UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):   March 17, 2016

EVINE Live Inc.
(Exact name of registrant as specified in its charter)

Minnesota	001-37495	41-1673770	
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)	

6740 Shady Oak Road
Eden Prairie, Minnesota 55344-3433
(Address of principal executive offices)

(952) 943-6000
(Registrant’s telephone number, including area code)

Not applicable
(Former name or former address, if changed since last report)

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:
 
 	¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 	
 	¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 	
 	¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 	
 	¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 	

	Item 2.02	Results of Operations and Financial Condition	
 
On March 23, 2016, EVINE Live Inc. (the “Company”) issued a press release disclosing its results of operations and financial condition for the Company’s fiscal fourth quarter and fiscal year ended January 30, 2016. The press release is furnished herewith as Exhibit 99.1.
 
In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934 or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in that filing.
 
	Item 3.01	Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.	
 
On March 21, 2016, the Company received a letter from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) informing the Company that because the closing bid price for the Company’s common stock listed on Nasdaq was below $1.00 for 30 consecutive trading days, the Company does not comply with the minimum closing bid price requirement for continued listing on the Nasdaq Global Market under Nasdaq Marketplace Rule 5450(a)(1) (the “Rule”). The notification has no immediate effect on the listing of the Company’s common stock.
 
In accordance with Nasdaq’s Marketplace Rule 5810(c)(3)(A), the Company has a period of 180 calendar days, or until September 19, 2016, to regain compliance with the Rule. If at any time before September 19, 2016, the bid price of the Company’s common stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq will provide written notification that the Company has achieved compliance with the Rule.
 
The letter also disclosed that in the event the Company does not regain compliance with the Rule by September 19, 2016, the Company may be eligible for additional time. To qualify for additional time, the Company would be required to transfer to the Nasdaq Capital Market and meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and would need to provide written notice of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split if necessary. If an application for transfer were approved, the Company would have an additional 180 calendar days to comply in order for the Company’s common stock to remain listed on the Nasdaq Capital Market. If the Company is not eligible for the second compliance period, then the Staff will provide notice that the Company’s securities will be subject to delisting.
 
The Company intends to continue actively monitoring the bid price for its common stock between now and September 19, 2016, and will consider available options to resolve the deficiency and regain compliance with the Rule. There is no assurance, however, that the Company will be eligible for an additional compliance period or that the Company’s common stock will not be delisted from Nasdaq.
 
	Item 5.02	Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers .	
 
On March 17, 2016, the Company eliminated the position of Senior Vice President, Chief Merchandising Officer and terminated the employment of Penny Burnett, who formerly served in this position, effective March 17, 2016.
 
	Item 9.01.	Financial Statements and Exhibits.	
 
	(d)	Exhibits	
 
The following exhibit is being furnished with this Current Report on Form 8-K.
 
 	Exhibit No.	 	Description	
 	 	 	 	
 	99.1	 	Press Release, dated March 23, 2016.

 	

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 hereto duly authorized.

Date:  March 23, 2016	EVINE Live Inc.	

 	By:	/s/ Damon Schramm	
 	 	Damon Schramm
Senior Vice President, General Counsel and Secretary

 

 	

 
EXHIBIT INDEX

No.	 	Description	
 	 	 	
99.1	 	Press Release, dated March 23, 2016.

 	

 
Exhibit 99.1
 
EVINE Live Reports Fourth Quarter and Full Year Results

 
Fiscal Year 2015 Fourth Quarter Highlights
 
	·	Net sales were $212 million, a 5% increase year-over-year.	
 
	·	Online net sales as a percentage of total net sales increased 360 basis points to 49.7%.	
 
	·	Mobile remains the fastest-growing platform with net sales of $46.8 million, a 47% increase year-over-year.	
 
	·	Adjusted EBITDA was $4.9 million, a 29% decrease year-over-year.	
 
	·	EPS was $0.01, a decrease of $0.05 year-over-year.	
 
