December 26 December 28 December 29 December 30 December 31 2004 2003 2002 2001 2000 ----------- ----------- ----------- ----------- ----------- ($ in thousands) Unaudited Statement of Operations Data: Revenues $ 6,560 $ 6,272 $ 7,221 $ 7,998 $ 10,105 Cost of Revenues 3,549 2,847 3,207 3,267 4,329 ----------- ----------- ----------- ----------- ----------- Gross Profit 3,011 3,425 4,014 4,731 5,776 ----------- ----------- ----------- ----------- ----------- Operating expenses General and administrative 243 435 158 195 239 Product development 1,603 1,652 1,847 1,129 1,315 Sales and marketing 2,256 1,904 1,676 1,858 2,402 Overhead allocation from Parent 300 300 300 300 300 ----------- ----------- ----------- ----------- ----------- Total operating expenses 4,402 4,291 3,981 3,482 4,256 ----------- ----------- ----------- ----------- ----------- Net Income (loss) $ (1,391) $ (866) $ 33 $ 1,249 $ 1,520 =========== =========== =========== =========== ===========UNITED STATES

9SECURITIES AND ~~month~~EXCHANGE (39 week) period ended Year ended ------------------------------ ---------- September 25, September 26, December 26 December 28 2005 2004 2004 2003 ------------ ------------ ------------ ------------ REVENUES 100% 100% 100% 100% COST OF REVENUES 56% 58% 54% 45% ------------ ------------ ------------ ------------ GROSS PROFIT 44% 42% 46% 55% ------------ ------------ ------------ ------------ OPERATING EXPENSES General and administrative 3% 4% 4% 7% Product development 16% 25% 24% 26% Sales and marketing 34% 35% 34% 30% Overhead allocation from Parent 5% 5% 5% 5% ------------ ------------ ------------ ------------ Total operating expenses 58% 68% 67% 68% OTHER EXPENSES Loss on disposal of fixed assets -1% 0% 0% 0% ------------ ------------ ------------ ------------ Total other expenses -1% 0% 0% 0% ------------ ------------ ------------ ------------ NET LOSS -15% -26% -21% -14% ============ ============ ============ ============COMMISSION

~~BALANCE SHEETS (Dollars in thousands) ------------------------------------------------------------------------------------------------- ASSETS December 26~~WASHINGTON, 2004 December 28, 2003 ----------------- ----------------- CURRENT ASSETS: Accounts receivable, net $ 1,397 $ 1,065 Inventories 712 669 ----------------- ----------------- Total current assets 2,109 1,734 PROPERTY AND EQUIPMENT, NET 44 59 GOODWILL 410 410 ----------------- ----------------- TOTAL ASSETS $ 2,563 $ 2,203 ================= ================= LIABILITIES AND PARENT'S EQUITY IN UNIT CURRENT LIABILITIES Accounts payable $ 104 $ 85 Accrued salaries, wages and commissions 100 195 Accrued warranty costs 33 33 Accrued royalties 114 65 ----------------- ----------------- Total current liabilities 351 378 ----------------- ----------------- TOTAL LIABILITIES 351 378 COMMITMENTS AND CONTINGENCIES PARENT'S EQUITY IN UNIT 2,212 1,825 ----------------- ----------------- TOTAL LIABILITIES AND PARENT'S EQUITY IN UNIT $ 2,563 $ 2,203 ================= ================= See accompanying notes to audited financial statements D.C. ~~F-3~~20549

~~STATEMENTS OF CASH FLOWS (Dollars in thousands)~~ FORM 8--------------------------------------------------------------------------------------------------- Years ended ----------- December 26, 2004 December 28, 2003 ----------------- ----------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (1,391) $ (866) Adjustments to reconcile net loss to net cash used in operating activities Depreciation 15 13 Provision for doubtful accounts 24 (1) Provision for inventory obsolescence reserve (47) (109) Changes in operating assets and liabilities: Accounts receivable (356) 102 Inventories 4 363 Accounts payable 19 20 Accrued salaries, wages and commissions (95) 124 Accrued warranty costs -- (9) Accrued royalties 49 61 ----------------- ----------------- Net cash used in operating activities (1,778) (302) ----------------- ----------------- NET CASH PROVIDED BY FINANCING ACTIVITIES: Intercompany transactions, net 1,778 302 ----------------- ----------------- NET INCREASE (DECREASE) IN CASH -- -- CASH, BEGINNING OF YEAR -- -- ----------------- ----------------- CASH, END OF YEAR $ -- $ -- ================= ================= See accompanying notes to audited financial statements. F-6K

