**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,D.C. 20549**

----

FORM 10-K/A

**AMENDMENTNO. 1**

----

x                              ANNUALREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934 

**FORTHE FISCAL YEAR ENDED MAY 31, 2005**

**OR**

**o**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

**FORTHE TRANSITION PERIODFROM                  TO                  **

**COMMISSIONFILE NUMBER 000-26565**

----

**LIBERATE TECHNOLOGIES**

(Exact Name of Registrantas Specified in Its Charter)
| **DELAWARE**                                                                                                      | ** ** | **94-3245315**                        |
|-------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------|
| (State or Other  Jurisdiction of  Incorporation or Organization)                                                  |       | (I.R.S. Employer  Identification No.) |
| **310 University Avenue, Suite 201  Palo Alto, California 94301**                                            |
| (Address of  Principal Executive Offices, Including Zip Code)                                                     |
| **(650) 330-8960**                                                                                           |
| (Registrant’s  Telephone Number, Including Area Code)                                                        |
| Securities  registered pursuant to Section 12(b) of the Act:**None**                                    |
| Securities  registered pursuant to Section 12(g) of the Act:**Common Stock, $0.01 par value per share** |

 

----

Indicate by check mark whetherthe Company (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the Company was required tofile such reports), and (2) has been subject to such filing requirementsfor the past 90 days. Yes x  No o

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 of Regulation S-K isnot contained herein, and will not be contained, to the best of the Company’sknowledge, in definitive proxy or information statements incorporated byreference in Part III of this Form 10-K or any amendment tothis Form 10-K. o

Indicate by check markwhether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes x  No o

The aggregate market valueof the voting stock held by non-affiliates of the Registrant was approximately$22.2 million based on the last reported sale price of the Company’s commonstock on September 20, 2005 As of August 31, 2005 there were110,934,837 shares of common stock outstanding (including shares held byaffiliates).

**DOCUMENTSINCORPORATED BY REFERENCE: None.**

 

----

**EXPLANATORY NOTE**

On August 15, 2005,Liberate Technologies (“Liberate” or the “Company”) filed with the Securitiesand Exchange Commission (the “SEC”) its Annual Report on Form 10-K for thefiscal year ended May 31, 2005 (the “Initial Form 10-K”). In accordancewith the SEC rules, the Company incorporated by reference Part III of theInitial Form 10-K from the Proxy Statement to be filed by the Company inconnection with its 2005 Annual Stockholders’ Meeting, which the Companyanticipated filing on or before September 28, 2005. Since filing theInitial Form 10-K, the Company has determined that it will not file itsProxy Statement prior to the September 28 deadline and, in accordance withSEC rules, must file an amendment to its Initial Form 10-K to include thedisclosures required by Part III of Form 10-K. This Amendment No. 1on Form 10-K/A amends and supplements Part III of the Initial Form 10-Kin order to include those disclosures required by Part III of Form 10-K.

**SUBSEQUENT EVENTS**

On September 19, 2005, Leslie J. Lee filed aclass action complaint in the Court of Chancery of the State of Delaware,alleging that Liberate and certain officers and directors breached theirfiduciary duties in connection with a 1-for-250,000 reverse stock splitproposed by Liberate (the “Stock Split”). Plaintiff purports to bring theaction individually and on behalf of a putative class of all stockholdersowning fewer than 250,000 shares of Liberate common stock. The complaint seekspreliminary and permanent injunctive relief against the Stock Split,declaratory relief, rescission of the Stock Split, rescissory and/orcompensatory damages and attorneys’ fees and expenses. Also on September 19,2005, Plaintiff filed a motion for expedited proceedings and a motion forpreliminary injunction. Liberate believes the allegations are without merit andintends to defend the complaint vigourously.

**PART III**

**ITEM 10.**         DIRECTORSAND EXECUTIVE OFFICERS OF THE REGISTRANT

**Directors**

Thefollowing table sets forth, as of September 28, 2005, certain informationabout the Company’s directors. All of the directors are elected annually for aone-year term. There are no arrangements or understandings between the Companyand any person, pursuant to which such person has been elected a director, andno director is related to any other director or executive officer of theCompany.

| **Name**                     | ** ** | ** ** | ** ** | **Age** | ** ** | **Positions and Offices Held with Liberate** | ** ** |
|------------------------------|------------|------------|------------|---------|------------|-----------------------------------------------------------------------|------------|
| David Lockwood(1)            |       |       | 45         |    |       | Chairman  and Chief Executive Officer                                 |       |
| Charles N. Corfield(2)(3)(4) |       |       | 46         |    |       | Director                                                              |       |
| Patrick S.  Jones(2)(3)(4)   |       |       | 60         |    |       | Director                                                              |       |
| Dr. David C.  Nagel(4)  |       |       | 60         |    |       | Director                                                              |       |
| Robert R. Walker(2)(3)       |       |       | 55         |    |       | Director                                                              |       |

----

(1)          Member of SecondaryCompensation Committee

(2)          Member of CorporateGovernance Committee

(3)          Member of Finance andAudit Committee

(4)          Member of CompensationCommittee

*David Lockwood*has served asChairman and Chief Executive Officer of Liberate since June 2003 andstrategic advisor to Liberate from March 2003 to June 2003. Mr. Lockwoodserved as executive officer of InterTrust Technologies, a provider of digitalrights management software, from September 2001 to February 2003,serving in the roles of Chief Executive Officer, President, and Executive ViceChairman. 

2

----

Mr. Lockwood servedas director of InterTrust from October 2000 to January 2003. From January 2000to October 2001, Mr. Lockwood was the Managing Partner of ReutersGreenhouse Fund, a venture capital firm. Mr. Lockwood currently serves onthe Board of Directors of Forbes.com and is a managing member of LockwoodCapital Advisors LLC.

