6 above (the "Tenant Obligations"). The remaining balance
of the Tenant Obligations shall be paid by Tenant or Guarantor to Landlord on or
before the earlier of (i) the time that the "Stock Consideration" provided for
under Section 1.3(a) of the Asset Purchase Agreement identified below is
received by Tenant or any of its affiliates, including 3dfx Interactive, Inc., a
California corporation ("3dfx"), (ii) the "Post-Closing Advance" provided for
under Section 1.3(b) of the Asset Purchase Agreement is received by Tenant or
any of its affiliates, including 3dfx, or (iii) at such time Tenant or Guarantor
receives an infusion of funds of at least $25,000,000.00 from new investors, or
(iv) April 19, 2003. The "Asset Purchase Agreement" referred to in this
paragraph is that certain Asset Purchase Agreement dated December 15, 2000 by
and among 3dfx, Nvidia Corporation and Titan Acquisition Corp. No. 2.

         8. Environmental Certificate. Tenant shall cooperate fully with
Landlord and the Secretaria del Medio Ambiente, Recursos Naturales y Pezca
(Ministry of the Environment, Natural Resources and Fishery), the Procuraduria
Federal de Proteccion al Ambiente (Federal


                                       3

<PAGE>

Agency for Protection of the Environment) and any other federal, state or local
agency with jurisdiction over environmental matters relating to the Premises
(the "Agencies"), to obtain a letter of compliance regarding the environment
condition of the Premises and shall prepare such reports and respond to such
inquiries regarding Tenant's use and occupancy of the Premises as required by
the Agencies. Tenant shall pay all costs, expenses, penalties and fines incurred
in obtaining the letters of compliance to the extent related to Tenant's use and
occupancy of the Premises, including but not limited to costs of environmental
studies and evaluations required by any Agency, all costs of remediation of any
environmental contamination or condition resulting from Tenant's use and
occupancy of the Premises, all costs of removing any hazardous materials brought
onto the Premises by Tenant or Tenant's invitees, all other costs and expenses
incurred to cure or rectify any other condition caused by Tenant's use and
occupancy of the Premises as necessary to obtain letters of compliance, any
penalties or fines imposed by any Agency relating to environmental conditions or
practices resulting from or relating to Tenant's use and occupancy of the
Premises, and any other administrative cost or expense incurred to obtain all
necessary letters of compliance or Agency clearances. In the event Landlord
shall pay any such costs, expenses, penalties or fines, Tenant shall reimburse
Landlord the full amount thereof immediately upon demand.

         9. Option. Tenant acknowledges that the option described in Section
Twenty of the Lease (regarding the right and option to acquire land adjacent to
the Premises) has expired and is null and void. Tenant expressly waives and
quitclaims to Landlord any right, title and interest in such option or the
property covered by the option. Furthermore, as Tenant never exercised the
Option under the terms stated in Section Twenty of the Lease, the deposit in the
amount of $55,000.00 has been forfeited in favor of the Landlord.

         10. Currency. Any reference in this Termination Agreement to "dollars"
or "$" shall mean United States ("U.S.") dollars. Notwithstanding that any
amounts due and payable by Tenant under this Termination Agreement shall be
expressed in U.S. dollars, Tenant shall have the right to make payment in
Mexican pesos, with the amount of pesos owed being calculated at the "sell"
exchange rate of the Bank of Mexico published daily in the Diario Oficial de la
Federacion (Official Gazette of the Federation) on the date that payment is
made.

         11. Binding Effect. This Termination Agreement shall be binding upon
and inure to the benefit of the Parties hereto and their respective successors
and assigns.

         12. Governing Law; Venue. This Termination Agreement shall be governed
by and construed in accordance with the venue agreed to by Tenant and STB under
the Lease and the Guaranty, respectively. Accordingly, Tenant and STB agree to
submit to the jurisdiction of the courts of Ciudad Juarez, State of Chihuahua,
Mexico and El Paso, Texas, respectively.

         13. No Oral Agreements. This Termination Agreement constitutes the sole
agreement of the parties and supersedes any prior understandings,
representations or written or oral agreements between the parties respecting the
subject matter hereof.

         14. Counterparts. This Termination Agreement may be executed in
multiple counterparts, and each counterpart shall be deemed an original
instrument upon execution thereof.





                                       4
<PAGE>

         EXECUTED as of the date first stated above.


<Table>
<S>                                                           <C>
                                                              LANDLORD:

WITNESS:                                                      COMPLEJO INDUSTRIAL FUENTES,
                                                              S.A. DE C.V.


-------------------------                                     By:      /s/ Eduardo Fuentes Varela
Signature of Witness                                          Name:    Eduardo Fuentes Varela,
                                                              Title:   Chairman of the Board of Directors
-------------------------
Printed Name of Witness


                                                              TENANT:

                                                              S.T.B. DE MEXICO, S.A. DE C.V.


                                                              By:      /s/ Richard A. Heddleson
                                                              Name:    Richard A. Heddleson
                                                              Title:   Chairman


                                                              GUARANTOR:

                                                              S.T.B. SYSTEMS, INC.


                                                              By:      /s/ Richard A. Heddleson
                                                              Name:    Richard A. Heddleson
                                                              Title:   President
</Table>


                                       5

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.38
<SEQUENCE>4
<FILENAME>d97663exv10w38.txt
<DESCRIPTION>SERIES B PREFERRED STOCK PURCHASE AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.38


                             3DFX INTERACTIVE, INC.

                   SERIES B PREFERRED STOCK PURCHASE AGREEMENT

         This Series B Preferred Stock Purchase Agreement (this "AGREEMENT") is
made as of June 13, 2002, by and among 3dfx Interactive, Inc., a California
corporation (the "COMPANY"), and SF Capital Partners Ltd., a limited company
formed under the laws of the British Virgin Islands (the "INVESTOR").

         WHEREAS, the Company is a party to that certain Asset Purchase
Agreement dated as of December 15, 2000 (the "ASSET PURCHASE AGREEMENT"), by and
among the Company, NVIDIA Corporation, a Delaware corporation ("NVIDIA"), and
NVIDIA US Investment Company, a Delaware corporation, f/k/a Titan Acquisition
Corp. No. 2 ("NVIDIA SUB");

         WHEREAS, pursuant to the terms of the Asset Purchase Agreement, the
Company is entitled to receive two million (2,000,000) shares of the common
stock, par value $.001 per share, of NVIDIA ("NVIDIA STOCK") upon the
satisfaction of certain conditions described therein;

         WHEREAS, the Board of Directors of the Company deems it advisable and
in the Company's best interest to issue shares of Series B Stock (as defined
below) to the Investor in order to generate sufficient cash proceeds to satisfy
the Liabilities (as defined in Section 3.5 hereof), thereby enabling the Company
to expeditiously wind up, settle and liquidate its affairs and dissolve in
accordance with its Plan of Dissolution; and

         WHEREAS, the generation of cash from the issuance of the shares of
Series B Stock, the satisfaction of the Liabilities and the receipt of shares of
NVIDIA Stock by the Company should allow the Company to pay its creditors and
maximize the value it is able to deliver to its common shareholders.

         NOW, THEREFORE, the parties hereto agree as follows:

                                   SECTION 1
                           PURCHASE AND SALE OF STOCK

         1.1 Certificate of Determination. The Company shall adopt and file with
the Secretary of State of the State of California on or before the Closing Date
(as defined below) the Certificate of Determination of the Rights, Preferences,
Privileges and Restrictions of Series B Preferred Stock of the Company in the
form attached hereto as Exhibit A (the "CERTIFICATE").