BALANCE SHEETS (Dollars in thousands) ------------------------------------------------------------------------------------------------------ (Unaudited) September 25, 2005 December 26, 2004 ------------------ ----------------- ASSETS CURRENT REPORT ASSETS: Accounts receivable, net $ 1,159 $ 1,397 Inventories 756 712 ------------------ ----------------- Total current assets 1,915 2,109 PROPERTY AND EQUIPMENT, NET 3 44 GOODWILL 410 410 ------------------ ----------------- TOTAL ASSETS $ 2,328 $ 2,563 ================== ================= LIABILITIES AND PARENT'S EQUITY IN UNIT CURRENT LIABILITIES Accounts payable $ 13 $ 104 Accrued salaries, wages and commissions 137 100 Accrued warranty costs 26 33 Accrued royalties 25 114 ------------------ ----------------- Total current liabilities 201 351 ------------------ ----------------- TOTAL LIABILITIES 201 351 COMMITMENTS AND CONTINGENCIES PARENT'S EQUITY IN UNIT 2,127 2,212 ------------------ ----------------- TOTAL LIABILITIES AND PARENT'S EQUITY IN UNIT $ 2,328 $ 2,563 ================== =================

~~UNAUDITED~~PURSUANT TO ~~STATEMENTS~~SECTION OF13 ~~OPERATIONS~~OR 15(~~Dollars in thousands~~d) ------------------------------------------------------------------------------------------ 9 month (39 week) periods ended ------------------------------- September 25, 2005 September 26, 2004 ------------------ ------------------ REVENUES $ 4,838 $ 4,870 COST OF REVENUES 2,720 2,846 ------------------ ------------------ GROSS PROFIT 2,118 2,024 ------------------ ------------------ OPERATING EXPENSES General and administrative 169 183 Product development 788 1,199 Sales and marketing 1,637 1,688 Overhead allocation from Parent 225 225 ------------------ ------------------ Total operating expenses 2,819 3,295 ------------------ ------------------ LOSS FROM OPERATIONS (701) (1,271) OTHER EXPENSES Loss on disposal of fixed assets (38) -- ------------------ ------------------ Total other expenses (38) -- ------------------ ------------------ NET LOSS $ (739) $ (1,271) ================== ================== See accompanying notes to unaudited financial statements. F-18THE

~~UNAUDITED~~SECURITIES EXCHANGE ~~STATEMENTS~~ACT OF CHANGES IN PARENT'S EQUITY IN UNIT (Dollars in thousands) --------------------------------------------------------------------------------------------- 9 month (39 week) periods ended ------------------------------- September 25, 2005 September 26, 2004 ------------------ ------------------ Parent's Equity in Unit - beginning of period $ 2,212 $ 1,825 Net loss (739) (1,271) Intercompany transactions - net 654 1,360 ------------------ ------------------ Parent's Equity in Unit - end of period $ 2,127 $ 1,914 ================== ================== See accompanying notes to unaudited financial statements. F-191934

