Evine Live, the former ShopHQ, said it has received notice from the NASDAQ that it has 180 days to get its stock price above $1 per share or risk being delisted from the stock exchange.
The notification is the latest in a series of setbacks for the company, which was the subject of a proxy fight in 2014 where one of its largest shareholders took control of the company and rearranged its management team.
In the past month, Evine’s CEO – former HSN executive Mark Bozek – resigned, replaced by chairman Bob Rosenblatt in the interim. EVP and chief strategy officer Russell Nuce also resigned.
In a Securities and Exchange Commission filing, Evine revealed that Bozek, who left the company effective Feb. 8, received a severance package valued at more than $1.2 million.
Evine stock, once as high as $7 per share during the proxy battle, has been trading under $1 each since Feb. 5. The stock was trading at 82 cents each (up 6 cents) in early trading Wednesday.
According to an SEC filing, Evine received notification from NASDAQ about its non-compliance on March 21. In accordance with NASDAQ rules it has 180 days, or until Sept. 19, to regain compliance, which would mean the stock has to trade above $1 per share for a minimum of 10 consecutive business days. If it does not reach that level by the Sept. 19 deadline, Evine could be eligible for an extension, but would be required to transfer from the NASDAQ Global Market exchange to the NASDAQ Capital Market exchange and meet all the necessary requirements. If it still fails to meet the Exchange’s standards, then the stock would be subject to delisting.
Evine also reported fourth quarter results, with revenue up 5% $212 million but cash flow down 29% to just $4.9 million in the period. For the full year, revenue increased 3% to $693.3 million while cash flow was down 60% to $9.2 million.
“Although the company had solid revenue growth in the fourth quarter, we are disappointed with the overall bottom line results,” Rosenblatt said in a statement. “The profit erosion that continued into our fourth quarter doesn’t reflect the merchandising balance and operational discipline necessary to deliver consistent growth in value to all stakeholders. We are in the midst of implementing plans to address these issues, but we are mindful that it will take some time to fix them in the right way. Last week we took our first steps toward addressing these issues and cut our full-year operating expense by $5 million through a reduction in corporate overhead and other operating costs.”
Rosenblatt continued, “Evine Live has a proven business model and we are strongly positioned to continue to use our expertise as a leader in the digital video commerce space. Our historical focus on developing proprietary and exclusive brands to broaden our product offering is proving to be a good idea. However, it is only one piece of a much broader business strategy that is required to create profitable results and to build shareholder value. Our work going forward is centered on building a cohesive merchandising strategy with clear accountability. With the $17 million bank term loan from GACP Finance Co., LLC, our recently strengthened balance sheet provides the Company some additional flexibility in building long-term relationships with our vendors, as well as the ability to be more opportunistic in the broader marketplace.”
