(Mark One)
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 2004
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ________________ to ________________.
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Delaware
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77-0421089
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(State or other jurisdiction of
incorporation or organization) |
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(I.R.S. Employer
Identification No.) |
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888 Seventh Ave., 17th Floor, New York, NY
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10019
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(Address of principal executive offices)
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(Zip Code)
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(212) 974-5730
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(Registrants telephone number, including area code)
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PART I. FINANCIAL INFORMATION
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1
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September 30
2004 |
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December 31,
2003 |
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Assets
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Current assets:
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Cash and cash equivalents
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$
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6,525
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$
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9,077
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Accounts receivable, net
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28
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Other current assets
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160
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164
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Total current assets
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$
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6,685
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$
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9,269
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Liabilities and stockholders equity
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Current liabilities:
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Accrued liabilities
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$
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90
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$
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1,935
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Total current liabilities
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90
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1,935
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Stockholders equity:
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Common stock, $0.001 par value; 30,000,000 shares authorized; 3,027,273 and 3,243,979 shares issued and outstanding at September 30, 2004 and December 31, 2003, respectively
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23
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23
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Additional paid-in capital
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146,053
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146,053
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Accumulated other comprehensive loss (net)
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(79
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)
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(79
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)
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Accumulated deficit
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(139,335
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)
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(138,663
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)
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Treasury Stock 216,706 shares at cost
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(67
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)
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Total stockholders equity
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6,595
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7,334
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Total liabilities and stockholders equity
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$
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6,685
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$
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9,269
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2004
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2003
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2004
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2003
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Net revenues:
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License
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$
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$
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$
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$
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4
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Services
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39
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Total net revenues
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43
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Cost of net revenues:
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License
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5
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Services
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2
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Non-cash cost of revenue
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Total cost of net revenues
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7
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Gross profit (loss)
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36
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Operating expenses:
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Sales and marketing
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6
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277
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Research and development
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165
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General and administrative
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225
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472
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792
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4,730
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Restructuring
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4,411
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Total operating expenses
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225
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478
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792
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9,583
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Loss from operations
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(225
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)
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(478
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)
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(792
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)
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(9,547
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)
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Other income (expense), net
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40
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52
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120
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180
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Gain on sale of digital music fulfillment business
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2,868
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Net loss
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$
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(185
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)
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$
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(426
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$
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(672
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)
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$
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(6,499
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)
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Net loss per share:
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Basic and diluted
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$
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(0.06
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)
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$
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(0.13
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)
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$
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(0.21
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$
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(2.00
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Weighted average shares
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3,027
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3,243
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3,154
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3,242
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Nine Months Ended
September 30, |
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2004
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2003
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Cash flows from operating activities:
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Net loss
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$
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(672
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)
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$
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(6,499
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)
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Adjustments to reconcile net loss to net cash used in operating activities:
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Depreciation and amortization
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228
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Gain on sale of digital music fulfillment business
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(2868
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)
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Changes in assets and liabilities:
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Accounts receivable
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28
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35
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Other current assets
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4
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1,054
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Accounts payable
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(1,006
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)
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Accrued liabilities
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(1,845
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)
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(1,805
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)
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Deferred revenue
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(39
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)
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Net cash used in operating activities
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(2,485
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)
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(10,900
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)
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Cash flows from investing activities:
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Purchase of available for sale securities
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(459
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)
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Decrease in restricted cash
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826
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Proceeds from sale of digital music fulfillment business and related assets
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3,200
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Net cash provided by investing activities
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3,567
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Cash flows from financing activities:
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Cash distribution to stockholders
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(57,771
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)
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Proceeds from issuance of common stock, net of repurchases
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14
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Purchase of treasury stock