~~UNAUDITED STATEMENTS~~ DATE OF REPORT ~~CASH FLOWS~~ (~~Dollars~~DATE inOF ~~thousands)~~EARLIEST ~~--------------------------------------------------------------------------------------------------------------~~EVENT ~~9 month (39 week~~REPORTED) ~~periods ended ------------------------------- September 25, 2005 September 26, 2004 ------------------ ------------------ CASH FLOWS FROM OPERATING ACTIVITIES~~: Net loss $ (739) $ (1,271) Adjustments to reconcile net loss to net cash used in operating activities Depreciation 3 16 Loss on disposal of fixed assets 38 -- Provision for doubtful accounts 50 43 Provision for inventory obsolescence reserve 25 (12) Changes in operating assets and liabilities: Accounts receivable 188 (85) Inventories (69) (38) Accounts payable (91) 66 Accrued salaries, wages and commissions 37 (119) Accrued warranty costs (7) (7) Accrued royalties (89) 47 ------------------ ------------------ Net cash used in operating activities (654) (1,360) ------------------ ------------------ NET CASH PROVIDED BY FINANCING ACTIVITIES: Intercompany transactions, net 654 1,360 ------------------ ------------------ NET INCREASE (DECREASE) IN CASH -- -- CASH, BEGINNING OF PERIOD -- -- ------------------ ------------------ CASH, END OF PERIOD $ -- $ -- ================== ================== See accompanying notes to unaudited financial statements. F-20

9 month (39 week) period ending ------------------------------- September 25, 2005 September 26, 2004 ------------------ ------------------ Balance at beginning of period $ 33 $ 33 Payments made for warranty costs incurred -- (July 12~~) Adjustment to provision (7) 4 ------------------ ------------------ Balance at end of period $ 26 $ 25 ================== ==================~~, 2006

~~Historical ----------- Pro Forma Pro Forma~~ L Q ~~Corp ACPG Adjustments Combined -------- ----------- ----------- --------- ASSETS CURRENT ASSETS: Cash $ 5~~ CORPORATION,~~930~~ $ -- $(2,991)(1) $ 2,939 Accounts receivable, net -- 1,159 (112)(2) 1,047 Inventories -- 756 -- 756 Other 65 -- -- 65 ------- ------- ------- ------- Total current assets 5,995 1,915 (3,103) 4,807 PROPERTY AND EQUIPMENT, NET -- 3 97 (3) 100 GOODWILL -- 410 (410)(4) -- (5) INTANGIBLE ASSETS, NET -- -- 1,127 (3) 1,127 ------- ------- ------- ------- TOTAL ASSETS $ 5,995 $ 2,328 $(2,289) $ 6,034 ======= ======= ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ -- $ 13 $ -- (2) $ 13 Accrued salaries, wages and commissions -- 137 (137)(2) -- Accrued warranty costs -- 26 -- 26 Accrued royalties -- 25 (25) -- Other accrued expenses 57 -- -- 57 ------- ------- ------- ------- Total current liabilities 57 201 (162) 96 TOTAL LIABILITIES 57 201 (162) 96 COMMITMENTS AND CONTINGENCIES -- -- -- (6) -- SHAREHOLDERS' EQUITY 5,938 2,127 (2,127)(7) 5,938 ------- ------- ------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 5,995 $ 2,328 $(2,289) $ 6,034 ======= ======= ======= =======INC.

~~Historical~~(EXACT NAME ~~----------- Pro Forma Pro Forma L Q Corp ACPG Adjustments Combined -------- ----------- ------------ --------- REVENUES $ -- $ 4,838 $ -- $ 4,838 COST~~ OF ~~REVENUES~~REGISTRANT --AS ~~2,720~~SPECIFIED --IN ~~2,720~~ITS ~~------- ------- ------- ------- GROSS PROFIT -- 2,118 -- 2,118 ------- ------- ------- ------- OPERATING EXPENSES General and administrative 636 169 225(8~~CHARTER) 1,199 169(9) Product development -- 788 15(10) 803 Sales and marketing -- 1,637 -- 1,637 Overhead allocation from Parent -- 225 (225)(8) -- ------- ------- ------- ------- Total operating expenses 636 2,819 184 3,639 ------- ------- ------- ------- LOSS FROM OPERATIONS (636) (701) (184) (1,521) INTEREST INCOME 166 -- (81)(11) 85 OTHER (EXPENSE), NET -- (38) -- (38) ------- ------- ------- ------- LOSS BEFORE INCOME TAXES (470) (739) (264) (1,473) INCOME TAXES -- -- -- (12) -- ------- ------- ------- ------- NET LOSS $ (470) $ (739) $ (264) $(1,473) ======= ======= ======= ======= NET LOSS PER SHARE: Basic and diluted $ (0.15) $ (0.46) ======= ======= Weighted average shares 3,214 3,214 ======= =======