*Charles N.Corfield*has served as a directorof Liberate since December 1998. Since August 2000, Mr. Corfieldhas served as Chief Executive Officer of SandCherry, Inc., a provider oftelecommunications software. Mr. Corfield also serves as a director andmember of the audit committee of iBasis, a provider of internet-basedcommunication services.

*Patrick S. Jones*has served as adirector of Liberate since June 2003. Since March 2001, Mr. Joneshas been a private investor and a board member of several public and privatecompanies. From June 1998 to March 2001, Mr. Jones served asSenior Vice President and Chief Financial Officer of Gemplus InternationalS.A., a smart card device manufacturer. Mr. Jones serves on the board aschairman of the audit committee of Genesys S.A., a public company that providesconferencing services. Mr. Jones is also acting chairman of the board ofLattice Semiconductor, a publicly held maker of semiconductors (programmablelogic devices). Mr. Jones also serves on the boards of SmartTrust AB, aprivately-held provider of mobile device software, Trema N.V., a privately-heldprovider of treasury and banking software, and Mobile365, a privately-heldprovider of mobile messaging services and infrastructure.

*Dr. DavidC. Nagel*has**served as a Director of Liberatesince February 2000. From August 2001 to May 2005, Dr. Nagelserved as President and Chief Executive Officer of PalmSource, Inc., apublic company that provides operating system software platforms for mobiledevices. Before joining PalmSource, Dr. Nagel was President of AT&TLabs from April 1996 to August 2001 and Chief Technology Officer ofAT&T from August 1997 to August 2001. Dr. Nagel also servedas Chief Technology Officer of Concert, a joint venture between AT&T andBritish Telecom, from June 1999 to August 2001.

*RobertR. Walker* has served as a director of Liberate since June 2003.From March 1999 to December 2001, Mr. Walker served as Chief FinancialOfficer of Agilent Technologies, an electronic equipment manufacturing company.Mr. Walker is also Chairman of Financial Executives International anassociation of senior financial executives, a director of Electro ScientificIndustries, Inc., a supplier of manufacturing equipment to the globalelectronics market, and a director of Brocade Communications Systems, Inc.,a supplier of networked storage solutions.

**Executive Officers**

Ourexecutive officers, their ages, positions with Liberate, and certainbiographical information as of September 28, 2005 are as follows:

| **Executive Officers** | ** ** | ** ** | ** ** | **Age** | ** ** | **Positions and Offices Held with Liberate** | ** ** |
|-----------------------------|------------|------------|------------|---------|------------|-----------------------------------------------------------------------|------------|
| David Lockwood*             |       |       | 45         |    |       | Chairman  and Chief Executive Officer                                 |       |
| Philip A. Vachon            |       |       | 48         |    |       | President—Liberate  International                                |       |
| Gregory S. Wood             |       |       | 47         |    |       | Executive  Vice President and Chief Financial Officer                 |       |
| Patrick P. Nguyen           |       |       | 39         |    |       | Executive Vice  President—Corporate Development                  |       |

----

*                    Please seebiographical information for Mr. Lockwood above.

*Philip A. Vachon*was appointed President—LiberateInternational in April 2003. From November 2002 to April 2003, Mr. Vachonwas a consultant to Liberate. From January 2001 to October 2002, Mr. Vachonadvised a variety of technology companies. From January 1999 to December 2000,he was Senior Vice President of Worldwide Sales for Liberate.

3

----

*Gregory S. Wood*has been executive Vice President and Chief Financial Officer of Liberate sinceJune 2003 and served as a strategic advisor to Liberate from March 2003to June 2003. Previously, he served as Chief Financial Officer ofInterTrust, a provider of digital rights management software, from November 2000to February 2003. Before joining InterTrust, Mr. Wood served as ChiefFinancial Officer of Network Computing Devices, a computer networking company,from August 1999 to November 2000. Mr. Wood is a certifiedpublic accountant.

*PatrickP. Nguyen* has been Executive Vice President—CorporateDevelopment of Liberate since June 2003. Mr. Nguyen served as astrategic advisor to Liberate from March 2003 to June 2003.Previously, he served as Executive Vice President—Corporate Development and VicePresident—GlobalAlliances of InterTrust from July 1998 to February 2003.

**Finance and Audit Committee**

Our board has a separatelydesignated Finance and Audit Committee. The current members of the Finance andAudit Committee are Mr. Walker (chair), Mr. Corfield, and Mr. Jones.Our Board has determined that Mr. Walker is qualified as an “auditcommittee financial expert” within the meaning of SEC regulations and that eachmember of the Finance and Audit Committee is independent under the listingstandards of the Nasdaq Stock Market and applicable securities law. The charterof the Finance and Audit Committee can be found on our investor relationswebsite at *http://investors.liberate.com*.

**Section 16(a) BeneficialOwnership Reporting Compliance**

The members of our Board,our executive officers, and persons who hold more than ten percent of ouroutstanding common stock are subject to the reporting requirements of Section 16(a) ofthe Securities Exchange Act of 1934, as amended, which require them to filereports with respect to their ownership of our common stock and theirtransactions in our common stock. Based solely on our review of (1) copiesof Section 16(a) reports that we received from these personsregarding transactions in our common stock during fiscal 2005 and (2) writtenrepresentations that we received from our executive officers and directors thatno annual Form 5 reports were required to be filed by them for fiscal2005, we believe that our executive officers, Board members, and greater-than-ten-percentstockholders met all reporting requirements under Section 16(a) forfiscal 2005 in a timely manner**.**

4

----

**ITEM 11.**         EXECUTIVECOMPENSATION

Thefollowing summary compensation table sets forth, for the fiscal years ended May 31,2005, 2004 and 2003, the compensation earned for services rendered in allcapacities to Liberate and its subsidiaries by David Lockwood, who was ourChief Executive Officer on May 31, 2005; and the three other most highlycompensated executive officers who were serving as such on May 31, 2005(collectively, the “named executive officers”). We do not grant stockappreciation rights and have in the past provided no long-term compensationbenefits other than stock options and stock units. In accordance with the rules ofthe Securities and Exchange Commission (“SEC”), the table below excludescertain items of compensation paid by us, such as perquisites and otherpersonal benefits or reimbursements that did not exceed the lesser of $50,000or 10% of the total annual salary and bonus reported for the named executiveofficers for such fiscal year.

