As Reported (1)

Pro Forma Adjustments

Pro Forma

ASSETS

Current assets:

Cash and cash equivalents

$ 34,609

$ 17,000

(2)

$ 51,609

Restricted cash in escrow

-

3,000

(2)

3,000

Accounts receivable, net

5,722

(4,987)

(3)

735

Inventories, net

11,160

-

11,160

Prepaid expenses and other current assets

4,180

(308)

(3)

3,872

Total current assets

55,671

14,705

70,376

Property and equipment, net

5,545

(1,266)

(3)

4,279

Other long-term assets

2,027

(1,692)

(4)

335

Total assets

$ 63,243

$ 11,747

$ 74,990

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$ 5,264

$ (284)

(3)

$ 4,980

Deferred revenue

3,311

(2,068)

(3)

1,243

Accrued liabilities and other

1,758

3,798 

(5)

5,556

Total current liabilities

10,333

1,446

11,779

Other long-term liabilities

79

-

79

Total liabilities

10,412

1,446

11,858

Stockholders’ equity:

Preferred stock

-

-

-

Common stock

7

-

7

Treasury stock

(1,431)

-

(1,431)

Additional paid-in capital

810,642

-

810,642

Accumulated other comprehensive income

(3)

15

(3)

12

Accumulated deficit

(756,384)

10,286

(6)

(746,098)

Total stockholders’ equity

52,831

10,301

63,132

Total liabilities and stockholders’ equity

$ 63,243

$ 11,747

$ 74,990

As Reported (7)

Pro Forma Adjustments (8)

Pro Forma

Net revenue:

e-Commerce revenue

$ 35,314

$ -

$ 35,314

Media revenue

10,028

(10,028)

-

Total net revenue

45,342

(10,028)

35,314

Cost of revenue:

e-Commerce cost of revenue

30,651

-

30,651

Media cost of revenue

2,186

(2,186)

-

Total cost of revenue

32,837

(2,186)

30,651

Gross margin

12,505

(7,842)

4,663

Operating expenses:

Sales and marketing

6,784

(3,409)

3,375

Research and development

3,770

(2,095)

1,675

General and administrative

6,398

(1,405)

4,993

Amortization of intangible assets

43

-

43

Total operating expenses

16,995

(6,909)

10,086

Loss from operations

(4,490)

(933)

(5,423)

Gain on sale of non-marketable securities

4,021

-

4,021

Interest and other income (expense), net

(30)

-

(30)

Loss before income taxes

(499)

(933)

(1,432)

Provision for income taxes

13

-

13

Net Loss

$ (512)

$ (933)

$ (1,445)

Net loss per share:

Basic

$ (0.08)

$ (0.23)

Diluted

$ (0.08)

$ (0.23)

Shares used in per share calculations:

Basic

6,409

6,409

Diluted

6,409

6,409

As Reported (9)

Pro Forma Adjustments (8)

Pro Forma

Net revenue:

e-Commerce revenue

$ 29,524

$ -

$ 29,524

Media revenue

10,462

(10,462)

-

Total net revenue

39,986

(10,462)

29,524

Cost of revenue:

e-Commerce cost of revenue

26,843

-

26,843

Media cost of revenue

2,805

(2,805)

-

Total cost of revenue

29,648

(2,805)

26,843

Gross margin

10,338

(7,657)

2,681

Operating expenses:

Sales and marketing

6,669

(3,527)

3,142

Research and development

2,286

(1,460)

826

General and administrative

5,899

(1,420)

4,479

Amortization of intangible assets

41

(41)

-

Total operating expenses

14,895

(6,448)

8,447

Loss from operations

(4,557)

(1,209)

(5,766)

Interest and other income (expense), net

7

-

7

Loss before income taxes

(4,550)

(1,209)

(5,759)

Benefit for income taxes

(23)

-

(23)

Net loss

$ (4,527)

$ (1,209)

$ (5,736)

Net loss per share:

Basic

$ (0.72)

$ (0.91)

Diluted

$ (0.72)

$ (0.91)

Shares used in per share calculations:

Basic

6,294

6,294

Diluted

6,294

6,294

As Reported (9)

Pro Forma Adjustments (8)

Pro Forma

Net revenue:

E-commerce revenue

$ 99,057

$ -

$ 99,057

Media revenue

20,409

(20,409)

-

Total net revenue

119,466

(20,409)

99,057

Cost of revenue:

E-commerce cost of revenue

83,277

-

83,277

Media cost of revenue

4,906

(4,906)

-

Total cost of revenue

88,183

(4,906)

83,277

Gross margin

31,283

(15,503)

15,780

Operating expenses:

Sales and marketing

15,420

(6,738)

8,682

Research and development

5,542

(3,685)

1,857

General and administrative

11,565

(2,065)

9,500

Amortization of intangible assets

83

(83)

-

Gain loss on sale of assets

(65)

65

-

Total operating expenses

32,545

(12,506)

20,039

Loss from operations

(1,262)

(2,997)

(4,259)

Interest and other income (expense), net

(11)

-

(11)

Loss before income taxes

(1,273)