         1.2 Authorization and Issuance of Series B Stock. Subject to the terms
and conditions of this Agreement, the Investor agrees to acquire, and the
Company agrees to authorize and issue to the Investor, at the Closing Date (as
defined below), that number of shares (the "SHARES") of the Company's Series B
Preferred Stock, no par value ("SERIES B STOCK"), which equals the quotient
obtained by dividing (a)(i) the sum of the Funding Amount (as defined below) and
(ii) the specified percentage of the Funding Amount indicated in the table below
(the "SPECIFIED PERCENTAGE") by (b) the average closing price of NVIDIA Stock
for the five (5) trading days




<PAGE>

immediately preceding the Closing Date (the "NVIDIA CLOSING PRICE"), with any
resulting fraction of a Share to be rounded up to the next whole Share;
provided, however, that if the NVIDIA Closing Price is greater than $70, the
number of Shares to be issued to the Investor on the Closing Date shall equal
that number of Shares to which the Investor would have been entitled had the
NVIDIA Closing Price been $70. The calculation of the number of Shares of Series
B Stock to be issued to the Investor shall be determined in accordance with the
preceding sentence, with reference to the Specified Percentages set forth below
that vary based on the NVIDIA Closing Price:



<Table>
<Caption>
        NVIDIA CLOSING PRICE ($)                                 SPECIFIED PERCENTAGE (%)
        ------------------------                                 ------------------------
<S>                                                              <C>
             35.01 to 70.00                                                 40
             34.51 to 35.00                                                 40
             34.01 to 34.50                                                 39
             33.51 to 34.00                                                 38
             33.01 to 33.50                                                 37
             32.51 to 33.00                                                 36
             32.01 to 32.50                                                 35
             31.51 to 32.00                                                 34
             31.01 to 31.50                                                 33
             30.51 to 31.00                                                 32
             30.01 to 30.50                                                 31
             29.51 to 30.00                                                 30
             29.01 to 29.50                                                 29
             28.51 to 29.00                                                 28
             28.01 to 28.50                                                 27
             27.51 to 28.00                                                 26
             27.01 to 27.50                                                 25
             26.51 to 27.00                                                 25
             26.01 to 26.50                                                 25
</Table>


As provided in Section 8.1 hereof, in the event the NVIDIA Closing Price is at
or below $26.00, the Company or the Investor is entitled to terminate this
Agreement.

         1.3 Purchase Price. The purchase price of the Shares to be delivered by
the Investor to the Company on the Closing Date shall be cash in immediately
available funds equal to the Funding Amount (as defined below).




                                      -2-
<PAGE>

         For purposes of this Agreement, the "Funding Amount" shall be the sum
of (a) the fixed and determinable amount of Liabilities upon the Closing Date,
(b) the maximum amount of all undetermined Liabilities, as shall be reasonably
known upon the Closing Date, and (c) that amount of expenses reasonably
necessary to complete the liquidation, winding-up and dissolution of the Company
and otherwise address the expenses associated with resolving all undetermined
Liabilities through a liquidating trust or otherwise, after taking into account
the Company's assets then on hand.

         As provided in Section 8.1 hereof, in the event that the Funding Amount
is greater than $35,000,000 or less than $25,000,000, the Investor may terminate
this Agreement at its option. The Funding Amount shall be applied exclusively to
the payment of Liabilities, with any residual amount being applied to the
resolution of any undetermined Liabilities and the expenses referred to in
clause (c) above (with any further residual amount distributed to the Company's
shareholders).

                                   SECTION 2
                               ESCROW AND CLOSING

         2.1 Escrow and Closing. Once (a) the amount of all Liabilities is
determined, or if some Liabilities are not determinable then the maximum amount
of all undetermined Liabilities shall be reasonably known to the Company and the
Investor (as determined by the parties in good faith); and (b) upon satisfaction
of one of the conditions precedent specified in clauses (i) - (iv) below, then
the Investor will promptly deliver the Funding Amount in immediately available
funds to an escrow agent reasonably satisfactory to the Company and the Investor
pursuant to an escrow agreement reasonably satisfactory to the Company and the
Investor (the "Cash Funding Escrow"). Without limiting the foregoing, such
escrow agreement shall provide that subject to the satisfaction of the
conditions described in Sections 5 and 6 of this Agreement (it being understood
and agreed that the Investor shall have the right to waive any of the conditions
set forth in Section 5 and the Company shall have the right to waive any of the
conditions set forth in Section 6), upon satisfaction of the conditions
stipulated in the escrow agreement for release to the Company of the Funding
Amount from the escrow, the purchase and sale of the Series B Stock shall take
place at the offices of the Company or another mutually agreeable location on
the first reasonably practicable business day (the "Closing Date").

         Without limiting the foregoing, such escrow agreement shall further
provide for the return to the Investor of the Funding Amount, plus any other
amounts provided for in the escrow agreement, in the event (x) of the
termination of this Agreement by the Investor or the Company in accordance with
the terms of Section 8.1 hereof or (y) that the NVIDIA Stock has not been
delivered to the Company, or to an escrow agent or other third party reasonably
acceptable to Investor pursuant to an escrow agreement or other arrangement
reasonably acceptable to Investor (the "Stock Escrow"), within 3 business days
after the Investor's delivery of the Funding Amount to the Cash Funding Escrow;
provided that in the event that the Funding Amount is returned to Investor
pursuant to clause (y), Investor acknowledges that the terms of this Section 2.1
shall continue to have full effect and Investor may again be required to deliver
the Funding Amount in accordance with this Section 2.1 until such time as this
Agreement is terminated in accordance with Section 8.1 hereof.

         The conditions precedent specified in clause (b) above are:

         (i)      the delivery of the NVIDIA Stock to the Company or to the
                  Stock Escrow; or

         (ii)     NVIDIA's and/or NVIDIA Sub's delivery of an agreement,
                  certificate or other document pursuant to which one or both of
                  them agree with the Company and with the Investor, or pursuant
                  to which one or both of them expressly represents to the
                  Company and the Investor, that (a) upon the Company's receipt
                  of the purchase price for the Shares and NVIDIA's and NVIDIA
                  Sub's receipt of a Company certificate or other document in
                  which the Company certifies and covenants as to certain
                  matters in satisfaction of its certification obligation set
                  forth in Section 1.3(a) of the Asset Purchase Agreement
                  (provided, that the required contents of the Company's
                  certificate or other document must be reasonably satisfactory
                  to the Investor), that provision for the payment of the
                  Liabilities of the Company and its Subsidiaries will be deemed
                  to have been made and (b) NVIDIA Sub will deliver the NVIDIA
                  Stock to the Company or the Stock Escrow on the same business
                  day as the Company receives the purchase price for the Shares
                  and NVIDIA and NVIDIA Sub receives the Company's certificate
                  or other document referred to in subclause (a) above; or

         (iii)    the issuance of a court order by a court of competent
                  jurisdiction directing NVIDIA or NVIDIA Sub to deliver the
                  NVIDIA Stock to the Company or into the Stock Escrow; or

         (iv)     Investor has received such other assurances that are
                  satisfactory to it, in its sole discretion.

         2.2 Issuance of Shares against Payment. At the Closing, the Company
shall deliver to the Investor a certificate representing that number of Shares
determined in accordance with Section 1.2 hereof against payment of the purchase
price therefor as specified in Section 1.3.




                                      -3-
<PAGE>

                                    SECTION 3
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY


         Except as otherwise described in the Schedule of Exceptions attached
hereto, the Company hereby represents and warrants to, and covenants with, the
Investor as of the date hereof, as follows:

         3.1 Organization. Each of the Company and its Subsidiaries (as defined
in Rule 405 promulgated under the Securities Act of 1933, as amended (the
"SECURITIES ACT")), is duly incorporated and validly existing under the laws of
the jurisdiction of its organization, whether contained within or outside of the
United States of America. Each of the Company and its Subsidiaries has full
power and authority to conduct its business as presently conducted, and no
proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification.