|                                                | ** ** | ** ** | ** ** | ** ** | ** **    | **Long-Term Compensation** | ** ** |
|------------------------------------------------|------------|------------|------------|------------|---------------|---------------------------------|------------|
| ** **                                     | ** ** | ** ** | ** ** | ** ** | ** **    | **Awards**                      | ** ** |
| ** **                                     | ** ** | ** ** | ** ** | ** ** | ** **    | **Annual Compensation**    | ** ** | **Restricted Stock** | ** ** | **Securities** | ** ** |
| **Name and Principal Position** | ** ** | ** ** | ** ** | **Year**   | ** **    | **Salary ($)**             | ** ** | **Bonus ($)** | ** ** | **Other Annual  Compensation ($)** | ** ** | **/ Stock Unit  Awards ($)** | ** ** | **Underlying  Options (#)** | ** ** |
| David Lockwood                                 |       | 2005       |       |       | 250,357  |                            |       |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| Chairman of the Board and                      |       | 2004       |       |       | 250,357       |                            |       |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| Chief Executive Officer                        |       | 2003       |       |       | 53,201        |                            |       |   | — |   |   |   | — |   |   |   | — |   |   |   | 1,300,000 |   |   |
| Philip A. Vachon                               |       | 2005       |       |       | 250,357       |                            |       |   | — |   |   |   | 306,068 | (1) |   |   | 168,000 | (2) |   |   | — |   |   |
| President—Liberate                        |       | 2004       |       |       | 250,357       |                            |       |   | 150,000 |   |   |   | 7,795 | (1) |   |   | 303,000 | (3) |   |   | — |   |   |
| International                                  |       | 2003       |       |       | 328,789       |                            |       |   | — |   |   |   | — |   |   |   | — |   |   |   | 1,700,000 |   |   |
| Gregory S. Wood                                |       | 2005       |       |       | 250,357       |                            |       |   | — |   |   |   | — |   |   |   | 252,000  | (2) |   |   | — |   |   |
| Executive Vice President and                   |       | 2004       |       |       | 250,357       |                            |       |   | — |   |   |   | — |   |   |   | 454,500 | (3) |   |   | — |   |   |
| Chief Financial Officer                        |       | 2003       |       |       | 53,201        |                            |       |   | — |   |   |   | — |   |   |   | — |   |   |   | 1,300,000 |   |   |
| Patrick P. Nguyen                              |       | 2005       |       |       | 250,357       |                            |       |   | — |   |   |   | — |   |   |   | 252,000 | (2) |   |   | — |   |   |
| Executive Vice President—                 |       | 2004       |       |       | 250,357       |                            |       |   | — |   |   |   | — |   |   |   | 454,500 | (3) |   |   | — |   |   |
| Corporate Development                          |       | 2003       |       |       | 53,201        |                            |       |   | — |   |   |   | — |   |   |   | — |   |   |   | 1,300,000 |   |   |

----

(1)          Represents a housingallowance of $127,455, relocation expenses of $6,270 and tax equalizationpayments of $172,343 during fiscal 2005 and relocation expenses of $7,795 infiscal 2004 related to Mr. Vachon’s foreign assignment.

(2)          Represents the cashvalue of dividend equivalent rights granted during fiscal 2005 on unvestedrestricted stock units in connection with the Special Dividend of $2.10 pershare paid April 8, 2005 (the “Special Dividend”).

(3)          Representsstock unit awards granted to these executive officers during fiscal 2004. Mr. Vachonreceived 100,000 stock units and Mr. Wood and Mr. Nguyen eachreceived 150,000 stock units. In accordance with SEC regulations, the valuesreported in the table above were obtained by multiplying the number of stockunits granted by $3.03, the closing price of Liberate’s common stock on thedate the stock units were granted. These values do not necessarily reflect thefuture value of the stock units or of the shares issuable upon vesting of thestock units. These units vested as to 7.5% of the total units on July 15,2004 and as to an additional 12.5% of the total units on January 15, 2005and would have vested as to an additional 12.5% on July 15, 2005 and on January 15and July 15 of each year thereafter. In connection with the Company’s saleof substantially all of the assets of its North American business to Double CTechnologies, LLC (the “North American Business Sale”), all stock units held byour named executive officers became vested upon consummation of that sale on April 7,2005. In addition, although the stock units did not entitle holders to votingrights, dividends or other rights of stockholders until the units became vestedand shares were issued in settlement of the units, 

5

----

in connection withthe North American Business Sale, the named executive officers were granteddividend equivalent rights, entitling them to the per share value of theSpecial Dividend for each unit held by such executive on the record date setfor the Special Dividend

**Option Grants in Fiscal 2005**

During fiscal 2005, wegranted no stock options to our named executive officers or to other employees.

**OptionExercises in Fiscal 2005 and Fiscal Year-End Option Values**

The following table sets forth information concerningstock option exercises during fiscal 2005 by each of the named executiveofficers, including the aggregate amount of gains on the date of exercise. Thevalue realized for option exercises is the aggregate fair market value of ourcommon stock on the date of exercise less the exercise price. In addition, thetable includes the number of shares covered by both exercisable andunexercisable stock options held on May 31, 2005 by each of thoseofficers. Also reported are values for “in-the-money” stock options thatrepresent the positive spread between the respective exercise prices ofoutstanding stock options and the fair market value of our common stock as of May 31,2005. The values for unexercised in-the-money options have not been, and maynever be, realized.

