On May 10, 2013, Point.360 received notice from the Nasdaq QMX Group that due to the resignation of an independent director, the company no longer meets the requirement to maintain a minimum of three independent directors on its audit committee. The company has a cure period in order to regain compliance as follows: until the earlier of the company’s next annual shareholders’ meeting or April 21, 2014; or if the next annual shareholders’ meeting is held before October 18, 2013, then the company must evidence compliance no later than October 18, 2013. The company must submit to Nasdaq documentation, including biographies of any new directors, evidencing compliance with the rules no later than this date. In the event the company does not regain compliance by this date, Nasdaq will provide written notification to the company that its securities will be delisted. At that time, the company may appeal the delisting determination to a Hearings Panel.

Point.360 reported unaudited consolidated earnings results for the third quarter and nine months ended March 31, 2013. For the quarter, the company reported revenue of $8,295,000 compared to $8,497,000 a year ago. Operating income was $11,000 compared to operating loss of $205,000 a year ago. Income before income taxes was $150,000 against loss before income taxes of $327,000 a year ago. Net income was $150,000 or $0.01 per basic and diluted share compared to net loss of $327,000 or $0.03 per basic and diluted share a year ago. EBITDAN was $898,000 against $674,000 a year ago. For the nine months, the company reported revenue of $23,701,000 compared to $26,008,000 a year ago. Operating loss was $600,000 compared to operating income of $103,000 a year ago. Loss before income taxes was $345,000 against $167,000 a year ago. Net loss was $345,000 or $0.03 per basic and diluted share compared to $167,000 or $0.02 per basic and diluted share a year ago. EBITDAN was $2,007,000 against $2,993,000 a year ago. Operating cash flow was $1.6 million By the end of summer, the company expects to open two new Movie Q stores to test a smaller physical distribution model. Delays have resulted from the long ordering periods for certain components related to the new system. Since the lease costs of these stores have been previously absorbed by the existing three stores, incremental sales are expected to generate greater gross margins.

Point.360, Q3 2013 Earnings Call, May 09, 2013