(2,997)

(4,270)

Benefit for income taxes

(83)

-

(83)

Net Loss

$ (1,190)

$ (2,997)

$ (4,187)

Loss per share:

Basic

$ (0.19)

$ (0.66)

Diluted

$ (0.19)

$ (0.66)

Shares used in per share calculations:

Basic

6,319

6,319

Diluted

6,319

6,319

`

As Reported (9)

Pro Forma Adjustments (8)

Pro Forma

Net revenue:

E-commerce revenue

$ 76,335

$ -

$ 76,335

Media revenue

18,284

(18,284)

-

Total net revenue

94,619

(18,284)

76,335

Cost of revenue:

E-commerce cost of revenue

62,630

-

62,630

Media cost of revenue

6,610

(6,610)

-

Total cost of revenue

69,240

(6,610)

62,630

Gross margin

25,379

(11,674)

13,705

Operating expenses:

Sales and marketing

15,277

(8,365)

6,912

Research and development

6,148

(4,635)

1,513

General and administrative

9,551

(459)

9,092

Amortization of intangible assets

306

(306)

-

Gain on sale of assets

(1,391)

1,391

-

Restructuring costs

(101)

101

-

Total operating expenses

29,790

(12,273)

17,517

Loss from operations

(4,411)

599

(3,812)

Interest and other income (expense), net

44

-

44

Loss from continuing operations before income taxes

(4,367)

599

(3,768)

Benefit for income taxes

(167)

-

(167)

Loss from continuing operations

$ (4,200)

$ 599

$ (3,601)

Loss per share from continuing operations:

Basic

$ (0.69)

$ (0.59)

Diluted

$ (0.69)

$ (0.59)

Shares used in per share calculations:

Basic

6,073

6,073

Diluted

6,073

6,073

As Reported (9)

Pro Forma Adjustments (8)

Pro Forma

Net revenue:

E-commerce revenue

$ 49,091

$ -

$ 49,091

Media revenue, including $545 of related party revenue

16,486

(16,486)

-

Total net revenue

65,577

(16,486)

49,091

Cost of revenue:

E-commerce cost of revenue

38,151

-

38,151

Media cost of revenue

6,953

(6,953)

-

Total cost of revenue

45,104

(6,953)

38,151

Gross margin

20,473

(9,533)

10,940

Operating expenses:

Sales and marketing

11,775

(7,924)

3,851

Research and development

8,103

(7,235)

868

General and administrative

8,843

(710)

8,133

Amortization of intangible assets

200

(200)

-

(Gain) loss on sale of assets

1,020

(1,020)

-

Restructuring costs

(62)

62

-

Total operating expenses

29,879

(17,027)

12,852

Loss from operations

(9,406)

7,494

(1,912)

Interest and other income (expense), net

110

-

110

Other than temporary impairment of non-marketable equity securities

(4,585)

4,585

-

Loss before income taxes

(13,881)

12,079

(1,802)

Provision for income taxes

140

-

140

Net Loss

$ (14,021)

$ 12,079

$ (1,942)

Net loss per share:

Basic

$ (2.31)

$ (0.32)

Diluted

$ (2.31)

$ (0.32)

Shares used in per share calculations:

Basic

6,080

6,080

Diluted

6,080

6,080

(1)

Balances are as reported on the Company’s unaudited Condensed Consolidated Balance Sheet included in the Company’s Form 10-Q as of June 30, 2012.

(2)

In accordance with the terms of the Purchase Agreement, the Buyers paid the Company $20 million in cash, of which $3 million was deposited into an escrow account for a period of twelve months after the Closing Date in order to secure the Company’s indemnification obligations to the Buyers for potential breaches of the Company’s representations, warranties, covenants and other obligations made under the Purchase Agreement.

(3)

Estimated assets and liabilities acquired by the Buyers and remaining balances related to the Purchased Business to be excluded in Pro Forma ending balances at June 30, 2012.

(4)

Goodwill of $1.7 million related to the Purchased Business on the date of sale.

(5)

Includes the reduction of $0.5 million in accrued liabilities acquired by the Buyers, an accrual of estimated transaction costs of $1.1 million which are directly related to executing the sale of the Purchased Business assuming the transaction had occurred as of June 30, 2012, and an accrual of $3.2 million for retention bonuses and stock compensation to be paid to employees as a result of the sale of the Purchased Business.

(6)

Accumulated deficit includes an estimated $13.4 million gain from the sale of the Purchased Business assets assuming the transaction had occurred as of June 30, 2012, and the impact of retention bonuses and stock compensation to be paid to employees as a result of the sale of the Purchased Business.

(7)

As reported on the Company’s unaudited Condensed Consolidated Statements of Operations included in the Company’s Form 10-Q as of June 30, 2012.

(8)

Adjustments are results of the Purchased Business for the period presented. These amounts may differ from previously reported segment operating results due to items which were allocated to the Purchased Business, which will be retained subsequent to the sale of the Purchased Business.

(9)

As reported on the Company’s audited Consolidated Statements of Operations included in the Company’s Form 10-K as of December 31, 2011.