In connection with the North American Business Saleand the Special Dividend, and in order to prevent dilution or enlargement ofthe rights of option holders, effective upon the date of the Special Dividend,the Company made an equitable adjustment to the exercise price of the stockoptions in the following table by reducing the per share exercise price by$2.10, the per share value of the Special Dividend, or if the per shareexercise price was less than this value, then canceling the option andreplacing the option with one share of common stock, plus a cash payment equalto the difference between the per share Special Dividend and the per shareexercise price of the option, for each share subject to the option.

Thefair market value is determined by the closing price of our common stock on May 31,2005 as reported on the Pink Sheets system, which was $0.32 per share.

| ** **        | ** ** | **Number of  Shares  Acquired** | ** ** | **Value**            | ** ** | **Number of Securities  Underlying Unexercised  Options at Fiscal Year End** | ** ** | **Value of Unexercised  In-the-Money Options at  Fiscal Year End ($)** | ** ** |
|-------------------|------------|--------------------------------------|------------|----------------------|------------|-----------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------|------------|
| **Name**          | ** ** | ** **                           | ** ** | **on Exercise** | ** ** | **Realized ($)**                                                                                           | ** ** | **Exercisable**                                                                                           | ** ** | **Unexercisable** | ** ** | **Exercisable** | ** ** | **Unexercisable** | ** ** |
| David Lockwood    |       | 1,300,000                            |       |                 | $          | 728,000                                                                                                         |       |                                                                                                      | —     |   |   | — |   |   |   | — |   |   |   | — |   |   |
| Philip A. Vachon  |       | —                               |       |                 | —     |                                                                                                            |       | 1,700,000                                                                                                 |       |   | — |   |   |   | $ | 51,000 |   |   |   | — |   |   |
| Gregory S. Wood   |       | 1,300,000                            |       |                 | $          | 728,000                                                                                                         |       |                                                                                                      | —     |   |   | — |   |   |   | — |   |   |   | — |   |   |
| Patrick P. Nguyen |       | 1,300,000                            |       |                 | $          | 728,000                                                                                                         |       |                                                                                                      | —     |   |   | — |   |   |   | — |   |   |   | — |   |   |
|                   |            |                                      |            |                      |            |                                                                                                                 |            |                                                                                                           |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

**Stock Unit Grants in Fiscal 2005**

During fiscal 2004, weimplemented a program to grant stock units to employees and non-employeedirectors under the 1999 Equity Incentive Plan. Each stock unit entitles theholder to receive one share of common stock when the stock unit vests. Stockunits granted to employees generally vest over a period of four years, andthose granted to non-employee directors generally vest over 12 months. Onthe vesting dates, stock units are settled by the delivery of the correspondingnumber of shares of common stock. Upon termination of employment unvested stockunits are forfeited. In fiscal 2004, the Compensation Committee granted stockunits to the following named executive officers: Philip Vachon (100,000 units),Gregory Wood (150,000 units), and Patrick Nguyen (150,000 units). The closing price of Liberate’s common stock onthe date the stock units were granted to these executive officers was $3.03These units vested as to 7.5% if the total units on July 15, 2004 and asto an additional 12.5% of the total units on January 15, 2005 and wouldhave vested as to an additional 12.5% on July 15, 2005 and on January 15and July 15 of each year thereafter. In connection with the North AmericanBusiness Sale, however, all stock units held by our named 

6

----

executive officers became vested upon the consummation ofthat sale on April 7, 2005. In addition, although the stock units did notentitle holders to voting rights, dividends or other rights of stockholders untilthe units became vested and shares were issued in settlement of the units, inconnection with the North American Business Sale, the named executive officerswere granted dividend equivalent rights, entitling them to the per share valueof the Special Dividend for each unit held by such executive on the record dateset for the Special Dividend. During fiscal 2005, there were no stockunit grants to the named executive officers. During fiscal 2005, we granted atotal of 130,000 stock units to other employees and 30,768 stock units to ournon-employee directors.

**EquityCompensation Plan Information**

The following table summarizes information about ourshares of common stock that may be issued upon the exercise of options and thevesting of stock units under all of our existing equity compensation plans asof May 31, 2005, as well as shares of our common stock that may be issuedunder warrants or individual compensation arrangements that were not approvedby our stockholders.

As of May 31,2005, there were 110,869,535 shares of Liberate common stock outstanding. Atthat date, there were outstanding options to purchase 4,250,809 shares of stockat a weighted average exercise price of $6.80 per share and outstanding stockunits representing the right to receive 191,564 shares of stock. 

| **Plan category**                                             | ** ** | ** ** | ** ** | **Number of securities to be  issued upon exercise of  outstanding options,  warrants and rights** | ** ** | **Weighted average  exercise price of  outstanding options,  warrants and rights** | ** ** | **Number of securities  remaining available for  future issuance  (excluding securities  reflected in column (a))** | ** ** |
|--------------------------------------------------------------------|------------|------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| ** **                                                         | ** ** | **(a)**    | ** ** | **(b)**                                                                                                                                              | ** ** | **(c)**                                                                                                          | ** ** |
| Equity  compensation plans approved by security holders(1)(2) |       |       | 2,742,373  | (3)                                                                                                                                                  |       |                                                                                                             | $          | 11.40                                                                                                                                                            |       |   |   | 25,635,761 |   |   |
| Equity  compensation plans not approved by security holders(4)     |       |       | 1,700,000  |                                                                                                                                                 |       |                                                                                                             | $          | 2.44                                                                                                                                                             |       |   |   | — |   |   |
| Total                                                              |       |       | 4,442,373  |                                                                                                                                                 |       |                                                                                                             | $          | 7.97                                                                                                                                                             |       |   |   | 25,635,761 |   |   |

----

(1)          Includes the 1996 StockOption Plan, 1999 Equity Incentive Plan, and the 1999 Employee Stock PurchasePlan. No additional options may be issued under the 1996 Stock Option Plan.Under our 1999 Equity Incentive Plan, we may issue awards up to the availableplan balance in the form of stock options, restricted shares, stockappreciation rights, and stock units. As of May 31, 2005, no awards, otherthan the options and stock units included in the table above, were outstandingunder these plans.