         3.2 Due Authorization. The Company has all requisite power and
authority to execute, deliver and perform its obligations under this Agreement,
and this Agreement has been duly authorized and validly executed and delivered
by the Company and constitutes a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

         3.3 Non-Contravention. The execution and delivery of this Agreement,
the issuance and sale of the Shares to be sold by the Company under this
Agreement, the fulfillment of the terms of this Agreement and the consummation
of the transactions contemplated hereby will not conflict with or constitute a
violation of, or default (with the passage of time or otherwise) under, (i) the
Asset Purchase Agreement or any bond, debenture, note or other evidence of
indebtedness, or any lease, contract, indenture, mortgage, deed of trust, loan
agreement, joint venture or other agreement or instrument to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or their respective properties are bound, where such conflict,
violation or default is reasonably expected to have a material adverse effect
upon the Company and its subsidiaries taken as a whole, or the business,
financial condition, properties, operations or assets of the Company and its
Subsidiaries, taken as a whole, or the Company's ability to perform its
obligations under this Agreement ("MATERIAL ADVERSE EFFECT"), (ii) the Articles
of Incorporation, bylaws or other organizational documents of the Company or any
of its Subsidiaries, or (iii) any law, administrative regulation, ordinance or
order of any court or governmental agency, arbitration panel or authority
binding upon the Company or any of its Subsidiaries or their respective
properties, where such conflict, violation or default is likely to result in a
Material Adverse Effect

         3.4 Capitalization. The capitalization of the Company as of January 31,
2002 is as described in the unaudited consolidated financial statements of the
Company as of and for the fiscal year ended January 31, 2002 (the "2002
FINANCIAL STATEMENTS"). The Company has not issued any capital stock since
January 31, 2002 (other than the Shares contemplated by this





                                      -4-
<PAGE>

Agreement). The Shares to be sold pursuant to this Agreement have been duly
authorized, and when issued and paid for in accordance with the terms of this
Agreement, will be duly and validly issued, fully paid and nonassessable. Except
for options currently outstanding and up to 500,000 additional options that may
be issued under the Company's stock option and incentive plans, there are no
outstanding rights (including, without limitation, preemptive rights), warrants
or options to acquire, or instruments convertible into or exchangeable for, any
unissued shares of capital stock or other equity interest in the Company or any
of its Subsidiaries, or any contract, commitment, agreement, understanding or
arrangement of any kind, in either case to which the Company or any of its
Subsidiaries is a party and providing for the issuance or sale of any capital
stock of the Company or any of its Subsidiaries, any such convertible or
exchangeable securities or any such rights, warrants or options. Without
limiting the foregoing, no preemptive right, co-sale right, registration right,
right of first refusal or other similar right exists with respect to the
issuance and sale of the Shares. There are no stockholders agreements, voting
agreements or other similar agreements with respect to the Company's common
stock, no par value per share, to which the Company is a party. Other than STB
de Mexico, S.A. de C.V., in which Jose Reyes Ferriz, Esq. owns 0.10% of the
capital stock, the Company owns the entire equity interest in its Subsidiaries,
or in the Subsidiaries of its Subsidiaries, free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest.

         3.5 Liabilities. As of January 31, 2002, neither the Company nor its
Subsidiaries was subject to any Liabilities, other than as set forth on the
Schedule of Exceptions. For purposes of this Agreement, "Liabilities" shall
mean, with respect to the Company and its Subsidiaries, any debt, obligation,
duty or liability of any nature (including any unknown, undisclosed, unmatured,
unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious,
derivative, joint, several or secondary liability), regardless of whether such
debt, obligation, duty or liability would be required to be disclosed on a
balance sheet prepared in accordance with generally accepted accounting
principles and regardless of whether such debt, obligation, duty or liability is
immediately due and payable; provided, that "Liabilities" shall not for purposes
of this Agreement include any taxes arising out of the Company's and its
Subsidiaries' sale of assets under the Asset Purchase Agreement.

         3.6 Legal Proceedings. There is no legal or governmental proceeding
pending, or to the knowledge of the Company, threatened, concerning the Asset
Purchase Agreement, this Agreement or any other matter whatsoever, to which the
Company or any of its Subsidiaries is a party or of which the business or
property of the Company or any of its Subsidiaries is subject. Neither the
Company nor any Subsidiary is a party to the provisions of any injunction,
judgment, decree or order of any court, regulatory body, administrative agency
or other government body.

         3.7 No Violations. Neither the Company nor any of its Subsidiaries is
in violation of its Articles of Incorporation, bylaws or other organizational
documents, or its Plan of Dissolution or in violation of any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration
panel or authority applicable to the Company or any of its Subsidiaries, which
violation, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect, nor is the Company or any of its Subsidiaries in
default (and there exists no condition which, with the passage of time or
otherwise, would constitute a default) under the terms of the Company's Plan of
Dissolution or in the performance of any bond, debenture, note or any other
evidence of indebtedness or any indenture, mortgage, deed of trust




                                      -5-
<PAGE>

or any other material agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound or by which the property of the Company or any of its Subsidiaries is
bound, which is reasonably likely to have a Material Adverse Effect.

         3.8 Financial Statements. The 2002 Financial Statements present fairly,
in accordance with generally accepted accounting principles, the consolidated
financial position of the Company and its Subsidiaries as of the date indicated,
subject to normal year-end audit adjustments and the absence of footnotes
required by generally accepted accounting principles.

         3.9 No Material Adverse Change. Since January 31, 2002, there has not
been (i) a change that has had or is reasonably likely to have a Material
Adverse Effect, (ii) any obligation, direct or contingent, that is material to
the Company or any of its Subsidiaries considered as one enterprise, incurred by
the Company or any of its Subsidiaries, except obligations incurred in the
ordinary course of business, (iii) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company or any of its
Subsidiaries, or (iv) any loss or damage (whether or not insured) to the
physical property of the Company or any of its Subsidiaries which has been
sustained which has a Material Adverse Effect.

         3.10 SEC Filings. The Company has timely made all filings required
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),
during the period of February 1, 2001 through the date of this Agreement (the
"SEC REPORTS"), and all of the SEC Reports complied in all material respects
with the SEC's requirements as of their respective filing dates, and the
information contained therein as of the respective dates thereof did not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein in light of the
circumstances under which they were made not misleading.

         3.11 Transfer Taxes. On the Closing Date, all stock transfer or other
taxes (other than income taxes) which are required to be paid in connection with
the sale and transfer of the Shares hereunder will be, or will have been, fully
paid or provided for by the Company and the Company will have complied with all
laws imposing such taxes.

         3.12 Insurance. The Company and its Subsidiaries maintain insurance of
the types and in the amounts that the Company reasonably believes is adequate
for its businesses, including, but not limited to, insurance covering real and
personal property owned or leased by the Company and its Subsidiaries against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against by similarly situated companies, all of which insurance is in
full force and effect.

         3.13 Related Party Transactions. Except as disclosed in the SEC
Reports, no transaction has occurred between or among the Company, any of the
Subsidiaries and their affiliates, officers or directors or any affiliate or
affiliates of any such officer or director that with the passage of time will be
required to be disclosed pursuant to Section 13, 14 or 15(d) of the Exchange
Act.




                                      -6-
<PAGE>

         3.14 Books and Records. The books, records and accounts of the Company
and the Subsidiaries accurately and fairly reflect, in all material respects,
the transactions in, and dispositions of, the assets of, the Liabilities of, and
the operations of, the Company and the Subsidiaries. The Company maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.

         3.15 No Consent. Except as otherwise contemplated hereby, the
execution, delivery and performance of this Agreement, and the consummation of
the sale of the Shares contemplated hereby, do not require the consent, approval
or authorization of any third party, including, but not limited to, the common
shareholders of the Company.

         3.16 Ownership of NVIDIA Stock. The Company does not presently own any
shares of NVIDIA Stock and will not, prior to the Closing Date, own any shares
of NVIDIA Stock, other than any shares of NVIDIA Stock delivered to the Company
pursuant to the Asset Purchase Agreement.

         3.17 Affiliate Status. The Company is not an affiliate (as that term is
defined under Rule 144 promulgated under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), of NVIDIA.

         3.18 Offering. Assuming the accuracy of the Investor's representations
in Section 4 hereof, the offer, sale and issuance of the Shares to be issued in
accordance with the terms of this Agreement are exempt from the registration
requirements of Section 5 of the Securities Act and in compliance with
applicable state securities laws.

         3.19 Registered Shares. The issuance of the shares of NVIDIA Stock
pursuant to the Asset Purchase Agreement is registered pursuant to a
registration statement on Form S-4 (the "REGISTRATION STATEMENT") that remains
effective in accordance with the provisions of the Securities Act, and no stop
order has been issued or is pending, and no proceeding for that purpose has been
initiated or threatened by the SEC with respect to such Registration Statement.

         3.20 NVIDIA Information. Within the meaning of the federal securities
laws, the Company has not disclosed to the Investor any material, nonpublic
information regarding NVIDIA.




                                      -7-
<PAGE>

                                   SECTION 4
                 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR


         The Investor represents and warrants to the Company as of the date
hereof and as of the Closing Date as follows:

         4.1 Investment Experience. The Investor has substantial experience in
evaluating and investing in private placement transactions of securities in
companies similar to the Company such that the Investor is capable of evaluating
the merits and risks of its investment in the Company and has the capacity to
protect its own interests. The Investor is an "accredited investor" as such term
is defined in Rule 501 of Regulation D promulgated under the Securities Act
under one or more of the categories set forth therein.