	·	Total cash, including restricted cash, at year end was $12.3 million with an additional $29.7 million of unused availability on a revolving credit facility with PNC Bank.	

MINNEAPOLIS, MN – March 23, 2016 – EVINE Live Inc. (NASDAQ: EVLV) today announced results for the fourth quarter ended January 30, 2016.
 
“Although the Company had solid revenue growth in the fourth quarter, we are disappointed with the overall bottom line results,” said Bob Rosenblatt, Chairman and interim CEO. “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.”

 	

SUMMARY RESULTS AND KEY OPERATING METRICS	
($ Millions, except average price points and EPS)	
 
 	 	Q4 2015 01/30/2016	 	 	Q4 2014 01/31/2015	 	 	Change	 	 	YTD 01/30/2016	 	 	YTD 01/31/2015	 	 	Change	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Sales	 	$	211.5	 	 	$	201.2	 	 	 	5	%	 	$	693.3	 	 	$	674.6	 	 	 	3	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross Margin %	 	 	31.4	%	 	 	32.6	%	 	 	(120 bps)		 	 	34.4	%	 	 	36.3	%	 	 	(190 bps)		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA	 	$	4.9	 	 	$	7.0	 	 	 	(29	%)	 	$	9.2	 	 	$	22.8	 	 	 	(60	%)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Income (Loss)	 	$	0.7	 	 	$	3.3	 	 	 	(80	%)	 	$	(12.3	)	 	$	(1.4	)	 	 	791	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EPS	 	$	0.01	 	 	$	0.06	 	 	 	(83	%)	 	$	(0.22	)	 	$	(0.03	)	 	 	(633	%)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Homes (Average 000s)	 	 	87,719	 	 	 	87,889	 	 	 	(0	%)	 	 	88,105	 	 	 	87,481	 	 	 	1	%	
Net Shipped Units (000s)	 	 	2,907	 	 	 	2,898	 	 	 	0	%	 	 	9,853	 	 	 	9,055	 	 	 	9	%	
Average Selling Price (ASP)	 	$	66	 	 	$	63	 	 	 	5	%	 	$	64	 	 	$	67	 	 	 	(4	%)	
Return Rate %	 	 	18.9	%	 	 	19.9	%	 	 	(100 bps)		 	 	19.8	%	 	 	21.5	%	 	 	(170 bps)		
Online Net Sales %	 	 	49.7	%	 	 	46.1	%	 	 	360 bps	 	 	 	46.9	%	 	 	44.6	%	 	 	230 bps	 	
Total Customers - 12 Month Rolling (000s)	 	 	1,436	 	 	 	1,446	 	 	 	(1	%)	 	 	N/A	 	 	 	N/A	 	 	 	N/A	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
% of Net Sales by Category	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Jewelry & Watches	 	 	35	%	 	 	37	%	 	 	 	 	 	 	39	%	 	 	42	%	 	 	 	 	
Home & Consumer Electronics	 	 	39	%	 	 	38	%	 	 	 	 	 	 	31	%	 	 	30	%	 	 	 	 	
Beauty	 	 	13	%	 	 	11	%	 	 	 	 	 	 	14	%	 	 	12	%	 	 	 	 	
Fashion & Accessories	 	 	13	%	 	 	14	%	 	 	 	 	 	 	16	%	 	 	16	%	 	 	 	 	
Total	 	 	100	%	 	 	100	%	 	 	 	 	 	 	100	%	 	 	100	%	 	 	 	 	

 
Fourth Quarter 2015 Results
 
	·	Consumer Electronics was the fastest growing category at 35% vs. the prior year, followed by Beauty category at 23% and Fashion at 3%; Jewelry & Watches declined by 2% and Home declined by 11%.	
 
	·	Return rate for the quarter was 18.9%; an improvement of 100 basis points year-over-year.	
 