(2)          Each of the 1999 EquityIncentive Plan and 1999 Employee Stock Purchase Plan contains an automaticshare increase provision. Accordingly, the number of shares of common stockreserved for issuance under these plans will automatically increase on June 1of each year, unless the increase is waived by the Board. For our 1999 EquityIncentive Plan, on June 1 of each year the number of shares availableincreases automatically by the lesser of (a) 5% of our common sharesoutstanding on the date of increase, or (b) 6,000,000 shares. For our 1999Employee Stock Purchase Plan, on June 1 of each year the number of sharesavailable for purchase increases automatically by the lesser of (a) 2% ofour common shares outstanding on the date of increase, or (b) 1,666,666shares.

(3)          Represents options topurchase 236,771 shares with a weighted average exercise price of $3.40 issuedunder the 1996 Stock Option Plan; options to purchase 2,314,038 shares with aweighted average exercise price of $13.16 issued under the 1999 EquityIncentive Plan; and 191,564 stock units, each unit convertible into one shareof common stock with no exercise price issued under the 1999 Equity IncentivePlan.

7

----

(4)          Includesoption grants made outside of the 1999 Equity Incentive Plan to executiveofficers and employees as well as warrant agreements issued to certain networkoperators. For more details about the grants to executive officers, see “ExecutiveCompensation.”

**EmploymentContracts, Termination of Employment, and Change in Control Arrangements**

*Executive Employment Agreements.  *InMarch and April 2003, we entered into new employee retentionagreements with David Lockwood, Patrick Nguyen, Gregory Wood and Philip Vachon.Under the terms of the retention agreements, in the event of a change ofcontrol of Liberate that is followed within one year by the officer’s actual orconstructive termination, the officer will receive a payment equal to twice histotal taxable compensation for the prior fiscal year, with a minimum payment of$500,000 and a maximum payment of $750,000.

On June 15, 2005, our Board approved the paymentof certain severance payments in connection with amendments to the existingemployee retention agreements. As a result of the North America BusinessSale each executive officer was entitled to constructively terminate hisemployment and receive a severance payment. Our Board determined that Liberate’scontinuing operations would benefit from the continuing employment of suchexecutives, and approved the amendment of their employee retention agreementseffective as of June 15, 2005 so that the executives would no longer berequired to have terminated employment to be entitled to the severance paymentsthere under. Instead, Liberate paid each executive the amount he wouldotherwise have been entitled to had his employment been terminated pursuant tothe terms of those agreements.

The payments were made in June and July 2005.Specifically, Messrs. Lockwood, Vachon, Wood, and Nguyen were paid$625,000, $750,000, $625,000 and $625,000, respectively.

*Option and Stock Unit Grants.  *Inthe third quarter of fiscal 2003, the compensation committee of the boardapproved new options grants of 1.3 million shares to each of Mr. Lockwood,Mr. Wood, and Mr. Nguyen and 1.7 million shares to Mr. Vachon.The vesting of these options accelerated on April 7, 2005, in connectionwith the sale of the North America Business Sale.

In July 2002, in order to retain qualifiedindependent directors, the board approved the grant of options to purchase50,000 shares of our stock to each of the three independent board members.These options have an exercise price of $2.42 per share, which was the closingprice of the stock on the date of grant, and vest monthly over four years. Thevesting of these options accelerated on April 7, 2005, in connection withthe sale of the North America Business Sale. In connection with the NorthAmerican Business Sale and the Special Dividend, and in order to preventdilution or enlargement of the rights of option holders, effective upon thedate of the Special Dividend, the Company made an equitable adjustment to theexercise price of the stock options of the independent directors by reducingthe per share exercise price by $2.10, the per share value of the SpecialDividend, or if the per share exercise price was less than this value, thencanceling the option and replacing the option with one share of common stock,plus a cash payment equal to the difference between the per share SpecialDividend and the per share exercise price of the option, for each share subjectto the option.

In October 2003, Liberate’s four non-employeedirectors each received 5,882 stock units under the terms of the 1999 EquityIncentive Plan. The stock units vest over one year following grant, and vestingaccelerates upon certain changes of control of Liberate. In October 2004,these four non-employee directors each received 7,692 stock units under theterms of the 1999 Equity Incentive Plan. The vesting of these stock unitsaccelerated on April 7, 2005, in connection with the sale of the NorthAmerica Business Sale

In April 2004, the compensation committee of theBoard approved new stock unit grants representing 150,000 shares to each of Mr. Woodand Mr. Nguyen and 100,000 shares to Mr. Vachon. The stock units 

8

----

vest over four yearsfollowing the date of grant, and vesting accelerates upon certain terminationevents in connection with a change of control. The vesting of these stock unitsaccelerated in connection with the North America Business Sale on April 7,2005, pursuant to the terms of those grants.

As part of our standard compensation package, certainemployees and managers may be eligible to participate in a variety ofdiscretionary and non-discretionary bonus plans or commission plans. We accruebonus and commission expense ratably over the fiscal year, based on expectedpayouts against those plans.

*ConsultingAgreements.  *In November 2002, we entered into aletter agreement with Philip Vachon, in which we agreed to pay him $56,500 permonth for advisory services through February 28, 2003. We subsequentlyextended that agreement through April 11, 2003, at which time Mr. Vachonbecame President—LiberateInternational.

**Director Compensation**

Following is thecompensation program for non-employee directors adopted by the Board ofDirectors:

·       Eachnon-employee director receives $30,000 in annual cash compensation, payable insemi-annual installments, and $1,000 for participation in each Board andcommittee meeting. A director will only qualify for the payments if he or shehas attended at least 75% of the meetings of the Board and applicablecommittees for the six months prior to payment.