         4.2 Investment. The Investor is acquiring the Shares for investment for
the Investor's own account, not as a nominee or agent, and not with the view to,
or for resale in connection with, any distribution thereof. The Investor
understands that the Shares have not been, and will not be when issued,
registered under the Securities Act by reason of a specific exemption from the
registration provisions of the Securities Act, the availability of which depends
upon, among other things, the bona fide nature of the investment intent and the
accuracy of the representations as expressed herein. The Investor acknowledges
that the Shares must be held indefinitely unless subsequently registered under
the Securities Act or unless an exemption from such registration is available.

         4.3 No Public Market. The Investor understands that no public market
now exists, and that a market will never exist, for the Shares.

         4.4 Access to Information. The Investor has had an opportunity to
discuss the Company's current business operations, Liabilities and financial
condition with the Company's management. The Investor understands that a
purchase of the Shares involves a high degree of risk.

         4.5 Authorization; Corporate Power. The Investor has all requisite
legal and corporate or partnership power and authority to execute and deliver
this Agreement and to carry out and perform its obligations under the terms of
this Agreement and the transactions contemplated hereby and thereby. This
Agreement, when executed and delivered by the Investor, will constitute a valid
and legally binding obligation of such Investor, enforceable in accordance with
its terms, subject to laws of general application relating to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

         4.6 Broker's and Finders' Fees. The Investor has not incurred, and will
not incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this Agreement
or any transaction contemplated hereby.




                                      -8-
<PAGE>

         4.7 Legends. It is understood that each certificate representing the
Shares shall bear the following legend:


         "THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
         1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED (OTHER THAN IN A
         BONA FIDE MARGIN ACCOUNT) OR HYPOTHECATED IN THE ABSENCE OF AN
         EFFECTIVE REGISTRATION STATEMENT AS TO THE SHARES UNDER SAID ACT OR AN
         OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
         IS NOT REQUIRED."

         "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE RIGHTS,
         PREFERENCES, PRIVILEGES AND RESTRICTIONS SET FORTH IN THE CERTIFICATE
         OF DETERMINATION OF RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF
         THE SERIES B PREFERRED STOCK. A COPY OF THE CERTIFICATE OF
         DETERMINATION IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY."

         The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any Shares upon which it is
stamped, if in connection with a sale transaction, such holder provides the
Company with an opinion of counsel, in a generally acceptable form, to the
effect that a sale, assignment or transfer of such Shares may be made without
registration under the Securities Act.

         4.8 Principal Place of Business. The principal place of business of the
Investor in which its investment decision was made is located in Wisconsin.

                                   SECTION 5
             CONDITIONS OF THE INVESTOR'S OBLIGATIONS AT THE CLOSING


         The obligation of the Investor under this Agreement is subject to the
fulfillment at or before the Closing Date of each of the following conditions:

         5.1 Representations and Warranties. The representations and warranties
of the Company contained in Section 3 were true and correct as of the date of
execution of this Agreement, and except with respect to the representations and
warranties set forth in Sections 3.5, 3.6, 3.7 and 3.9, the representations and
warranties of the Company contained in Section 3 were true and correct at the
Closing Date.

         5.2 Performance. The Company shall have performed or fulfilled all
agreements, obligations and conditions contained herein required to be performed
or fulfilled by the Company before the Closing Date, including, but not limited
to, those described in Section 2.1, which are incorporated herein by reference.




                                      -9-
<PAGE>

         5.3 Securities Law Compliance. The offer and sale of the Shares
pursuant to this Agreement shall be in compliance with all federal and state
securities laws applicable thereto.

         5.4 Opinion of Counsel. The Investor shall have received opinions of
the Company's several legal counsel in form and substance reasonably
satisfactory to the Investor opining as to (i) the Company's ability, power and
authority to effectuate this Agreement, (ii) the validity of the authorization
and issuance of the Shares, (iii) the absence of a need for shareholder approval
to enter into this Agreement or to issue the Shares, (iv) the entry into the
Agreement and the issuance of the Shares does not give rise to any violation of
California usury laws, (v) the validity of the exemption of the issuance of the
Shares from the registration requirements of Section 5 of the Securities Act and
applicable state securities laws, (vi) the effectiveness of the Registration
Statement, and (vii) the free transferability of shares of NVIDIA Stock to
Investor.

         5.5 Compliance Certificate. The Company shall have delivered to the
Investor (i) an Officers' Certificate, dated the date of the Closing, certifying
that the conditions specified in Sections 5.1 and 5.2 have been fulfilled, (ii)
certified copies of the resolutions adopted by the Company's Board of Directors
authorizing the execution, delivery and performance of this Agreement and the
transactions contemplated by this Agreement, and (iii) certified copies of the
Company's Articles of Incorporation as in effect at the Closing.

         5.6 Certificate of Determination. Prior to or at the Closing, the
Certificate shall have been duly filed under the laws of the State of California
and shall be in full force and effect and shall not have been otherwise amended
or modified.

         5.7 No Actions Pending. There shall be no suit, action, investigation,
inquiry or other proceeding by any governmental authority or any other third
party or any other legal or administrative proceeding pending or threatened
which (i) questions the validity or legality of the transactions contemplated by
this Agreement, or seeks damages in connection therewith, and also (ii) names or
threatens to name Investor as a party thereto and, in Investor's reasonable
judgment, constitutes a credible risk of material liability to Investor;
provided, that it is agreed that a suit, action or other legal proceeding to
which NVIDIA is a party shall not constitute a condition to closing under this
Section 5.7.

         5.8 NVIDIA Stock. The certificate representing the shares of NVIDIA
Stock to be delivered to the Company under the Asset Purchase Agreement shall
represent fully registered shares (covered by the Registration Statement) and
shall not be subject to any legends restricting the resale of the shares
represented thereby, or the Investor shall have received reasonable assurances
that the certificate representing shares of NVIDIA Stock to which it may be
entitled under the terms of the Certificate shall be free from any such legends.
The NVIDIA Stock shall continue to be listed on the Nasdaq National Market or a
national securities exchange, and shall not be the subject of any suspension in
trading.

         5.9 Approvals. The Company shall have received all necessary approvals
to consummate the transactions contemplated by this Agreement.




                                      -10-
<PAGE>

                                   SECTION 6
             CONDITIONS OF THE COMPANY'S OBLIGATIONS AT EACH CLOSING


         The obligations of the Company under this Agreement are subject to the
fulfillment on or before the Closing Date of each of the following conditions:

         6.1 Representations and Warranties. The representations and warranties
of the Investor contained in Section 4 shall be true and correct when made and
on and as of the Closing with the same effect as though said representations and
warranties had been made on and as of the Closing Date.

         6.2 Performance. The Investor shall have performed or fulfilled all
agreements, obligations and conditions contained herein and required to be
performed or fulfilled by the Investor as of the Closing, including payment of
the required consideration for the Shares as set forth in Section 1.3 hereof.

                                   SECTION 7
                              PRE-CLOSING COVENANTS

         Up to and including the Closing Date, the parties covenant and agree
with each other as follows:

         7.1 Best Efforts. The Company and the Investor shall use all reasonable
best efforts to take, or cause to be taken, all actions necessary to consummate
the sale of the Shares contemplated by this Agreement.

         7.2 Form D. The Company shall file Form D, Notice of Sales of
Securities Pursuant to Regulation D, Section 4(6), and/or the Uniform Limited
Offering Exemption, with the Securities and Exchange Commission and any
applicable state securities authorities on the Closing Date.

         7.3 Filings. The Company shall timely make all filings required under
the Exchange Act following the date of this Agreement, and all such documents
shall comply in all material respects with the Securities and Exchange
Commission's requirements as of their respective filing dates (provided, that
nothing in this Section 7.3 shall prohibit the Company from making delayed
filings to the extent the Company complies with Rule 12b-25 promulgated under
the Exchange Act).

         7.4 Issuance of New Equity or Debt Securities. The Company shall not,
prior to the Closing Date, create (by reclassification or otherwise) a new
series of preferred stock or otherwise issue any equity security of the Company,
other than up to 500,000 additional options that may be issued under the
Company's stock option and incentive plans and other than securities issuable
upon the exercise of (i) currently outstanding options or warrants (ii)
additional options issued within the previously specified limit. Further, the
Company shall not, prior to the Closing Date, incur any additional indebtedness
for borrowed money.




