Board Approves Plan to Dissolve Company

Despite a $117.6 million IPO in 1999, embattled music site neared the end of its road Wednesday as the Board of Directors of the New York-based company, which enables custom CD compilation and digital downloads, voted unanimously to liquidate and dissolve the company.

The move comes nearly a month after music industry heavyweight EMI Group, a majority backer of the company, sold its stake on Dec. 8.

The board’s plan will now be submitted to the company’s stockholders for approval. The company said that once shareholders approve the plan it will prepare an information statement describing the plan for filing with the Securities and Exchange Commission. The statement will also be mailed to stockholders.

“The Board of Directors believes the Plan of Liquidation is in the best interests of the company and its stockholders,” said in a statement Wednesday. “In determining to liquidate the company, the board considered a number of factors including that the music industry and ecommerce in general are in a period of rapid change and uncertainty; the potential for growth and availability of financing in this environment is extremely limited; the company’s inability, despite significant efforts, to identify a buyer or strategic partner willing to offer value than that expected to be derived from liquidation; and the company’s stock has traded well below the net asset value of its shares. Based on this information, the Board of Directors believes that distributing the company’s net assets will return the greatest value to stockholders as compared to examined alternatives.” had been struggling for some time. In late September, it cut back its workforce by 30 percent in an attempt to slow cash burn. At that time, the company’s cash and cash equivalents amounted to about $31.2 million. The staff reductions were intended to cut its cash depletion to between $10 and $12 million annually.

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