·       Onthe date a new non-employee director joins the Board, he or she receives anaward of stock units, which represent Liberate’s agreement to issue shares ofcommon stock on a future date. If the director joins the Board between October 1and March 31, he or she receives stock units worth $20,000, which vest asto 50% of the units on the next April 1 and October 1, so long as thedirector remains on the Board. If the director joins the Board between April 1and September 30, he or she receives stock units worth $10,000, which vestas to 100% of the units on the next October 1.

·       OnOctober 1 of each year, each non-employee director receives an award ofstock units worth $20,000, which vest as to 50% of the units on April 1and October 1 of the following year, so long as the director remains onthe Board.

·       Inthe event of a change of control of Liberate, the non-employee directors’ stockunit awards will become vested as to 100% of the units. Pursuant to the termsof their awards, on April 7, 2005 in connection with the North AmericanBusiness Sale, the non-employee directors’ stock unit awards then held by thembecame 100% vested.

·       Eachnon-employee director who receives stock units is required to retain beneficialownership of at least 50% of the shares issued upon vesting and settlement ofthe stock units until he or she leaves the Board.

Directors who are alsoLiberate employees receive their employee compensation, which can includeequity compensation under our 1999 Equity Incentive Plan or otherwise, and arealso eligible to participate in our other plans and benefits generallyavailable to our employees. Compensation arrangements for directors who are orwere employees are described in “Executive Compensation” and in the “Compensation Committee Report.”

**CompensationCommittee Interlocks and Insider Participation**

The Compensation Committee of our Board was formed inSeptember 1997. From September 16, 2003 through May 31, 2005,the Compensation Committee consisted of Mr. Corfield (chair),Mr. Jones, and Dr. Nagel. Prior to September 16, 2003,Mr. Corfield and Ms. Dana Evan, a former director, served on thatcommittee. None of the members of the Compensation Committee has ever served asan officer or 

9

----

employee of Liberate orany of our subsidiaries. None of Liberate’s executive officers has served as adirector of a company that had an executive officer who served on our Board.

The Board of Directors hasestablished the Secondary Compensation Committee to administer our 1999 EquityIncentive Plan as to equity awards to employees and consultants who are notexecutive officers or directors, in amounts not exceeding 100,000 shares perindividual per grant. David Lockwood, our Chairman and Chief Executive Officer,is the sole member of the Secondary Compensation Committee.

**ITEM 12.**         SECURITYOWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERSMATTERS

The following table shows how much of our common stockwas beneficially owned as of August 19, 2005 by (i) each known holderof 5% or more of our common stock, (ii) each director, (iii) eachexecutive officer and (iv) all current directors and executive officers asa group. To our knowledge and except as set forth in the footnotes to thetable, the persons named in the table have sole voting and investment powerwith respect to all shares shown as beneficially owned by them, subject tocommunity property laws where applicable. Unless indicated otherwise, eachholder’s address is c/o Liberate Technologies, 310 University Avenue,Suite 201, Palo Alto, California 94301.

The column labeled“Options/Units” below reflects shares of common stock that are subject tooptions or stock units that are currently exercisable or will become vested orexercisable within 60 days of August 19, 2005. Those shares aredeemed outstanding for the purpose of computing the percentage ownership of theperson holding these options or units, but are not deemed outstanding for thepurpose of computing the percentage ownership of any other person. Percentageownership is based on 110,934,837 shares outstanding on August 19, 2005.

10

----

**Amountand Nature of Beneficial Ownership**
| **Beneficial Owner**                                                           | ** ** | ** ** | ** ** | **Shares** | ** ** | **Options** | ** ** | **Total** | ** ** | **Percent  of Class** | ** ** |
|-------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|-------------|------------|-----------|------------|----------------------------|------------|
| CCM Master Fund,  Ltd.(1)                                                           |       | 15,764,621 |       | —     |       | 15,764,621  |       |      | 14.2       | %                          |       |
| David Lockwood(2)                                                                   |       | 13,332,901 |       | —     |       | 13,332,901  |       |      | 12.0       | %                          |       |
| Glenview Capital  Management, LLC(3)                                                |       | 10,395,000 |       | —     |       | 10,395,000  |       |      | 9.4        | %                          |       |
| OZ Management,  L.L.C.(4)                                                           |       | 10,322,680 |       | —     |       | 10,322,680  |       |      | 9.3        | %                          |       |
| Highfields  Capital Management LP(5)                                                |       | 10,000,000 |       | —     |       | 10,000,000  |       |      | 9.0        | %                          |       |
| Deutsche Bank  AG(6)                                                                |       | 5,889,600  |       | —     |       | 5,889,600   |       |      | 5.3        | %                          |       |
| Philip A. Vachon                                                                    |       | 96,506     |       | 1,700,000  |       | 1,796,506   |       |      | 1.6        | %                          |       |
| Gregory S. Wood                                                                     |       | 1,447,911  |       | —     |       | 1,447,911   |       |      | 1.3        | %                          |       |
| Patrick P. Nguyen                                                                   |       | 1,437,911  |       | —     |       | 1,437,911   |       |      | 1.3        | %                          |       |
| Dr. David C.  Nagel                                                            |       | 13,574     |       | 210,000    |       | 223,574     |       |      | *          |                       |       |
| Charles N.  Corfield                                                                |       | 56,976     |       | 109,930    |       | 166,906     |       |      | *          |                       |       |
| Patrick S. Jones                                                                    |       | 13,574     |       | —     |       | 13,574      |       |      | *          |                       |       |
| Robert R. Walker                                                                    |       | 13,574     |       | —     |       | 13,574      |       |      | *          |                       |       |
| All current directors  and executive officers as a group (8 persons) |       | 16,412,927 |       | 2,019,930  |       | 18,432,857  |       |      | 16.6       | %                          |       |

----

*                    Less than 1%of our outstanding shares of common stock.