Historical ---------- Pro Forma Pro Forma Adjustments Combined L Q Corp ACPG (Unaudited) (Unaudited) -------- ---------- ----------- --------- REVENUES $ -- $ 6,560 $ -- $ 6,560 COST OF REVENUES -- 3,549 -- 3,549 ------- ------- ------- ------- GROSS PROFIT -- 3,011 -- 3,011 ------- ------- ------- ------- OPERATING EXPENSES General and administrative 968 243 300 (8) 1,736 225 (9) Product development -- 1,603 19(10) 1,622 Sales and marketing -- 2,256 -- 2,256 Overhead allocation from Parent -- 300 (300)(8) -- ------- ------- ------- ------- Total operating expenses 968 4,402 244 5,614 ------- ------- ------- ------- LOSS FROM OPERATIONS (968) (1,391) (244) (2,603) INTEREST INCOME 148 -- (72)(11) 76 OTHER (EXPENSE), NET (27) -- -- (27) ------- ------- ------- ------- LOSS BEFORE INCOME TAXES (847) (1,391) (316) (2,554) INCOME TAXES -- -- -- (12) -- ------- ------- ------- ------- NET LOSS $ (847) $(1,391) $ (316) $(2,554) ======= ======= ======= ======= NET LOSS PER SHARE: Basic and diluted $ (0.26) $ (0.79) ======= ======= Weighted average shares 3,232 3,232 ======= =======DELAWARE

Purchase price paid as: Cash to Checkpoint Systems, Inc. $ 2,581 Related fees 410 ------- $ 2,991 ======= Allocated to: Historical value of ACPG net assets $ 2,127 Liabilities not assumed in acquisition: Accrued salaries, wages and commissions 137 Accrued royalties 25 Assets not assumed in acquisition (~~112)~~STATE OR OTHER ~~Deduct~~JURISDICTION ~~goodwill~~OF ~~from previous acquisition (410~~INCORPORATION) Fair value of adjustments to assets and liabilities Identifiable intangible assets 1,127 Property and equipment 97 ------- Estimated fair value of net assets acquired 2,991 ------- Excess purchase price over allocation to identifiable assets and liabilities (i.e., goodwill) $ -- =======

000-25977

(COMMISSION FILE NUMBER)

77-0421089

(I.R.S. EMPLOYER IDENTIFICATION NO.)

888 Seventh Avenue

New York, New York 10019

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

(212) 974-5730

(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

r Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

r Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

r Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

r Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

The Board of Directors of L Q Corporation, Inc. (the “Company”), including each director independent of the Company and Barington Capital Group, L.P. (“Barington”), approved as of July 12, 2006 an amendment of the services agreement between Barington and the Company dated as of November 18, 2004 (as amended, the “Services Agreement”). The amendment, which is effective as of June 30, 2006, extended the term of the Services Agreement until December 31, 2007. The Agreement was previously set to expire by its terms on June 30, 2006.

Under the Services Agreement, as amended, Barington will continue to provide certain administrative, accounting and other services on behalf of the Company for a fee of $10,000 per month and legal services on behalf of the Company at the Company’s request for a fee of $175 per hour. The agreement also provides that in the event Barington identifies for the Company, at the Company’s request, a business transaction such as a merger, acquisition or joint venture, and provides the Company with financial consulting services in connection with such business transaction, the Company will pay Barington a fee of two percent of the amount of the consideration paid in the transaction.

Barington is a Delaware limited partnership whose general partner is a corporation of which James A. Mitarotonda is Chairman, President and Chief Executive Officer. Mr. Mitarotonda is our Chairman and former Chief Executive Officer. Sebastian E. Cassetta, the President, Chief Executive Officer and a director of the Company, is a Senior Managing Director and Chief Operating Officer of Barington.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

L Q CORPORATION, INC.

Dated: July 12, 2006 By: /s/ James A. Mitarotonda

James A. Mitarotonda

Chairman

Filing Compare · LQ CORP INC