	·	Gross profit dollars increased 1.3% to $66.4 million. Gross profit as a percentage of sales decreased 120 basis points to 31.4%, primarily related to the following:	
 
	o	60 basis points of gross margin percentage decrease was attributable to reduced margins from mixing out of Jewelry & Watches and into Consumer Electronics, partially offset by a positive mix into Beauty.	
 
	o	40 basis points of gross margin rate decrease was attributable to increased distribution depreciation due to the expansion and upgrades to our Bowling Green facility.	
 
	·	Adjusted EBITDA decreased to $4.9 million primarily due to continued gross profit rate pressure from merchandising mix changes and increased operating expense.	
 
	·	Operating income was $1.6 million vs. $3.9 million in the fourth quarter of last year.	
 
	·	Operating expense increased $3.1 million to $64.8 million, and was driven primarily by increased program distribution, and increased variable expense.	
 
	·	EPS for the fiscal 2015 fourth quarter decreased to $0.01, which includes distribution facility consolidation and technology upgrade costs. EPS for the fiscal 2014 fourth quarter was $0.06, which included executive and management transition costs.	

 	2 	 	

Full Year 2015 Results
 
	·	Consumer Electronics was the fastest growing category at 29% vs. the prior year, followed by Beauty category at 14% and Fashion at 10%; Jewelry & Watches declined by 3% and Home declined by 9%.	
 
	·	Return rate for the year was 19.8%, an improvement of 170 basis points year-over-year.	
 
	·	Gross profit dollars decreased 2.7% to $238.5 million. Gross profit as a percentage of sales decreased 190 basis points to 34.4%, primarily related to the following:	
 
	o	30 basis points of gross margin percentage decrease was attributable to reduced margins from mixing out of Jewelry & Watches and into Consumer Electronics, partially offset by a positive mix into Beauty and Fashion.	
 
	o	110 basis points of gross profit rate decrease was attributable to reduced gross profit rate within Jewelry & Watches and Home.	
 
	o	20 basis points of gross margin percentage decrease was attributable to reduced shipping and handling margin.	
 
	o	20 basis points of gross margin rate decrease was attributable to increased distribution depreciation due to the expansion and upgrades to our Bowling Green facility.	
 
	·	Adjusted EBITDA decreased to $9.2 million primarily due to gross profit rate pressure from merchandising mix changes and increased operating expense.	
 
	·	Operating income was ($8.7) million vs. $1.0 for the prior year.	
 
	·	Operating expense increased $3.2 million to $247.2 million, and was driven primarily by increased program distribution and increased variable expense.	
 
	·	EPS for the fiscal year decreased to ($0.22), which includes executive and management transition costs, and distribution facility consolidation and technology upgrade costs. EPS for fiscal 2014 was ($0.03), which included executive and management transition costs, and activist shareholder response costs.	

Liquidity and Capital Resources
 
As of January 30, 2016, total cash, including restricted cash, was $12.3 million, compared to $12.6 million at the end of the third quarter of fiscal 2015. The Company also had $29.7 million of unused availability on its revolving credit facility with PNC Bank at the end of the fourth quarter.
 
On March 10, 2016, EVINE Live closed on a $17 million bank term loan with GACP Finance Co., LLC. The Company expects to use the borrowings for general corporate purposes as well as to strengthen the overall liquidity position of the company.

2016 Outlook
 
The Company expects sales growth relatively in line with 2015 with improved Adjusted EBITDA year-over-year.

 	3 	 	

 
Conference Call
 
A conference call to discuss the Company's fourth quarter earnings will be held at 8:30 a.m. Eastern Time on Wednesday, March 23, 2016.
Conference Call/Webcast Today, Wednesday, March 23, 2016 at 8:30 a.m. EST:
 
	WEBCAST LINK:	http://event.on24.com/wcc/r/1133422/6794CB6BDA99C9E566C9EC62A7001D95	
 
	TELEPHONE:	(877) 407- 9039	
 
	PASSCODE:	13630363	
 
Please visit www.evine.com/ir for more investor information and to review an updated investor deck.

About EVINE Live Inc.
 
