Napster, the online music service, has stressed that it is "on the path to profitability" despite seeing its losses widen further.
Napster says there is strong demand for its subscription service
The firm made a $16.7m (£9.5m) loss in the last quarter, up from the $14.9m reverse in the same period last year.
It now has more than 500,000 'premium' users of its music download service, up 110% over the past year.
Napster, relaunched as a legal service in 2004, said it had enough cash to fund its business until at least 2008.
Some analysts have expressed concerns about the company's financial position and its ability to sustain continuing losses.
However, Napster said it was upbeat about its prospects for 2006, in which it will offer a new free music 'experience' through its website.
"We believe the prospects for our new Napster.com initiative, the robust organic growth of our subscription business, together with our focus on cost controls will all contribute to accelerating our path to profitability," said Chris Gorog, the firm's chairman and chief executive.
Mr Gorog said Napster had seen strong demand for its download service in Germany, which was launched at the end of last year.
Napster's sales increased only marginally to $23.5m over the three month period to the end of December.
However, sales are 94% higher than a year ago.