(1)          Includes 15,744,521shares owned directly by CCM Master Fund, Ltd., 13,600 shares held byGrant R. Coghill, and 6,500 shares held by Grace A. Coghill.Clint D. Coghill is the managing member of Coghill Capital Management,L.L.C., an entity that serves as the investment manager of CCM MasterFund, Ltd. Clint D. Coghill also serves as the investment custodianfor Grant R. Coghill and Grace A. Coghill. The address of CCM MasterFund, Ltd. and the other beneficial owners of these securities is OneNorth Wacker Drive, Suite 4725, Chicago, IL 60606. This information hasbeen taken from a Schedule 13G/A filed by the beneficial owners on February 20,2003.

(2)          Shares include 5,107,201shares owned directly by Mr. Lockwood and 8,225,700 shares owned directlyby Lockwood Fund LLC. Mr. Lockwood is managing member of Lockwood CapitalAdvisors LLC, which is the managing member of Lockwood Fund LLC. The address ofthe principal office of Lockwood Fund LLC and Lockwood Capital Advisors LLC isc/o Schulte Roth & Zabel LLP, 919 Third Avenue, New York, NY 10022,Attention: Stuart D. Freedman, Esq.

(3)          These shares arebeneficially owned by Glenview Capital Management, LLC, Glenview Capital GP,LLC, Glenview Capital Partners, LLC, Glenview Capital Master Fund, Ltd.,Glenview Institutional Partners, L.P. and Laurence M. Robins. The addressof Glenview Capital Master Fund, Ltd. is c/o Goldman Sachs (Cayman) Trust,Limited, Harbour Centre, North Church Street, P.O. Box 896GT, GeorgeTown, Grand Cayman, Cayman Islands, B.W.I. The address for all other entitiesis 399 Park Avenue, Floor 39, New York, NY 10022. This informationhas been taken from a Schedule 13G/A filed on February 10, 2005.

(4)          OZ Management, L.L.C.and Daniel S. Och, its Senior Managing Member, may be deemed to be thebeneficial owners of all these shares. This amount includes 9,671,343 sharesbeneficially owned by OZ Master Fund, Ltd., of which OZ Management, L.L.C.is the principal investment manager. The address of OZ Management, L.L.C. andDaniel S. Och is 9 West 57th Street, 39th Floor, New York, NY 10019. Theaddress of OZ Master Fund, Ltd. is c/o Goldman Sachs (Cayman) Trust,Limited, P.O. Box 896, G.T. Harbour Centre, Second Floor, North ChurchStreet, George Town, Grand Cayman, Cayman Islands. This information has beentaken from a Schedule 13G/A filed on February 14, 2005.

10

----

(5)          The 10,000,000 sharesare directly owned by Highfields Capital I LP, Highfields Capital II LP andHighfields Capital Ltd. (which directly owns 6,969,110 of the shares).These shares are also beneficially owned by Highfields Capital Management LP,the investment manager to the three direct owners; Highfields GP LLC, theGeneral Partner of Highfields Capital Management LP; and Jonathon S. Jacobson andRichard L. Grubman, the Managing Members of Highfields GP LLC. The address ofHighfields Capital Management LP, Highfields GP LLC, Mr. Jacobson and Mr. Grubmanis c/o Highfields Capital Management, 200 Clarendon Street, 51st Floor, Boston,MA 02116. The address of Highfields Capital Ltd. is c/o Goldman Sachs(Cayman) Trust, Limited, Harbour Centre, Second Floor, George Town, GrandCayman, Cayman Islands, B.W.I. This information has been taken from aSchedule 13G filed on July 8, 2003.

(6)          Theaddress of Deutsche Bank AG is Taunusanlage 12, D-60325 Frankfurt amMain, Federal Republic of Germany.

**ITEM 13.**         CERTAINRELATIONSHIPS AND RELATED TRANSACTIONS

From June 1, 2004 tothe date of this report, there have not been any transactions, and there arecurrently no proposed transactions, involving more than $60,000 to whichLiberate was a party and in which any executive officer, director, or 5%beneficial owner of Liberate’s common stock (or any family member of any ofthem) had or has a material interest, except as described above in “ExecutiveCompensation” or below in this section.

**Indemnificationof Directors and Executive Officers**

Liberate has entered into indemnification agreementswith each of its directors and executive officers. These agreements require Liberateto indemnify these individuals to the fullest extent permitted by Delaware lawfor certain liabilities, to which they may become subject as a result of theiraffiliation with Liberate. Pursuant to these indemnification agreements,Liberate is paying the legal fees for several former executive officers anddirectors in connection with the pending securities litigation and theinvestigations arising out of the restatement of Liberate’s financialstatements.

Liberate’s certificate ofincorporation and bylaws also contain certain provisions relating to thelimitation of liability and indemnification of directors and officers. Forexample, the certificate of incorporation provides that, with limitedexceptions, our directors will not be personally liable to Liberate or ourstockholders for monetary damages for any breach of fiduciary duty as adirector.

**Transactionswith Cox Communications**

A former member of ourBoard, Chris Bowick, is an executive officer of Cox Communications. Cox waspreviously a significant customer and a stockholder. In fiscal 2000 and 2004,we entered into agreements with Cox for the license of our software productsand for the provision of services. The agreement also provides that Cox willhave the right to test our software free of charge and without any commitmentto deploy services using our technology. Under the agreement, Cox paid us$6.0 million in prepaid licenses and services, and Cox is entitled toreceive the benefits of any more favorable terms and conditions that we may grantto any other North American network operator. Total revenues from Cox duringfiscal 2003, fiscal 2004 and fiscal 2005, before taking into account warrant-relatedoffsets, were $1.6 million, $496,000 and $12,000, respectively. Netrevenues from Cox, including the impact of the warrant-related offsets,were $410,000 in fiscal 2003, a negative $697,000 in fiscal 2004, and anegative $982,000 in fiscal 2005. In addition, under the commercial agreement,we were required to issue warrants to Cox. A total of 883,332 shares of ourcommon stock are reserved for issuance to Cox under these warrants. Theexercise price of these warrants is $6.90 per share. These warrants vestedaccording to milestones established in the commercial agreement to motivate Coxto deploy our products and as of 

11

----

fiscal2004, they were fully vested. At May 31, 2005 all vested warrants expired.In addition, Cox paid us $285,000 in fiscal 2003 and $396,000 in fiscal 2004related primarily to services. All license and services agreements with Coxwere assigned to Double C Technologies in connection with the sale of the NorthAmerica Business.