EVINE Live Inc. (NASDAQ: EVLV) is a digital commerce company that offers a compelling mix of proprietary, exclusive, and name brands directly to consumers in an engaging and informative shopping experience via television, online and on mobile. EVINE Live reaches approximately 88 million cable and satellite television homes 24 hours a day with entertaining content that invites its community of customers to shop, share and smile in a comprehensive digital shopping experience.
 
Please visit www.evine.com/ir for more investor information.

 
Contacts

Media:
Dawn Zaremba
EVINE Live Inc.
press@evine.com
(952) 943-6043

Investors:
Jason Iannazzo
EVINE Live Inc.
jiannazzo@evine.com
(952) 943-6126

 	4 	 	

EVINE Live Inc.	
AND SUBSIDIARIES	
CONSOLIDATED BALANCE SHEETS	
(In thousands except share and per share data)	
 
 	 	January 30,	 	 	January 31,	 	
 	 	2016	 	 	2015	 	
 	 	(Unaudited)	 	 	 	 	
 	 	 	 	 	 	 	
ASSETS	 	 	 	 	 	 	 	 	
Current assets:	 	 	 	 	 	 	 	 	
Cash	 	$	11,897	 	 	$	19,828	 	
Restricted cash and investments	 	 	450	 	 	 	2,100	 	
Accounts receivable, net	 	 	114,949	 	 	 	112,275	 	
Inventories	 	 	65,840	 	 	 	61,456	 	
Prepaid expenses and other	 	 	5,913	 	 	 	5,284	 	
Total current assets	 	 	199,049	 	 	 	200,943	 	
Property and equipment, net	 	 	52,629	 	 	 	42,759	 	
FCC broadcasting license	 	 	12,000	 	 	 	12,000	 	
Other assets	 	 	2,085	 	 	 	1,989	 	
 	 	$	265,763	 	 	$	257,691	 	
 	 	 	 	 	 	 	 	 	
LIABILITIES AND SHAREHOLDERS' EQUITY	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	 	 	 	
Accounts payable	 	$	77,779	 	 	$	81,457	 	
Accrued liabilities	 	 	35,342	 	 	 	36,683	 	
Current portion of long term credit facility	 	 	2,143	 	 	 	1,736	 	
Deferred revenue	 	 	85	 	 	 	85	 	
Total current liabilities	 	 	115,349	 	 	 	119,961	 	

Capital lease liability	 	 	-	 	 	 	36	 	
Deferred revenue	 	 	164	 	 	 	249	 	
Deferred tax liability	 	 	2,734	 	 	 	1,946	 	
Long term credit facility	 	 	70,537	 	 	 	50,971	 	
Total liabilities	 	 	188,784	 	 	 	173,163	 	
 	 	 	 	 	 	 	 	 	
Commitments and contingencies	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Shareholders' equity:	 	 	 	 	 	 	 	 	
Preferred stock, $.01 par value, 400,000 shares authorized;	 	 	 	 	 	 	 	 	
zero shares issued and outstanding	 	 	-	 	 	 	-	 	
Common stock, $.01 par value, 100,000,000 shares authorized;	 	 	 	 	 	 	 	 	
57,170,245 and 56,448,663 shares issued and outstanding	 	 	571	 	 	 	564	 	
 	 	 	 	 	 	 	 	 	
Additional paid-in capital	 	 	423,574	 	 	 	418,846	 	
 	 	 	 	 	 	 	 	 	
Accumulated deficit	 	 	(347,166	)	 	 	(334,882	)	
Total shareholders' equity	 	 	76,979	 	 	 	84,528	 	
 	 	$	265,763	 	 	$	257,691	 	

 	5 	 	

EVINE Live Inc.	
AND SUBSIDIARIES	
CONSOLIDATED STATEMENTS OF OPERATIONS	
(Unaudited)	
(In thousands, except share and per share data)	