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(67
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)
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Net cash used in financing activities
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(67
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)
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(57,757
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)
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Net decrease in cash and cash equivalents
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(2,552
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)
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(65,090
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)
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Cash and cash equivalents, beginning of period
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9,077
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73,985
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Cash and cash equivalents, end of period
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$
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6,525
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$
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8,895
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2004
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2003
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2004
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2003
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Net lossas reported
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$
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185
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$
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426
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$
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672
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$
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6,499
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Less stock-based compensation (income) expense determined under fair value based method, net of tax effects
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2
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60
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54
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135
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Net losspro forma
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$
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187
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$
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486
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$
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726
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$
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6,634
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Basic and diluted net loss per shareas reported
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$
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0.06
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$
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0.13
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$
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0.21
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$
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2.00
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Basic and diluted net loss per sharepro forma
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$
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0.06
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$
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0.15
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$
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0.23
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$
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2.05
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September 30,
2004 |
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December 31,
2003 |
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Accrued liabilities:
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Consulting and professional services
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$
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30
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$
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124
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Litigation settlement
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1,766
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Other
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60
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45
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$
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90
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$
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1,935
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2004
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2003
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2004
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2003
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Comprehensive loss:
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Net loss
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$
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(185
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)
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$
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(426
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)
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$
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(672
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)
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$
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(6,499
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)
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Foreign currency translation adjustments
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1
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Unrealized gain (loss) on available-for-sale securities
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13
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13
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$
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(185
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)
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$
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(413
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)
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$
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(672
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)
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$
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(6,485
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)
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2004
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2003
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2004
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2003
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Common stock options
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|
111
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73
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111
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73
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Common stock warrants
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431
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431
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111
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|
504
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|
111
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504
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PERIOD
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(A) TOTAL
NUMBER OF SHARES PURCHASED (1) |
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(B) AVERAGE
PRICE PAID PER SHARE |
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(C) TOTAL
NUMBER OF SHARES REPURCHASE AS PART OF PUBLICLY ANNOUNCED PLANS OR PROGRAMS |
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(D) MAXIMUM
NUMBER OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLANS OR PROGRAMS |
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July 1 - July 31, 2004
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August 1 August 31, 2004
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216,706
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$0.31
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September 1 September 30, 2004
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(1) Represents fractional shares that were repurchased in connection with the implementation of the Reverse/Forward Stock Split on July 26, 2004. These repurchases were completed on August 4, 2004. Per share amounts and prices in the above table have not been adjusted to reflect the Reverse/Forward Stock Split. No shares of common stock were repurchased by us through a publicly announced plan or program.
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3.1
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Certificate of Incorporation as currently in effect (7)
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3.2
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Bylaws as currently in effect (2)
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4.2
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Form of Specimen Stock Certificate (1)
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10.1
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Form of Indemnification Agreement entered into between the registrant and each of its directors and executive officers (1)
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10.2
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1996 Equity Incentive Plan (1)
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10.3
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1999 Employee Stock Purchase Plan (1)
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10.21
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Summary Plan Description of 401(K) Plan (1)
|
10.50
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2000 Nonstatutory Stock Option Plan (2)
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10.71
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Settlement Agreement with BeMusic, Inc. dated as of January 17, 2003 (3)
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10.72
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Sublease Termination Agreement with Openwave Systems, Inc., dated as of July 14, 2003 (5)
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10.73
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Personal Property Lease Termination Agreement with Openwave Systems, Inc., dated as of July 14, 2003 (5)
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10.74
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Settlement Agreement and Mutual Release with BeMusic, Inc. dated February 13, 2004 (6)
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11.1
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Statement regarding computation of per share earnings (4)
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31.1
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Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002
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31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002
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32.1
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Certification of Chief Executive Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002
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32.2
|
Certification of Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002
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(1)
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incorporated by reference to the Registration Statement on Form S-1 and all amendments thereto, Registration No. 333-77707, filed with the Securities and Exchange Commission on May 4, 1999 and declared effective July 8, 1999
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(2)
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incorporated by reference to the Form 10-Q filed with the Securities and Exchange Commission on August 14, 2000
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(3)
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Incorporated by reference to Exhibits on Form 8-K filed with the Securities and Exchange Commission on January 28, 2003
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(4)
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this exhibit has been omitted because the information is shown in the financial statements or notes thereto
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(5)
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incorporated by reference to the Form 10-Q filed with the Securities and Exchange Commission on August 14, 2003
|
(6)
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incorporated by reference to the Form 10-K filed with the Securities and Exchange Commission on March 30, 2004
|
(7)
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Incorporated by reference to Exhibits on Form 8-K filed with the Securities and Exchange Commission on July 16, 2004
|
|
L Q CORPORATION, INC.
|
DATE: November 12, 2004
|
|
|
|
/s/ James A. Mitarotonda | |
|
|
|
James A. Mitarotonda
|
|
Chairman
|
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|
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/s/ Melvyn Brunt
|
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|
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Melvyn Brunt
|
|
Chief Financial Officer
|