**Executive Loans**

In 2001, we extended aloan in the principal amount of $500,000 to Mr. Fitzpatrick, who is aformer executive officer of the Company. The loan carried an interest rate of5.9% compounded annually and was due two years from issuance. In November 2002,Mr. Fitzpatrick repaid $275,000 of the principal amount of his promissorynote. According to the terms of Mr. Fitzpatrick’s promissory note, hisoutstanding principal balance of $225,000 and all accrued interest was due 60 daysfrom December 27, 2002, the date of the termination of his employment. Asof May 31, 2005, Mr. Fitzpatrick has not repaid the balance of thisloan and we have recorded a reserve to cover our potential loss.

**ITEM 14.**         PRINCIPALACCOUNTANT FEES AND SERVICES

Thefollowing table sets forth the aggregate fees billed by PricewaterhouseCoopers LLP, independent registered publicaccounting firm (“PWC”), for professional services for each of fiscal 2005 and2004 on behalf of Liberate Technologies and its subsidiaries, as well asout-of-pocket costs incurred in connection with these services: 
| ** **                           | ** ** | **2005** | ** ** | **2004** | ** ** |
|--------------------------------------|------------|----------|------------|----------|------------|
| ***Audit  Fees***                    |       |     |       |     |       |
| Audit fees(1)                        |       | $        | 334,527    |     | $          | 1,034,387 |   |
| ***Non-Audit  Fees***                |       |     |       |     |       |
| Tax Services and  Compliance Fees(2) |       | $        | 302,976    |     | 545,308    |   |
| ***Total  Fees***                    |       | $        | 637,503    |     | $          | 1,579,695 |   |

----

(1)   Includesfees for professional services for the review of financial statements includedin our quarterly reports on Form 10-Q, and for services that arenormally provided by PWC in connection with statutory and regulatory filings orengagements, including the audit of management’s report on the effectiveness ofthe Company’s internal control over financial reporting, as required bySection 404 of the Sarbanes-Oxley Act of 2002.

(2)          Includesfees for federal, state, local and international tax compliance, tax advice,and tax planning.

**Pre-ApprovalPolicy for Audit and Non-Audit Services**

Consistent with the charter of our Finance and AuditCommittee, we have established a policy governing the pre-approval of audit andnon-audit services delivered by Liberate’s independent registered publicaccounting firm. The Finance and Audit Committee must pre-approve thecategories of permitted audit and non-audit services, the specific services tobe performed, and the fees associated with those services. During the course ofthe year, we expect that there may be additional non-audit services that areidentified by management that are desired and were not contained in the annualpre-approval request. The Finance and Audit Committee has authorized thecommittee’s chairman, Mr. Robert Walker, who is an independent director,to pre-approve interim requests for additional non-audit services up to anaggregate amount of $25,000 between regular meetings of the committee. Mr. Walkerwill then report to the committee at its next meeting any interim pre-approvalsgranted since the last meeting. The Finance and Audit Committee has determinedthat the non-audit services provided by PWC toLiberate did not impair the independence of PWC.

12

----

**SIGNATURES**

Pursuantto the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized, on the 28thday of September 2005.
|                                | LIBERATE  TECHNOLOGIES |
|--------------------------------|-----------------------------|
| Date: September 28,  2005 | By:                         | /s/ DAVID  LOCKWOOD |
|                           |                        | David Lockwood |
|                           | * *                    | *Chief Executive Officer* |
| Date: September 28,  2005 |                        | /s/ GREGORY S. WOOD |
|                           |                        | Gregory S. Wood |
|                           | * *                    | *Executive Vice President and  Chief Financial Officer* |

 

Pursuantto the requirements of the Securities Exchange Act of 1934, this report hasbeen signed by the following persons on behalf of the registrant and in thecapacities indicated below on the 28th day of September 2005.
|                          | **Signature** | ** **                                   | ** ** |  | **Title** | ** ** |
|--------------------------|---------------|----------------------------------------------|------------|--|-----------|------------|
| /s/ DAVID  LOCKWOOD      |          | Chief Executive  Officer and Chairman of the |
| David  Lockwood          |          | Board                                        |
| /s/ CHARLES  N. CORFIELD |          | Director                                     |
| Charles  N. Corfield     |          |                                         |
| /s/ PATRICK  S. JONES    |          | Director                                     |
| Patrick  S. Jones        |          |                                         |
| /s/ DAVID  C. NAGEL      |          | Director                                     |
| Dr. David  C. Nagel |          |                                         |
| /s/ ROBERT  R. WALKER    |          | Director                                     |
| Robert R. Walker         |          |                                         |

 

13

----

**Exhibit Index**

Theexhibit index is amended and supplemented by adding the following:
|      | **Exhibit No.** | ** **                                                                                               | ** ** | **Exhibit** |
|------|----------------------|----------------------------------------------------------------------------------------------------------|------------|-------------|
| 23.1 |                 | Consent of Independent Registered Public Accounting  Firm                                                |
| 31.1 |                 | Rule 13a-14(a)/15d-14(a) Certification of  Liberate’s Chief Executive Officer.            |
| 31.2 |                 | Rule 13a-14(a)/15d-14(a) Certification of  Liberate’s Chief Financial Officer.            |
| 32.1 |                 | Section 1350 Certification of Liberate’s Chief  Executive Officer and Chief Financial Officer. |

 

----