Kazaa ally faces stock delisting

The American Stock Exchange notified Altnet parent company Brilliant Digital Entertainment last week that its shares will be delisted, after failing to meet the stock market's minimum financial requirements.

The company, which rose into the public eye after allying itself with file-swapping leader Kazaa, has been struggling financially for several years, as it tried to recast a multimedia software business into a peer-to-peer distribution platform.

Brilliant's Derek Broes, executive vice president, said the company will appeal the exchange's decision but that the delisting notification will not have any immediate effect on Altnet's operations.

"I think it has no impact whatsoever," Broes said. "Altnet is working the same as it always has. We're trucking along, and people are scrambling around the office."

Altnet is among the most prominent and controversial attempts to turn a hugely popular file-swapping network into a tool for distributing and selling authorized versions of digital files, instead of the infringing songs, movies and pieces of software that dominate the services today.

The service plugs into Kazaa and sprinkles authorized files in with related search results. As part of a joint venture with Kazaa parent Sharman Network, Altnet has spent considerable time trying to woo big record labels and movie studios into distributing content through the file-trading service, largely without success.

The company has persuaded some prominent independent musicians and game developers, most notably Atari (formerly Infogrames) to sell their products through Altnet's network, however.

Brilliant's management is negotiating with some of its investors and debt holders to convert the debt into equity shares in the company.

In its last financial statement to the Securities and Exchange Commission, Brilliant reported current cash and other liquid assets of about $4.6 million, with current liabilities of $8.7 million.