                                      -11-
<PAGE>

         7.5 Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the sale of
the Shares contemplated hereby.

                                    SECTION 8
                                  MISCELLANEOUS

         8.1 Termination. The Investor may terminate this Agreement in the event
that: (i) the NVIDIA Stock is de-listed from the Nasdaq National Market without
being simultaneously listed on a national securities exchange, (ii) the Funding
Amount, as determined at the time of satisfaction of the conditions precedent
specified in Section 2.1(i) and (ii) or at such other time as the parties shall
mutually agree, is greater than $35,000,000 or less than $25,000,000, (iii) the
Closing Date has not occurred on or prior to the one (1) year anniversary of the
date of this Agreement, (iv) the NVIDIA Closing Price is at or below than
$26.00, or (v) the Company is in material default under this Agreement and the
Company has not cured such default within 30 days of Investor's written notice
to the Company advising it of the default. The Company may terminate this
Agreement in the event (x) the Closing Date has not occurred on or prior to the
one (1) year anniversary of the date of this Agreement, (y) the NVIDIA Closing
Price is at or below $26.00 or (z) the Investor is in material default of this
Agreement, and the Investor has not cured such default within 30 days of the
Company's written notice to the Investor advising it of the default.

         8.2 Entire Agreement; Successors and Assigns; Assignment of Rights.
This Agreement and the Schedule of Exceptions and exhibit hereto constitute the
entire agreement between the Company and the Investor relative to the subject
matter hereof and supersede any previous agreement between the Company and the
Investor. Subject to the exceptions specifically set forth in this Agreement,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective executors, administrators, heirs, successors and
assigns of the parties. The rights and obligations under this Agreement of a
party hereto are not assignable without the prior written consent of the other
party hereto. Prior to or soon after the Closing Date, the Investor shall be
entitled to assign any of its Shares or rights hereunder, in whole or in part,
upon the reasonable satisfaction of the Company that such assignment will not
violate applicable securities laws, to any of its affiliates, who shall sign a
counterpart signature page agreeing to be bound by this Agreement and to be
entitled to the rights and obligations hereunder as if it were an Investor
hereunder.

         8.3 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by and construed in accordance with the laws of the
State of California applicable to contracts entered into and wholly to be
performed within the State of California by California residents. The parties
hereto irrevocably agree that any legal action or proceeding arising out of or
in connection with this Agreement shall be brought in the federal or state
courts located in the State of California, and shall be brought in no other
court. By the execution and delivery of this Agreement, the parties to this
Agreement hereby irrevocably accept and submit to the jurisdiction of such
courts in person, generally and unconditionally, in connection with any





                                      -12-
<PAGE>

legal action or proceeding arising out of or in connection with this Agreement.
The parties hereto waive all right to trial by jury in any action, suit or
proceeding brought to enforce or defend any rights or remedies arising under or
in connection with this Agreement, whether grounded in tort, contract or
otherwise.

         8.4 Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same instrument.

         8.5 Headings. The section headings of this Agreement are for
convenience and shall not by themselves determine the interpretation of this
Agreement.

         8.6 Notices. Any notice required or permitted hereunder shall be given
in writing and shall be conclusively deemed effectively given (i) upon personal
delivery, (ii) upon delivery by overnight courier, (iii) five (5) days after
deposit in the United States mail, by registered or certified mail, postage
prepaid, addressed (a) if to the Company, as set forth below the Company's name
on the signature page of this Agreement, and (b) if to the Investor, as set
forth below the Investor's name on the signature page of this Agreement, or at
such other address as the Company or the Investor may designate by ten (10)
days' advance written notice to the other party.

         8.7 Amendment of Agreement. Any provision of this Agreement may be
amended by a written instrument signed by the Company and the Investor.

         8.8 Confidentiality. Investor shall, and shall cause each of its
employees and directors to, safeguard and maintain as confidential all
Confidential Information (as defined herein) disclosed to or otherwise obtained
by it in strict confidence, including, without limitation, information in
written, magnetic or other physical form, and shall take reasonable precautions
to protect such Confidential Information (including, without limitation, all
precautions the Investor employs with respect to its own proprietary
information). Investor shall not, and shall cause each of its employees and
directors not to, copy, transmit, or disclose the Confidential Information, or
any information derived therefrom, to any other party, including, but not
limited to, an affiliate, agent or representative of the Investor, without the
written approval of the Company. The Investor shall not, and the Investor shall
cause each of its employees and directors not to, buy, sell or trade Company
securities based on possession or knowledge of Confidential Information until
such time as such Confidential Information is made public by the Company. Any
Investor affiliate, employee or director given access to any such Confidential
Information must have a legitimate "need to know" and the Investor will notify
such employee or director in writing that they are bound by the same
restrictions as the Investor regarding such Confidential Information. Nothing in
this Section 8.8 shall prohibit the Investor from trading in NVIDIA Stock or any
derivatives thereof. "Confidential Information" shall include (i) all of the
Investor's dealings with the Company concerning this Agreement and its
background and negotiation, (ii) all of the Company's and the Investor's
dealings with NVIDIA concerning this Agreement, the Asset Purchase Agreement and
the transactions contemplated hereby and thereby, (iii) all facts and
circumstances surrounding the Company's liquidation, winding-up and dissolution
and (iv) all information concerning the Company and its business and financial
affairs.




                                      -13-
<PAGE>

         8.9 Indemnification. In consideration of Investor's execution and
delivery of this Agreement and Investor's agreements contained herein, and in
addition to all of the Company's other obligations under this Agreement, the
Company shall defend, protect, indemnify and hold harmless Investor from and
against any and all losses, costs, penalties, fees, liabilities and damages, and
expenses including reasonable attorneys' fees and disbursements (the
"INDEMNIFIED LIABILITIES"), incurred by the Investor as a result of, or arising
out of, or relating to (i) any misrepresentation or breach of any representation
or warranty made by the Company in this Agreement or any other certificate,
instrument or document contemplated hereby, (ii) any breach of any covenant,
agreement or obligation of the Company contained in this Agreement or any other
certificate, instrument or document contemplated hereby and (iii) any suit,
action, investigation, inquiry or other legal or administrative proceeding by
any governmental authority or any other third party described in Section 5.7
hereof; provided, that, notwithstanding the foregoing, the Company shall not
indemnify the Investor from any Indemnified Liabilities that arise from or are
attributable to any act or omission of the Investor that constitutes fraud,
willful misconduct, gross negligence or a breach of the provisions of this
Agreement. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.

         In consideration of the Company's execution and delivery of this
Agreement and the Company's agreements contained herein, and in addition to all
of the Investor's other obligations under this Agreement, the Investor shall
defend, protect, indemnify and hold harmless the Company from and against any
and all losses, costs, penalties, fees, liabilities and damages, and expenses
including reasonable attorneys' fees and disbursements (the "INDEMNIFIED
LIABILITIES"), incurred by the Company as a result of, or arising out of, or
relating to (i) any misrepresentation or breach of any representation or
warranty made by Investor in this Agreement or any other certificate, instrument
or document contemplated hereby, or (ii) any breach of any covenant, agreement
or obligation of Investor contained in this Agreement or any other certificate,
instrument or document contemplated hereby; provided, that, notwithstanding the
foregoing, the Investor shall not indemnify the Company for any Indemnified
Liabilities that arise from or are attributable to any act or omission of the
Company that constitutes fraud, willful misconduct, gross negligence or a breach
of the provisions of this Agreement. To the extent that the foregoing
undertaking by the Investor may be unenforceable for any reason, the Investor
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law.

         Promptly after its receipt of notice of the commencement of any action,
the indemnified party will, if a claim in respect thereof is made against the
indemnified party hereunder, notify in writing the indemnifying party of the
commencement thereof; but omission so to notify the indemnifying party will not
relieve the indemnifying party from any liability hereunder which it may have to
the indemnified party unless such omission results in the indemnifying party's
forfeiture of substantive rights or defenses. If the indemnifying party so
elects, the indemnifying party may assume the defense of the Indemnified
Liabilities in a timely manner, including the employment of counsel (reasonably
satisfactory to the indemnified party) and payment of expenses, provided the
indemnifying party acknowledges in writing its unconditional obligation pursuant
to this Agreement to indemnify the indemnified party in respect of such
Indemnified Liabilities and permits the indemnified party and counsel retained
by the indemnified party at its






                                      -14-
<PAGE>

expense to participate in such defense. Notwithstanding the foregoing, in the
event the indemnified party determines in its reasonable discretion that there
may be a conflict between the positions of the indemnifying party and the
indemnified party or that there may be defenses available to the indemnified
party that are different from or in addition to those available to the
indemnifying party, then the indemnified party may employ a single separate
counsel (and local counsel as necessary) to represent or defend it in such
action, claim, proceeding or investigation and the indemnifying party will pay
the fees and disbursements of such separate counsel as incurred.