 	 	For the Three-Month Periods Ended	 	 	For the Twelve Month Periods Ended	 	
 	 	January 30,	 	 	January 31,	 	 	January 30,	 	 	January 31,	 	
 	 	2016	 	 	2015	 	 	2016	 	 	2015	 	
Net sales	 	$	211,542	 	 	$	201,224	 	 	$	693,312	 	 	$	674,618	 	
Cost of sales	 	 	145,133	 	 	 	135,683	 	 	 	454,832	 	 	 	429,570	 	
Gross profit	 	 	66,409	 	 	 	65,541	 	 	 	238,480	 	 	 	245,048	 	
Margin %	 	 	31.4	%	 	 	32.6	%	 	 	34.4	%	 	 	36.3	%	
Operating expense:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Distribution and selling	 	 	56,134	 	 	 	53,283	 	 	 	209,328	 	 	 	202,579	 	
General and administrative	 	 	6,442	 	 	 	5,938	 	 	 	24,520	 	 	 	23,983	 	
Depreciation and amortization	 	 	2,105	 	 	 	1,980	 	 	 	8,474	 	 	 	8,445	 	
Executive and management transition costs	 	 	-	 	 	 	485	 	 	 	3,549	 	 	 	5,520	 	
Distribution facility consolidation and technology upgrade costs	 	 	81	 	 	 	-	 	 	 	1,347	 	 	 	-	 	
Activist shareholder response costs	 	 	-	 	 	 	-	 	 	 	-	 	 	 	3,518	 	
Total operating expense	 	 	64,762	 	 	 	61,686	 	 	 	247,218	 	 	 	244,045	 	
Operating income (loss)	 	 	1,647	 	 	 	3,855	 	 	 	(8,738	)	 	 	1,003	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other expense:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest income	 	 	2	 	 	 	2	 	 	 	8	 	 	 	10	 	
Interest expense	 	 	(763	)	 	 	(388	)	 	 	(2,720	)	 	 	(1,572	)	
Total other expense	 	 	(761	)	 	 	(386	)	 	 	(2,712	)	 	 	(1,562	)	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before income taxes	 	 	886	 	 	 	3,469	 	 	 	(11,450	)	 	 	(559	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income tax provision	 	 	(219	)	 	 	(210	)	 	 	(834	)	 	 	(819	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	 	$	667	 	 	$	3,259	 	 	$	(12,284	)	 	$	(1,378	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) per common share	 	$	0.01	 	 	$	0.06	 	 	$	(0.22	)	 	$	(0.03	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) per common share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
---assuming dilution	 	$	0.01	 	 	$	0.06	 	 	$	(0.22	)	 	$	(0.03	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average number of common shares outstanding:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	57,158,427	 	 	 	56,357,182	 	 	 	57,004,321	 	 	 	53,458,662	 	
Diluted	 	 	57,158,427	 	 	 	57,598,309	 	 	 	57,004,321	 	 	 	53,458,662	 	

 	6 	 	

EVINE Live Inc.	
AND SUBSIDIARIES	
Reconciliation of Adjusted EBITDA to Net Income (Loss):	
(Unaudited)	
 
 	 	For the Three-Month Periods Ended	 	 	For the Twelve-Month Periods Ended	 	
 	 	January 30,	 	 	January 31,	 	 	January 30,	 	 	January 31,	 	
 	 	2016	 	 	2015	 	 	2016	 	 	2015	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA (000's)	 	$	4,926	 	 	$	6,952	 	 	$	9,206	 	 	$	22,773	 	
Less:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Activist shareholder response costs	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(3,518	)	
Executive and management transition costs	 	 	-	 	 	 	(485	)	 	 	(3,549	)	 	 	(5,520	)	
Distribution facility consolidation and technology upgrade costs	 	 	(81	)	 	 	-	 	 	 	(1,347	)	 	 	-	 	
Shareholder Rights Plan costs	 	 	-	 	 	 	-	 	 	 	(446	)	 	 	-	 	
Non-cash share-based compensation	 	 	(136	)	 	 	(522	)	 	 	(2,275	)	 	 	(3,860	)	
EBITDA (as defined)	 	 	4,709	 	 	 	5,945	 	 	 	1,589	 	 	 	9,875	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
A reconciliation of EBITDA to net income (loss) is as follows:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EBITDA (as defined)	 	 	4,709	 	 	 	5,945	 	 	 	1,589	 	 	 	9,875	 	
Adjustments:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	(3,062	)	 	 	(2,090	)	 	 	(10,327	)	 	 	(8,872	)	
Interest income	 	 	2	 	 	 	2	 	 	 	8	 	 	 	10	 	
Interest expense	 	 	(763	)	 	 	(388	)	 	 	(2,720	)	 	 	(1,572	)	
Income taxes	 	 	(219	)	 	 	(210	)	 	 	(834	)	 	 	(819	)	
Net income (loss)	 	$	667	 	 	$	3,259	 	 	$	(12,284	)	 	$	(1,378	)	