         8.10 Survival. The representatives, warranties, covenants and
agreements of each party to this Agreement shall survive the closing of the sale
of the Shares, but shall expire upon the Company's distribution to the Investor
of the "Liquidation Preference Amount" specified in the Certificate of
Determination relating to the Series B Stock.

         8.11 Press Releases. Without restricting the Company's ability to make
full and timely disclosure to its public shareholders, the Investor and the
Company will work together to develop mutually agreeable press releases relating
to this transaction.

         8.12 Expenses. Each of the Company and the Investor shall be
responsible for the payment of its own fees in connection with the transaction
contemplated by this Agreement.


                      [The next page is the signature page]






                                      -15-
<PAGE>




         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date above set forth.

                                "COMPANY"


                                3DFX INTERACTIVE, INC., A CALIFORNIA CORPORATION



                                By:   /s/ RICHARD A. HEDDLESON
                                   ------------------------------------------
                                Name:    Richard A. Heddleson
                                     ----------------------------------------
                                Title:   Chief Executive Officer
                                      ---------------------------------------
                                Address:
                                        -------------------------------------

                                        -------------------------------------

                                        -------------------------------------




                             Company Signature Page



<PAGE>



                                "INVESTOR"

                                SF CAPITAL PARTNERS LTD., A LIMITED COMPANY
                                UNDER THE LAWS OF THE BRITISH VIRGIN ISLANDS


                                By:  /s/ BRIAN H. DAVIDSON
                                   ------------------------------------------
                                Name:    Brian H. Davidson
                                     ----------------------------------------
                                Title:
                                      ---------------------------------------
                                Address:
                                        -------------------------------------

                                        -------------------------------------

                                        -------------------------------------








                             Investor Signature Page


<PAGE>



                          INDEX OF SCHEDULE AND EXHIBIT



SCHEDULES:

         Schedule of Exceptions

EXHIBITS:

         Exhibit A - Certificate of Determination of the Rights, Preferences,
                     Privileges and Restrictions of Series B Preferred Stock



<PAGE>


                                    EXHIBIT A


                          CERTIFICATE OF DETERMINATION
                     OF THE RIGHTS, PREFERENCES, PRIVILEGES
                AND RESTRICTIONS OF THE SERIES B PREFERRED STOCK

                                       OF

                             3DFX INTERACTIVE, INC.

             PURSUANT TO SECTION 401 OF THE GENERAL CORPORATION LAW
                           OF THE STATE OF CALIFORNIA

                  Richard A. Heddleson certifies that:

         A. Richard A. Heddleson is the President, Chief Executive Officer and
Chief Financial Officer of 3dfx Interactive, Inc., a California corporation (the
"CORPORATION").

         B. It is the intention that this Certificate of Determination state the
rights, preferences, privileges and restrictions of the Series B Preferred Stock
of the Corporation.

         C. No shares of the Series B Preferred Stock have been issued.

         D. Pursuant to the authority granted to the Board of Directors of the
Corporation by Article 3 of the Restated Articles of Incorporation, and in
accordance with the provisions of Section 401 of the General Corporation Law of
the State of California, the Board of Directors of the Corporation has adopted
the following resolution setting forth the rights, preferences, privileges and
restrictions of a new series of preferred stock designated as the Series B
Preferred Stock, no par value:

                  RESOLVED, that a series of authorized Preferred Stock, no par
value, designated Series B Preferred Stock of the Corporation, be hereby
created, and that the designations and amounts thereof and the voting powers,
preferences and relative, participating, optional and other special rights of
the shares of such series, and the qualifications, limitations and restrictions
thereof are as follows:

         1. Designation and Ranking. The Corporation shall have authority to
issue One Million Four Hundred Thousand (1,400,000) shares of Series B Preferred
Stock, no par value per share (the "SERIES B PREFERRED Stock"). The Series B
Preferred Stock shall, with respect to rights on liquidation, dissolution or
winding up, rank (i) senior to the Series A Preferred Stock, and (ii) senior to
all other subsequently designated series of Preferred Stock of the Corporation,
and senior to the common stock of the Corporation.

         2. Dividend Provisions. The holders of the outstanding shares of Series
B Preferred shall not be entitled to receive any dividends.




<PAGE>

         3. Liquidation Preferences. In connection with the liquidation,
dissolution or winding up of the Corporation, no distribution shall be made to
the holders of any equity securities of the Corporation other than shares of the
Series B Preferred Stock unless, prior thereto, the holders of shares of the
Series B Preferred Stock shall have received the Liquidation Preference Amount
specified below. If the Corporation is in the process of liquidating, dissolving
or winding up, immediately upon the Corporation's receipt of 500,000 or more
shares of the common stock of NVIDIA Corporation ("NVIDIA STOCK"), the
Corporation shall distribute to the holders of the Series B Preferred Stock, at
the Corporation's election, either (i) $90.00 cash per share of Series B
Preferred Stock or (ii) one share of NVIDIA Stock per share of Series B
Preferred Stock (the "LIQUIDATION PREFERENCE AMOUNT"). A merger, acquisition,
sale of shares of capital stock having voting power with respect to thirty-five
percent (35%) or more of the Company's outstanding capital stock or sale of
substantially all of the assets of the Corporation shall be deemed to be a
liquidation under this Section 3 and, if upon consummation thereof, the Company
does not at that time hold any shares of NVIDIA Stock then the holders of Series
B Preferred Stock will be entitled to receive the cash amount provided above.

         4. Redemption Provisions. The Series B Preferred shall not have the
right, nor be subject to, redemption.

         5. Conversion. The Series B Preferred Stock shall not be convertible
into other securities of the Corporation.

         6. Voting Rights. The holders of the Series B Preferred Stock shall
have no voting rights, except as otherwise provided by applicable law.

         7. Protective Provisions. The consent of a majority (51%) of the Series
B Preferred Stock shall be required for any action which (i) alters or changes
the rights, preferences or privileges of the Series B Preferred Stock, (ii)
increases or decreases the authorized number of shares of Series B Preferred,
(iii) creates (by reclassification or otherwise) a new series of preferred
stock, (iv) results in the issuance of any equity security of the Company, other
than equity securities issuable upon the exercise of options or warrants
outstanding as of the date of this Certificate of Determination and other than
up to 500,000 additional options that may be issued under the Company's stock
option and incentive plans (and any equity securities issuable upon the exercise
of such additional options), (v) results in any merger, sale of shares of
capital stock having voting power with respect to thirty-five percent (35%) or
more of the Company's outstanding capital stock, or any transaction in which all
or substantially all of the assets of the Corporation are sold, (vi) amends or
waives any provision of the Corporation's Restated Articles of Incorporation or
Bylaws that affect the rights or privileges of the Series B Preferred
shareholders or which create a new investor level with priority over the Series
B Preferred shareholders or (vii) results in the Company's incurrence of any
additional indebtedness for borrowed money. The Company shall not, by amendment
of its Restated Articles of Incorporation or through any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Certificate of Determination, but shall at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holders as
provided for herein and shall not attempt to do indirectly what it cannot do
directly under the terms hereof.




<PAGE>

         8. Restriction on Redemption and Cash Dividends with respect to Other
Capital Stock. Until the Liquidation Preference is fully satisfied, the Company
shall not, directly or indirectly, declare or pay any cash dividend or
distribution on its common stock or on any other security or redeem any such
securities issued by the Company without the prior express written consent of
the holders of not less than a majority (51%) of the then outstanding Series B
Preferred Shares.

         9. Lost or Stolen Certificates. Upon receipt by the Company of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Stock Certificate(s) representing the Series B Preferred Shares, and, in the
case of loss, theft or destruction, of any indemnification undertaking by the
holder to the Company and, in the case of mutilation, upon surrender and
cancellation of the Stock Certificate(s), the Company shall execute and deliver
new Stock Certificate(s) of like tenor and date (without requiring holder to
post an indemnity bond).

                  Each of the undersigned declares under penalty of perjury and
under the laws of the State of California that the above resolution was duly
adopted by the Board of Directors of the Corporation pursuant to Section 401 of
the California General Corporation Law and that the matters set forth in this
Certificate are true and correct to my own knowledge.

                  The undersigned have executed and subscribed this certificate
this ____ day of ____________, 2002 at Palo Alto, California.


                                ------------------------------------------------
                                Richard A. Heddleson, President, Chief Executive
                                Officer and Chief Financial Officer








</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.39
<SEQUENCE>5
<FILENAME>d97663exv10w39.txt
<DESCRIPTION>FORM OF FULL AND FINAL RELEASE AND SETTLEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.39


                             3DFX INTERACTIVE, INC.
                                  P.O. BOX 790
                          ALVISO, CALIFORNIA 95002-0790

                                  May 22, 2001

(Vendor)("CREDITOR" OR "YOU")
(Address_1)
(Address_2)
(City),(State)(Zip)
(Country)

Dear Creditor:

         At a special shareholders meeting held on March 27, 2001, 3dfx's
shareholders approved proposals to liquidate, wind up and dissolve 3dfx
Interactive, Inc. ("3dfx") pursuant to a plan of dissolution and to sell some of
3dfx's assets to an affiliate of NVIDIA Corporation ("NVIDIA") pursuant to an
asset purchase agreement (the "NVIDIA Sale").

         AS REQUIRED BY CALIFORNIA LAW, 3dfx IS HEREBY NOTIFYING YOU THAT IT HAS
ELECTED TO WIND UP ITS AFFAIRS AND VOLUNTARILY DISSOLVE IN ACCORDANCE WITH
CHAPTER 19 OF THE CALIFORNIA GENERAL CORPORATION LAW, AND IS NOW IN THE PROCESS
OF WINDING UP ITS AFFAIRS IN THE MANNER REQUIRED BY LAW AND AS PRESCRIBED UNDER
THE PLAN OF DISSOLUTION.

         3dfx recently made initial payments to creditors who chose to sign the
Terms of Settlement and Release sent to creditors in February 2001. The final
payment will be made to them as soon as 3dfx receives up to an additional $25
million from nVidia. In order to receive this additional payment, 3dfx must
certify to nVidia that it will be able to satisfy all its liabilities upon
receipt of the additional payment. To do this we resolve several items in
litigation, terminate a number of long term real estate leases, and dispose of
our subsidiaries in Northern Ireland and Mexico. We cannot estimate if or when
this may occur. Some creditors asked us to pay a higher amount than that offered
in exchange for an immediate full settlement. We offered to pay 70% of the total
owed for a full release to those creditors who did not wish to wait for the
final payment in full. We want to extend this same offer to our other creditors.

         Our records reflect that 3dfx owes you an aggregate amount of
$_____________ (the "Amount Owed"), which is the principal amount owed for goods
and services provided by you, but does not include any interest, penalties,
costs or attorney's fees. If you agree that this is the amount owed to you, then
you should review the "Full and Final Release and Settlement" attached, and if
it is acceptable to you, countersign it and return it to the address indicated
below and you will receive an immediate and final payment for 70% of the Amount
Owed, or $__________ (the "Final Settlement Amount"). We will cut and mail
checks to creditors who sign this agreement on the Friday following receipt of
the signed Full and Final Release and Settlement. If you do not agree that the
Amount Owed is correct, please let us know so that we may make the necessary
adjustments to the records so that they are in agreement and we can prepare a
corrected .

         If you agree to accept immediate payment of the Final Settlement Amount
as the final and total amount to be paid you by 3dfx and its subsidiaries, then
please read the following Full and Final Release and Settlement carefully,
countersign and return it to 3dfx at:

                             3DFX INTERACTIVE, INC.
                                  P.O. Box 790
                          Alviso, California 95002-0790


Sincerely yours,



Richard A. Heddleson, Chief Financial Officer
of 3dfx Interactive, Inc.
President of STB Systems, Inc. and other 3dfx subsidiaries


<PAGE>


April ___, 2001
Page 2



                             3DFX INTERACTIVE, INC.

                      FULL AND FINAL RELEASE AND SETTLEMENT

                  The undersigned creditor ("Creditor"), on its own behalf and
         on behalf of its subsidiaries, affiliates, predecessors and successors
         (together, the "Releasing Parties"), agrees to accept $ _________ (the
         "Final Settlement Amount") in full, final, and complete satisfaction of
         all past, present or future claims of the Releasing Parties against
         3dfx Interactive, Inc. ("3dfx") and its subsidiaries, affiliates,
         predecessors, successors, officers, directors, employees, agents, and
         attorneys (together, the "Released Parties"), whether known or unknown,
         asserted or unasserted, and waives and releases any and all related
         claims including claims for penalties, interest, costs, disbursements
         or attorneys fees related in any way to the claims of the Releasing
         Parties against the Released Parties. The Releasing Parties acknowledge
         that they have had the opportunity to be advised by legal counsel, and
         that they are familiar with the provisions of the California Civil Code
         Section 1542 which provides as follows:

              A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
              DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
              EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
              AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

         The Releasing Parties, being aware of the above Code Section, hereby
         expressly, knowingly and intentionally waive any rights any of them may
         have thereunder, as well as under any other statute or common law
         principles of similar effect and agree that this Full and Final Release
         and Settlement expressly supersedes any and all prior written or oral
         agreements with any of the Released Parties.

         AS YOUR AGREEMENT WITH THE TERMS OF THIS FULL AND FINAL RELEASE AND
SETTLEMENT ABOVE MAY COMPROMISE THE AMOUNT YOU BELIEVE THAT 3dfx OWES TO YOU,
YOU ARE URGED TO CONSULT WITH AN ATTORNEY OF YOUR CHOICE TO ADVISE YOU OF THE
EFFECT OF YOUR EXECUTION OF THIS FULL AND FINAL RELEASE AND SETTLEMENT.

THE UNDERSIGNED CREDITOR OF 3dfx INTERACTIVE, INC. AND/OR ONE OR MORE OF ITS
SUBSIDIARIES (INCLUDING STB SYSTEMS, INC.) DOES HEREBY ACKNOWLEDGE AND AGREE TO
ALL OF THE TERMS SET FORTH IN THIS FULL AND FINAL RELEASE AND SETTLEMENT.

(Vendor)
--------------------------------            -----------------------------------
Name of Creditor                            Date

--------------------------------            -----------------------------------
Signature of Authorized Person              Title of Authorized Person

This Full and Final Release and Settlement shall become effective when
countersigned below:


-----------------------------------------------------
Richard A. Heddleson, Chief Financial Officer
of 3dfx Interactive, Inc.
President of STB Systems, Inc. and other 3dfx subsidiaries


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.40
<SEQUENCE>6
<FILENAME>d97663exv10w40.txt
<DESCRIPTION>FORM OF RELEASE AND SETTLEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.40

                             3DFX INTERACTIVE, INC.
                                  P.O. BOX 790
                          ALVISO, CALIFORNIA 95002-0790

                                February 16, 2001

("CREDITOR" OR "YOU")


Dear Creditor:

         I am enclosing for your information a copy of the Prospectus/Proxy
Statement that is being distributed to the shareholders of 3dfx Interactive,
Inc. ("3dfx"). The Prospectus/Proxy Statement describes the proposals that are
being submitted for 3dfx shareholder approval, namely the dissolution of 3dfx
and the sale to an affiliate of Nvidia Corporation ("Nvidia") of certain assets
of 3dfx (the "Nvidia Sale"). The SEC decided not to review the Prospectus/Proxy
Statement and has since declared the related registration statement effective,
which allowed us to accelerate the 3dfx shareholder meeting date to vote on
these proposals to March 27, 2001.