Adjusted EBITDA
 
EBITDA represents net income (loss) for the respective periods excluding depreciation and amortization expense, interest income (expense) and income taxes. The Company defines Adjusted EBITDA as EBITDA excluding non-operating gains (losses); activist shareholder response costs; executive and management transition costs; distribution facility consolidation and technology upgrade costs; Shareholder Rights Plan costs and non-cash share-based compensation expense. The Company has included the term “Adjusted EBITDA” in our EBITDA reconciliation in order to adequately assess the operating performance of our television and online businesses and in order to maintain comparability to our analyst's coverage and financial guidance, when given. Management believes that the term Adjusted EBITDA allows investors to make a more meaningful comparison between our business operating results over different periods of time with those of other similar companies. In addition, management uses Adjusted EBITDA as a metric to evaluate operating performance under the Company’s management and executive incentive compensation programs. Adjusted EBITDA should not be construed as an alternative to operating income (loss), net income (loss) or to cash flows from operating activities as determined in accordance with generally accepted accounting principles and should not be construed as a measure of liquidity. Adjusted EBITDA may not be comparable to similarly entitled measures reported by other companies. The Company has included a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, in this release. 

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Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
 
This release may contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as anticipate, believe, estimate, expect, intend, predict, hope, should, plan, will or similar expressions. Any statements contained herein that are not statements of historical fact may be deemed forward-looking statements. These statements are based on management's current expectations and accordingly are subject to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained herein due to various important factors, including (but not limited to): consumer preferences, spending and debt levels; the general economic and credit environment; interest rates; seasonal variations in consumer purchasing activities; the ability to achieve the most effective product category mixes to maximize sales and margin objectives; competitive pressures on sales; pricing and gross sales margins; the level of cable and satellite distribution for our programming and the associated fees; our ability to establish and maintain acceptable commercial terms with third-party vendors and other third parties with whom we have contractual relationships, and to successfully manage key vendor relationships and develop key partnerships and proprietary brands; our ability to manage our operating expenses successfully and our working capital levels; our ability to remain compliant with our credit facilities covenants; our ability to successfully transition our brand name and corporate name; customer acceptance of our new branding strategy and our repositioning as a digital commerce company; the market demand for television station sales; changes to our management and information systems infrastructure; challenges to our data and information security; changes in governmental or regulatory requirements; litigation or governmental proceedings affecting our operations; significant public events that are difficult to predict, or other significant television-covering events causing an interruption of television coverage or that directly compete with the viewership of our programming; our ability to obtain and retain key executives and employees; our ability to attract new customers and retain existing customers; changes in shipping costs; our ability to offer new or innovative products and customer acceptance of the same; changes in customer viewing habits or television programming; and the risks identified under “Risk Factors” in our recently filed Form 10-K and any additional risk factors identified in our periodic reports since the date of such Form 10-K. More detailed information about those factors is set forth in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this announcement. We are under no obligation (and expressly disclaim any such obligation) to update or alter the Company’s forward-looking statements whether as a result of new information, future events or otherwise.

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