         Under the terms of the Asset Purchase Agreement between 3dfx and
Nvidia, Nvidia has agreed to pay $70 million in cash and one million shares of
Nvidia common stock for the 3dfx assets that it is purchasing, subject to a
number of conditions. Of the $70 million in cash to be received by 3dfx at
closing, $15 million must immediately be applied to the repayment of a bridge
loan made by Nvidia to 3dfx in December 2000, so 3dfx will receive a net cash
amount at closing of $55 million (the "Closing Cash Payment"). Nvidia is not,
however, required to deliver the shares of its common stock provided for in the
purchase agreement (the "Stock Payment") until 3dfx is able to satisfy certain
additional conditions, including 3dfx's delivery of a certificate that it has
satisfied all of its and its subsidiaries' liabilities. In order to meet this
post-closing requirement, 3dfx is permitted under the terms of the purchase
agreement to request that Nvidia make a one-time exchange of up to 500,000
shares of Nvidia common stock from the Stock Payment for up to $25 million in
cash, provided that the cash from the exchange will be sufficient to satisfy in
full all remaining liabilities.

         As the Closing Cash Payment will not alone be sufficient to satisfy
3dfx's and its subsidiaries' liabilities, 3dfx expects that it will be required
to exchange stock for cash from Nvidia in order to fully pay these liabilities
and otherwise be entitled to receive the balance of the Stock Payment. 3dfx
expects that the aggregate cash provided by the Closing Cash Payment and the
stock-for-cash exchange will be sufficient to pay all known current and
determinable liabilities, although unknown, contingent or disputed liabilities
could result in liabilities exceeding this aggregate cash amount. If this were
to be the case, then Nvidia would not be obligated to make the stock-for-cash
exchange or otherwise deliver the Stock Payment to 3dfx.

         We have updated 3dfx's accounts payable records in response to the
helpful feedback we received from a number of creditors. Our records reflect
that 3dfx owes you an aggregate amount of $_____________ (the "Repayment
Amount"), which is the principal amount owed for goods and services provided by
you, but does not include any interest, penalties, costs or attorney's fees
(other than interest accruing on loans extended by financial institutions). If
you agree that this is the amount owed to you, then 3dfx is requesting that you
review the "Terms of Settlement and Release" set forth below in this letter,
countersign it and return it to the address indicated below. 3dfx is sending
this letter to you and to all of its other creditors and is seeking
counter-execution of these letters for three principal reasons:

         o        First, to ensure to the greatest extent possible that all of
                  3dfx's creditors are treated fairly and equally by receiving
                  the principal amounts of their claims;

         o        Second, to assure Nvidia that 3dfx will, upon making the
                  stock-for-cash exchange, be in a position to satisfy all of
                  its liabilities; and

         o        Third, to ensure that amounts owed by 3dfx to its creditors
                  are paid as soon as possible, without delay resulting from
                  resolving contingent or disputed claims.

         UPON CLOSING OF THE NVIDIA SALE, A PORTION OF THE CLOSING CASH PAYMENT
WILL BE RESERVED TO FINANCE THE WIND-DOWN OF 3DFX'S OPERATIONS, WITH THE BALANCE
USED TO MAKE PRO RATA PAYMENTS TO ALL 3DFX CREDITORS WHOSE COUNTERSIGNED LETTERS
ARE TIMELY RECEIVED BY 3DFX. THE BALANCE OF THE REPAYMENT AMOUNT DUE TO SUCH
CREDITORS WILL BE PAID TO THEM FOLLOWING THE STOCK-FOR-CASH EXCHANGE PROVIDED
FOR IN THE PURCHASE AGREEMENT WITH NVIDIA. THOSE CREDITORS WHOSE COUNTERSIGNED
LETTERS ARE NOT TIMELY RECEIVED BY 3DFX WILL NOT RECEIVE PAYMENT OF THEIR CLAIM
UNTIL ALL CLAIMS ARE RESOLVED AND 3DFX RECEIVES SUFFICIENT CASH TO PAY ALL
CREDITORS IN FULL.

         If you are in agreement that the Repayment Amount indicated above is
the total amount owed to you by 3dfx and its subsidiaries, then please read the
following Terms of Settlement and Release carefully, countersign this letter and
return it to 3dfx as indicated below:



<PAGE>

February 16, 2001
Page 2


                         TERMS OF SETTLEMENT AND RELEASE

                  Creditor, on its own behalf and on behalf of its subsidiaries,
         affiliates, predecessors and successors (together, the "Releasing
         Parties"), agrees to accept the Repayment Amount indicated above in
         this letter in full, final, and complete satisfaction of all of the
         claims of the Releasing Parties against 3dfx and its subsidiaries,
         affiliates, predecessors, successors, officers, directors, employees,
         agents, and attorneys (together, the "Released Parties"), whether known
         or unknown, asserted or unasserted, from the beginning of time to
         February 16, 2001, and waive and release any and all related claims
         including claims for penalties, interest, costs, disbursements or
         attorneys fees related in any way to the claims of the Releasing
         Parties against the Released Parties. The Releasing Parties acknowledge
         that they have had the opportunity to be advised by legal counsel, and
         that they are familiar with the provisions of the California Civil Code
         Section 1542 which provides as follows:

              A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
              DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
              EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
              AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

         The Releasing Parties, being aware of the above Code Section, hereby
         expressly, knowingly and intentionally waive any rights any of them may
         have thereunder, as well as under any other statute or common law
         principles of similar effect.

         It is understood and agreed that if on or before May 18, 2001, you do
not receive a pro rata payment of that portion of the Closing Cash Payment
allocated to 3dfx creditors whose countersigned letters are received by 3dfx,
then all the terms of this letter, including the Terms of Settlement and
Release, shall be null and void.

         BECAUSE YOUR AGREEMENT WITH THE TERMS OF THIS LETTER, INCLUDING THE
TERMS OF SETTLEMENT AND RELEASE ABOVE, MAY COMPROMISE THE AMOUNT YOU BELIEVE
THAT 3DFX OWES TO YOU, YOU ARE URGED TO CONSULT WITH AN ATTORNEY OF YOUR CHOICE
TO ADVISE YOU OF THE EFFECT OF YOUR COUNTER-EXECUTION OF THIS LETTER.

         If you are in agreement with all of the terms of this letter, including
the above Terms of Settlement and Release, please countersign this letter in the
space provided below and return this letter so that it is received by 3dfx on or
before March 23, 2001 at the following address:

                             3DFX INTERACTIVE, INC.
                                  P.O. Box 790
                          Alviso, California 95002-0790

         If you have any questions regarding the Nvidia Sale or the process by
which 3dfx intends to address the claims of its creditors, please address them
to me at the above address. I assure you that it is 3dfx's intent to treat all
of its creditors fairly and equally. Please know that I, on behalf of 3dfx, very
much appreciate the patience that you and other 3dfx creditors have demonstrated
to this point. As you can see, the terms and procedures leading up to the
closing of the Nvidia Sale, as well as winding up of 3dfx's affairs thereafter,
are delicate and complex. I sincerely believe that your continued cooperation
with this process is not only in your best interest, but in the best interest of
all of 3dfx's creditors. I look forward to receiving your countersigned copy of
this letter.

                              Sincerely,


                              Richard A. Heddleson
                              Chief Financial Officer of 3dfx Interactive, Inc.

                              President of STB Systems, Inc. and other 3dfx
                              subsidiaries

THE UNDERSIGNED CREDITOR OF 3DFX INTERACTIVE, INC. AND/OR ONE OR MORE OF ITS
SUBSIDIARIES (INCLUDING STB SYSTEMS, INC.) DOES HEREBY ACKNOWLEDGE AND AGREE TO
ALL OF THE TERMS CONTAINED IN THIS LETTER, INCLUDING THE TERMS OF SETTLEMENT AND
RELEASE:


--------------------------------               --------------------------------
Name of Creditor                               Date


--------------------------------               --------------------------------
Signature of Authorized Person                 Title of Authorized Person



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>7
<FILENAME>d97663exv23w1.txt
<DESCRIPTION>CONSENT OF PRICEWATERHOUSECOOPERS LLP
<TEXT>
<PAGE>



                                                                    EXHIBIT 23.1


                       Consent of Independent Accountants


We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 333-42156, 333-79037, and 333-95017) of 3dfx
Interactive, Inc. of our report dated June 7, 2002, except for Note 13, as to
which the date is June 13, 2002 relating to the consolidated financial
statements which appear in this Annual Report on Form 10-K. We also consent to
the incorporation by reference of our report dated June 13, 2002 relating to the
financial statement schedule, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
San Jose, California
June 14, 2002





</TEXT>
</DOCUMENT>
</SUBMISSION>
